[WATCH] ‘Gaffarena spoke to me, but I made it clear expropriation had to be discussed with GPD’

Michael Falzon on controversial €1.65m expropriation • Video by Ray Attard

It was property owner Marco Gaffarena who personally petitioned the Government Property Division to have his share of the Valletta palazzo on Old Mint Street expropriated during the summer of 2014.

The revelation comes from an exclusive interview with parliamentary secretary for planning Michael Falzon, who despite rubber-stamping the controversial €1.65 million expropriation deal, is insisting he did nothing irregular.

Falzon has admitted receiving Marco Gaffarena at his office at Auberge de Castille, and that he told the property owner that any matters relating to the expropriation of his land should be discussed solely with the Government Property Division.

Now under pressure over the compensation deal, Falzon has admitted having gone hunting with Gaffarena in the past, but denied having accepted any political donations from Gaffarena despite his friendship.

“Gaffarena came to speak to me on several issues, much like others like [construction magnates] Nazzareno Vassallo and Charles Polidano do,” Falzon said.

“I receive people on a daily basis. On this particular case I made it clear to him that the matter should only be discussed with the GPD.”
Falzon did not rule out that Gaffarena was allowed by the GPD to personally select the lands he should receive in exchange for the Valletta expropriation.

But the junior minister pushed aside a suggestion to resign pending two investigations by the IAID (internal audit and investigations department) and the Auditor General.

Gaffarena was paid €822,500 in cash and then granted several government lands, totaling another €822,500, for the expropriation of his 50% ownership in a Valletta building that houses the government offices of the Building Industry Consultative Committee.

The deal has raised suspicion on two counts: he was compensated in January 2015 for a 25% share in the property, and then again in April after he managed to buy another 25% in February; and because the lands he was given abutted on property he already owned or which he intends to develop.

Falzon yesterday told MaltaToday that he challenged anyone to say that he had committed anything illegal.

“I could have gone to the GPD and rummaged through the documents. But I am here to work. I am man enough to shoulder my responsibility if I did anything irresponsible; I have no problem in obeying the Prime Minister if he asks me to suspend myself. But I challenge anyone to say that I did something illegal to say it.”

Falzon even said there was nothing suspicious about the fact that Gaffarena had acquired a 25% share in the building in February, just two months before the second compensation. “Under the previous administration, contracts were signed in just six days… I am comforted by the fact that all laws, procedures and regulations were followed.”

Despite Falzon’s assurances, the junior minister’s interview has revealed that it was Gaffarena who approached the GPD with an offer to expropriate his share in the Old Mint Street building.

MaltaToday can reveal that up until the summer of 2014, Gaffarena owned a 25% share that he had acquired back in 2007.

Then in August 2014, Falzon said that the GPD a request from the landlords’ lawyers demanding the eviction of the property since it was no longer being used as a school as per the original lease agreement. “The GPD risked losing the palace so they went for it,” Falzon said – although he also said that the lease was to expire in 2028, somewhat contradicting the impression of the need for an urgent expropriation.

But this newspaper can also confirm that between 11 August and 28 September, the GPD appointed architect Joseph H. Spiteri to carry out valuations on the Old Mint Street offices, agricultural land at Tal-Handaq where an unlicensed restaurant operates, 26,000 square metres of agricultural land in Haz-Zebbug, and 6,000 square metres of land at Tas-Salvatur in Mqabba.

And in November 2014 – as told to MaltaToday by seller Anthony Mercieca – Gaffarena was also busy negotiating with him for the acquisition of another 25% share in the Old Mint Street, which he eventually bought in February 2015 for just €139,762.

“Gaffarena went to the GPD offering them an exchange for his share in Old Mint Street, for a government property he was renting out for peanuts. The GPD considered it to be a wise move, presented an internal communication and I signed it. The GPD was of the opinion it made sound business sense and I endorsed it,” Falzon told MaltaToday.

He also insisted that GPD based its decision on the established procedures and valuations presented to it by Joseph Spiteri, a head of department in the Faculty for Built Environment at the University of Malta.

He defended the GPD’s decision to first expropriate Gaffarena’s 25% share, and then proceed on the second 25% share of Old Mint Street. “Yes, it is something that happens… it doesn’t happen every day but there were instances where it occurred. You cannot ignore the importance of the building in question, a palace in Valletta that had housed a school and an examination centre. The government risked losing the property by 2028,” he said.

But all the more importantly, it appears that Gaffarena may have had a direct say in which lands he should receive in exchange for the expropriation of the Valletta building.

Selecting the lands

For example, in October 2014 a senior GPD architect valued a Sliema shop on Manwel Dimech Street at €65,000. As it happens, Gaffarena had a year earlier purchased the adjoining three-storey house for €72,000. Then in May 2015, Gaffarena applied with MEPA to demolish the townhouse and shop to build 10 apartments and a penthouse over four levels.

It is for this reason that the Gaffarena expropriation shocks. At Handaq, he was leasing from government land being used to host an illegal entertainment venue under an enforcement notice from MEPA.

Indeed, the choice was no coincidence as it is increasingly becoming evident that Gaffarena did have a say in which lands he got.

When questioned, Falzon reiterated that there was “no political involvement in the valuation of the properties or the choice of lands.”

But he said that the law allowed for such land exchanges.

“There are a number of parameters to follow when an exchange takes place, including that the value can’t vary more than 30%. The choice of the site is something that GPD discusses with the individual and independent architects value the property. I reiterate that I didn’t interfere in the choice of lands.”

Falzon neither confirmed, nor denied Gaffarena’s personal role in choosing the land parcels.

“I’d imagine there were discussions on the land choice but I didn’t interfere at any point. I’m not saying ‘yes he was accommodated’ or ‘no he wasn’t’. I’m saying that in no way did I indicate which lands should be passed on,” he said.

When asked whether he was aware of discussions Gaffarena had with the GPD on the choice of the lands, Falzon replied: “You want an answer from me which I can’t give because I didn’t do it [interfere].”

Falzon said that compensation with public land was a practice long employed by the GPD.

Up until 2003, expropriations by the State could take place without compensation. This later changed when the government department demanding the expropriation had to front the money for the ownership of the title.

“We’ve had several requests for compensation in land. Gaffarena’s exchange is no exception; it has happened before and the law regulating the disposal of government land provides for it,” Falzon said.

The parliamentary secretary also defended the values of the lands given to Gaffarena, which according to shadow justice minister Jason Azzopardi were heavily undervalued: for example, two land parcels in Bahar ic-Caghaq valued at €260,000 and €70,000 were valued at €500,000 and €150,000 respectively by two independent architects.

Falzon again stated he did not interfere in the valuation of the property or the GPD’s work. “I never asked anyone to favour Gaffarena in any way.”

“We face the flak irrespective of what we do: the government was accused of interfering in the GPD’s work in the Café Premier saga; now we are still being criticised even though there was no political interference.”

Falzon said he will await the outcome of the investigation before pronouncing himself on whether the GPD applied inferior criteria on the value of the lands.

“I will not point any fingers at anyone; I won’t be prosecutor, judge or jury. There are two investigations underway and they will establish the facts.”

Separately, MaltaToday is exclusively publishing the evaluations carried out by architects Joseph H Spiteri and Stefan Scotto. The evaluation documents pertain to the property in Old Mint Street and the sites in Tal-Handaq, Sliema, Haz-Zebbug and Mqabba.

No Cabinet referral

Falzon refuted suggestions from MaltaToday that the expropriation deal should have been presented to the Cabinet for its approval.

According to Falzon, no expropriation deal is presented to the Cabinet and that ministers learnt of the case “from the media”.

“I am not here to pass on the buck. There was no need to present it to the Cabinet for approval because expropriation deals are not presented to the Cabinet. Yes, the Cabinet learnt of the expropriation from the media because that is the normal procedure… at no point was the Prime Minister involved,” he said.

He also turned his guns on the former administration, saying that expropriations took place on the eve of the election – ostensibly referring to the land swap deal for the Fekruna restaurant – and that there was cases of direct intervention by the former prime minister.

But departmental sources even told MaltaToday that Gaffarena was seen at the Lands Department in the company of Clint Scerri, a member of Falzon’s parliamentary secretariat.

According to Falzon, Scerri is a member of the secretariat’s customer care team and “part of his job is to assist people seeking the GPD’s services”.

“I spoke to Scerri and frankly I feel the reports against him are unfair. I’m not defending him if he did something wrong.”

But Falzon had also played down the seriousness of the €1.65 million expropriation when last week he said the news was sensational only because of Gaffarena’s family name: one that has in the past been in the news over abusive construction. 

“I believe that a surname shouldn’t make a difference. I have the comfort that the law, procedures and regulations were followed. I have several requests for land swap agreements from other surnames: Ganado, Xuereb, Vella… should I stop them all? Is this what the Opposition wants? I repeat that there was no interference from my end and I was reassured that every procedure was followed before I signed the advice.”