[WATCH] Muscat awaiting AG’s advice before mulling action needed against GWU

Government awaiting Attorney General's advice on GWU agreement

Government is awaiting the Attorney General’s advice before deciding what course of action to take against the General Workers’ Union (GWU) following an investigation over the lease of a Valletta building.

An investigation by the Auditor General found that the GWU’s lease of offices to ARMS Ltd and two commercial entities was in breach of the public contract because the union did not hold a majority shareholding.

Prime Minister Joseph Muscat this morning said that government was awaiting the AG’s advice after receiving “conflicting legal advice,” adding that legal action could set a precedent in regards to social housing properties which were bought by tenants. 

Yesterday, the Opposition said it expects government to take the union to court over the breach.

The NAO report concluded that the lease between the GWU and ARMS Ltd was in breach of the union’s contract with government, as the GWU did not have any shareholding in ARMS as stipulated in the union's lease agreement with the government for the land it owns in Valletta.

In 1957, the government granted the GWU the perpetual emphyteusis of a site on which to build its headquarters for trade union activities and its Union Press. In 1997, the contract with Government was modified permitting the Union to transfer, assign or let part of its building to any company in which it had more than 51 per cent shareholding.

In May 2015, the GWU redeemed the yearly ground rent of €801 against payment of €16,026, rendering the property freehold. Prior to the redemption, in April 2014, the GWU leased part of its premises to ARMS against the annual payment of €61,950.

The NAO established that between April 2014 and May 2015, the GWU was in breach of the government lease.

"The redemption of ground rent rendered the breach less straightforward due to the opposing views expressed by the GWU and the GPD. The union maintained that the redemption rendered obsolete all conditions stemming from the contract with Government, while GPD argued otherwise," the National Audit Office said in its report.

The NAO said it agreed with the GPD and recommended that the department institute legal action against the GWU for the breaches prior to redemption. "The NAO also urges the GPD to establish, through legal action, whether the conditions of the contract survive ground rent redemption, and in the affirmative, institute judicial action against the Union or any other type of action deemed suitable.