Mistra defaulters Montebello donated to Tonio Fenech’s political campaign

Construction developers JPM Brothers, who defaulted on a €42 million loan for the Mistra Heights apartment towers, were donors for the political campaign of Finance Minister Tonio Fenech: the same minister touted as having been asked to intervene in the difficult sale of one of their properties, the derelict Jerma Hotel in Marsaskala.

MaltaToday can reveal that a former member of Fenech’s private secretariat was responsible for the collection of cheques, signed in his name and also his wife’s but not the minister’s, from JPM Brothers and other donors. The official then cashed the cheques to allegedly pay for the minister’s electoral campaign.

Confronted by this newspaper, the former official alleged he had been instructed by the minister to collect donations from several contributors. “Amongst them were JPM Brothers, and I would go to their office to collect the cheques made in my name. I paid for the electoral expenses myself,” the former official said.

In comments to MaltaToday, minister Tonio Fenech said he did not know of these donations.

“In our political system we depend on our helpers to raise money for our activities, but I never received any monies directly from the Montebello brothers,” Fenech said.

Fenech told MaltaToday his political activities attracted a wide range of constituents, and admitted knowing the Montebellos from his Birkirkara constituency, but the allegations about having intervened in the Jerma sale were “false and untrue… I never ever intervened to favour Montebello in any way.”

Referring to the €42 million loan call-in by Bawag bank, on another Montebello project that is unfinished, Fenech said: “I cannot be associated with this call-in… but yes, it is worrying.”

The same JPM Brothers – Jeffrey and Peter Montebello – had been engaged by the finance minister to carry out works on his Balzan residence in 2009. But when the sub-contractor they engaged was not paid his full dues, the contractor revealed to MaltaToday that Peter Montebello had told him the works were “a favour” for the minister’s intervention in the sale of the Jerma Hotel.

One year on, finance minister has to distance himself from allegations that the Montebellos were renovating his home as a favour on the Jerma hotel sale.

The shadow of the Montebello brothers continues to haunt finance minister Tonio Fenech, a year on since he was first alleged to have been acting on their behalf on the sale of the Jerma Hotel.

Tonio Fenech has already denied allegations that works on his house in Balzan in 2009 had been carried out by the Montebellos as a favour for brokering the possible sale of the Jerma – which never materialised.

Adding fuel to the fire was the revelation that entrepreneurs George Fenech and Joe Gasan – with whom the minister had travelled by private jet to watch a football match in Spain – had presented their plans for a ‘Portomaso of the south’ on the site of the Jerma to Prime Minister Lawrence Gonzi, in a meeting that took place in the beginning of summer 2009.

The plans would never achieve fruition, because as minister responsible for MEPA, Gonzi found out that planning policies prohibited the redevelopment of hotels into lucrative real estate.

It was an unfavourable choice for the minister to use the services of JPM Brothers to carry out renovation on his villa: it was questionable given that the Montebellos were involved in large-scale projects such as the €250 million Mistra Heights, the A3 Towers in Paola, and the redevelopment of the Galaxy hotel in Sliema.

Rumours of their worsening financial state of affairs appeared to have been confirmed last Sunday by MaltaToday, which revealed that a court had ordered Gemxija Crown Ltd, whose shareholders include Jeffrey and Peter Montebello, to pay up €42.2 million on a defaulting loan taken out with Austrian-owned Bawag bank. Gemxija is the developer of Mistra Heights, the as yet incomplete luxury tower blocks on the sites of the former Corinthia Mistra Village, in Xemxija.

Unprecedented in Maltese banking history for the value involved, Gemxija’s other shareholder Najeeb al Saleh – chairman of Kuwaiti real estate giant Al Massaleh – confirmed he was in discussions with the Montebellos over their share in Mistra Heights.

But while Tonio Fenech and the Montebellos denied the allegations that the minister was brokering the sale of the Jerma, whistleblower Charles Magro is still standing his ground.

Magro, an Enemalta employee who runs his own turnkey firm, was contracted by the Montebellos to carry out works on the minister’s Balzan house. “Peter Montebello said the works were ‘bi pjacir’, a favour for the minister to help him sell off the Jerma to Gasan and Fenech,” Magro had told MaltaToday back in November 2009.

When the Jerma deal never took place, and with JPM Brothers not being forthwith in paying Magro for his services, he turned directly to Tonio Fenech for payment, and even brought the matter to the attention of the Prime Minister’s personal secretary.

Fenech had categorically denied asking JPM Brothers to carry out works in his private residence with the aim of concluding business on the Jerma sale. “It’s a lie. My arrangement with JPM Brothers was against payment, as according to their quote. Rainbow were sub-contractors for JPM Brothers and I cannot comment on the exchange that took place between them.”

Charles Magro stood by his claims as recently as September 2010, when the Labour party accused the government of victimising him at his workplace at Enemalta, for being a whistleblower on the Montebello ‘favour’.

On his part, Fenech accused Magro of having a “purely political agenda… Magro is speaking about works carried out under private contract, and which payments were made in full and as a contractor, accepted as fully settled.”

Magro’s claims have never been challenged in court, as the only libel suit Fenech had filed was against Opposition leader Joseph Muscat and One News head Glenn Bedingfield.

Magro himself instituted his own legal proceedings against JPM Brothers, to reclaim monies on services rendered for the works on the minister’s residence

This story appears in today's edition of MaltaToday Midweek - Subscribe now to the digital edition.