‘Why is it my head on the chopping block?’

Former Lands parliamentary secretary Michael Falzon is mounting his own public relations ‘campaign of war’ against the Auditor General, claiming people at the NAO were manipulating the audit of the government property department’s (GPD) expropriation of Marco Gaffarena’s share of a Valletta palazzo “for political purposes”.

After resigning in the face of a damning NAO audit report that suspects there was collusion in the €1.65 million compensation paid to Gaffarena for his share of half the ownership of 36, Old Mint Street, Valletta, Falzon is now claiming that a NAO staff member was “manipulating the investigation”.

“I met Auditor General [Anthony Mifsud] and his deputy [Charles Deguara] in the presence of my chief of staff, and warned him that a certain person was manipulating the investigations so as to damage the government for political reasons,” Falzon told Radju Malta’s Ghandi Xi Nghid programme in a telephone link.

“He promised to relay my concerns to him, and yet that person remained in the same position,” Falzon said.

The defiant Falzon has insisted that he did not interfere in the valuations that under-valued the lands transferred to Gaffarena as part of the expropriation settlement, with Gaffarena now facing court action by the government which wants to recover the lands. “What’s certain is that I did absolutely nothing wrong, that I didn’t interfere in the land valuations, and that I conducted my work according to long-established procedures.”

Falzon was not found to have been involved in negotiations with Gaffarena, although he held an initial meeting with him, and his aide, Clint Scerri, accompanied Gaffarena to the GPD. Both investigations by the Prime Minister’s internal audit and investigations department (IAID) and the NAO determined that GPD officials worked round the clock to fast-track the expropriations of Gaffarena’s two, undivided 25% shares of the building.

“In my 22 months as parliamentary secretary, the doors of my office have always been open to everyone, regardless of their political affiliations. Should I have told him not to approach the Lands Department or MEPA simply because he was a well-known figure?

“I’m honestly baffled why my head was placed on the chopping block, but that’s politics, I suppose…”

Falzon took exception to the strong language used by the NAO, which drew up a strong condemnation of the GPD for accommodating Gaffarena, and the parliamentary secretary’s neglect in protecting the government’s interest.

Falzon accused the NAO of drawing up a foregone conclusion to force him out of office. “There are certain statements within the conclusion that sound identical to a speech by the leader of the Opposition,” Falzon said.

But the serious conclusions in the NAO report, which are under review by the Attorney General, could have serious criminal consequences, with attention now focused on senior GPD officials, underlings, as well as the architect, a university lecturer, who over-valued 36, Old Mint Street and under-valued the five lands transferred to Gaffarena.

“The NAO’s understanding of collusion is secret or illegal cooperation or conspiracy in order to deceive others, with this expropriation being a case of senior officials and Gaffarena secretly cooperating to the detriment of the other co-owners,” the NAO said.

According to the report

1. The NAO accused the GPD of having only expropriated Gaffarena’s two 25% shares, and not the entire property. “In the case of the second share, Government timed its expropriation to coincide with when Gaffarena acquired this share.”

2. The GPD did not expropriate the entire property citing insufficient funds when funds were in fact available: the NAO said the GPD’s allocated budget for expropriations in 2015 was €7.2 million, rendering it possible to acquire the entire property. “Whether government intended to incur such a substantial expense on one property is debatable, particularly in view of the lack of a public purpose identified in this regard.” 

3. The GPD only negotiated with Gaffarena and never communicated with any of the other owners.

4. Gaffarena offered to sell a share to the GPD that he did not own. This second share was owned by third parties who had never been contacted by the government regarding its interest in acquiring the property. The government’s interest in this share of the Valletta property crystallised the day after Gaffarena’s acquisition of it, with Michael Falzon’s approval obtained a week later. 

5. The GPD was aware or could easily have traced the identity of the other owners and readily negotiated with them too following the President’s declaration on expropriation.

6. All the valuations “render evident the fact that Gaffarena was involved in preparations undertaken with regard to the expropriation process well in advance of the President’s declaration”. It is at this point that the expropriation became public knowledge and the point at which Gaffarena should have come forward with documents substantiating ownership. This sequence of events was not adhered to in this case, with Gaffarena well aware of the expropriation and identifying properties for counter-exchange in advance.

7. The elimination of the Raba ta’ Harram property from the first expropriation process, due to the aggregate value of properties proposed in exchange for a share of 36, Old Mint Street exceeding that permissible, indicated that Gaffarena was aware of the values of the lands that he was to acquire. This was confirmed by Gaffarena himself.

“This awareness of the values assigned to the lands, apart from supporting the understanding of collusion between Gaffarena and the GPD, introduced a considerable element of risk as access to such information provided an opportunity and context for the breach of the process’ integrity.

“The extent of the risk depended on what information Gaffarena was privy to. That Gaffarena was informed of proceedings prior to them becoming public was clear; however, the NAO could not establish the extent of information at his disposal due to his failure to cooperate with this Office. The GPD’s poor record keeping and the officials’ dubious account of events, particularly in view of how this expropriation materialised without any coordination between those involved, further compounded this.” 

8. Supporting this notion that Gaffarena was well informed of what was going on was evidence provided by all GPD officials who confirmed the regular presence of Gaffarena at the GPD offices, specifically referring to various instances when he was seen in the company of the director of estate management, Carmel Chircop.