Architect whom Falzon accuses of conflict last worked for NAO in 2009

An allegation by Michael Falzon that the architect who valued the Old Mint Street palazzo had a “conflict of interest” because he also rendered services to the National Audit Office, turns out to be not entirely precise.

Architect Joseph H. Spiteri – who overvalued the Valletta palazzo owned by Marco Gaffarena and undervalued the government lands transferred to Gaffarena in exchange – was last engaged with the NAO back in 2009.

Falzon made the allegation during an interview on PBS chat-show Xarabank, in which took exception with the findings of the NAO's report that hammered the final nail in the coffin for the former parliamentary secretary for lands. The NAO report was based on the findings of an IAID report commissioned by the Prime Minister that had been completed months earlier.

“The report was all a justification for a politically motivated attack against me for having drawn the NAO’s attention before this case erupted on [NAO chief investigating officer] Mr [Keith] Mercieca’s antics… It is a shameful mess of a report,” he said, while adding that he was surprised that the NAO failed to hone in on architect Joseph Spiteri, who had carried out the land and property evaluations.

Spiteri, a university lecturer, was contracted out by the Government Property Department to value the Valletta palazzo as well as six parcels of land that were selected by Marco Gaffarena as part of a €1.65 million compensation in land and cash for his 50% in Old Mint Street.

When the Gaffarena expropriation scandal broke, Falzon had actually defended the valuations of Spiteri as the work of a university academic whose specialisation are property valuations.

In comments to MaltaToday earlier on Friday, the NAO defended its examination of Spiteri’s role on the expropriation.

“The NAO met with Architect Spiteri in the conduct of its investigation and clarified various aspects of his involvement in the process of valuing the lands exchanged, as well as his relationship with Gaffarena and the GPD,” a spokesperson said.

Both the valuation of 36 Old Mint Street, and the valuations of the other properties exchanged, most of which were valued by Spiteri, were addressed in detail in the NAO audit.

The NAO found that Spiteri applied rates of €5,000 per square metre for prime office space and €4,000 per square metre for ancillary space, exceeding rates of similar properties intended for commercial use.

The NAO said Spiteri was “well aware that such burdens would expire in 2028” – referring to the lease through which the palazzo rented by the government for the BICC offices – “which fact should have been considered when determining the value... equivalent to a reduction of 20 per cent of the value, which, if applied by the consultant architect, would have resulted in a significantly lower valuation.”

The NAO also wrote a lengthy criticism of the valuations prepared by Spiteri with respect to the properties exchanged by the government.

Valuations by PricewaterhouseCoopers on behalf of the IAID found that the overvaluation of Old Mint Street and the undervaluation of the government properties resulted in a discrepancy of €3,134,000. “Applied to the context of the two [25%] shares expropriated and on the basis of valuations obtained by the NAO and the IAID, government acquired property worth €944,500, while Gaffarena received €516,000 in cash and €2,862,000 in property, in aggregate, €3,378,000,” the NAO said.

“In the case of 36 Old Mint Street, the Consultant Architect failed to consider the property’s encumbrance. The impact of this consideration on the valuation obtained by the NAO was equivalent to a reduction of 20 per cent of the value. In the case of the other properties, similar omissions were noted, with sites valued as agricultural land by the Consultant Architect, yet considered for residential, commercial or industrial purposes by PwC. These alternative uses, deemed permissible by MEPA, accounted for the most substantial element of variations noted.”

The NAO’s report concluded that there was collusion between Gaffarena and members of the GPD – amongst them its former director-general Raymond Camilleri and estate director Carmel Camilleri – to pre-select the lands he would be granted in return for the expropriation of his share in Old Mint Street which had not public purpose at all.