Issue link: https://maltatoday.uberflip.com/i/521559
maltatoday, WEDNESDAY, 3 JUNE 2015 7 TIM DIACONO LABOUR MP Charles Buhagiar, chairman of the Building Indus- try Consultative Council, claimed he was unaware of a €1.65 million compensation for the expropriated property of Marco Gaffarena in Valletta. Gaffarena was paid the compen- sation in cash and lands for half a property in Old Mint Street that houses the government offices of the BICC. In January this year, the govern- ment paid Gaffarena €822,500 for a quarter of the property that he had purchased for €23,294 in December 2007. The following month, Febru- ary, Gaffarena purchased another quarter of the property for €139,762, which the government subsequently expropriated for another €822,500, in April. However, Buhagiar denied any knowledge of the government's in- tentions to expropriate the building that houses the BICC's offices. "Expropriation falls under the Lands Department," Buhagiar told MaltaToday. "I hadn't known about their expropriation plans, nor did I have any reason to know about them. It's none of my business. I first heard about the story from the newspaper last week." He also denied knowing of Gaf- farena's intentions to purchase shares in the property and insisted that he wasn't aware of any work that he or his architects' office had carried out for Gaffarena or his company. Parliamentary secretary Michael Falzon has claimed that the trans- action was a completely regular one and that no criminal investigation was necessary. "The only reason it made the news was because of his surname," Falzon said of Gaffarena at a news confer- ence on Monday. Gaffarena is an as- sociate of Labour MP Joe Sammut. A petrol pump station he owns in Qormi is associated with a number of illegalities that were recently sanctioned by the Labour adminis- tration. "The land was realistically valued at €822,500 by architects appointed by the Government Property Divi- sion," Falzon told the news con- ference. "We're not private estate agents and negotiate according to the fair market value. If Gaffarena had originally bought the land for a cheaper price than the market value, then he simply made a good busi- ness deal." Various attempts were made to contact Falzon on whether he agrees that Gaffarena's deal raises a red flag over his attempt to under-value the property, whether the GPD con- sulted any notarial deeds pertain- ing to the history of the property it was valuating, whether he agrees that somebody within the Lands Department or the BICC had fed Gaffarena with inside information about the government's intentions to expropriate the property, and what remedial steps the government would take if so. Questions were also sent to Fi- nance Minister Edward Scicluna on whether the Tax Compliance Unit or Inland Revenue Department should investigate the deal and whether he will send government architects to investigate the evaluation of the property. However, both sets of questions remained unanswered at the time of going to print. News Ultimate contractual liability lies with Skanska CONTINUES FROM PAGE 1 Gonzi, who had been asked by Camilleri to meet over the settlement agree- ment, added that it was strange that the government declared that its rights had been hindered when the legal advice given to FMS stat- ed otherwise. Camilleri, through his lawyer George Hyzler, sent the thread of emails to Judge Sciberras, chair of the inquiry into the use of weak concrete at Mater Dei. The corre- spondence – dating between De- cember 2008 and April 2009 – was sent after the board of inquiry had already concluded its report. It was nonetheless presented to Health Minister Konrad Mizzi. The Project Closure Agreement was drafted to waive all contesta- tions and claims which were raised by the Foundation for Medical Services and Skanska Malta Joint Venture (SMJV). The PCA was found in a safe at the Foundation for Medical Servic- es with a number of other sensitive documents, isolated from the rest of the documents pertaining to the Mater Dei Hospital. What raises questions about clause 9 – the blanket waiver – is that the second clause, titled the Reciprocal Waiver of Claims, clearly stipulated that both sides were waiving the contestations and claims that were being raised. Correspondence over the Project Closure Agreement Extracts from 25 emails show that clause 9 already existed in a draft settlement agreement, though it was elaborated upon in the final settlement agreement, which be- came the PCA. A noticeable difference between the original and final version of clause 9 is that what started off as "[…]the parties will not be liable whatsoever for all and any fur- ther and future concerns, claims or disputes […]" became "[…]the parties will not be liable whatso- ever for all and any further, past, present or future concerns, claims or disputes […]". Despite being nominated as the "senior executive" for FMS, Camill- eri was not legally empowered to commit FMS to any agreement without the requisite authorisation – the approval of the FMS board was necessary. On 26 December, 2008, Camilleri forwarded the terms of settlement to Alan Caruana, then-head of sec- retariat at the Finance Ministry. Communication continues in the following days between Camilleri and Camilleri Preziosi, who had been engaged by FMS to legally as- sist them. On 29 January, 2009, FMS were presented with yet another up- dated version of the agreement. On 4 February, 2009, Camilleri re- ceived an email from Skanska rep Erik-Lars Alm with SMJV's own amendments. During the same day, SMJV raised questions over reference to the Maltese law in clauses 2 and 5. The FMS lawyers explained that they were "trying to achieve closure without waiving any rights that FMS may have at law (the 15-year contractor liability and liability for hidden or latent defects) – this on the basis of your discussions with SMJV". Discussions on the PCA clauses continued in the following days up until 19 February, the day of the signing. In one particular email, Alm explains that Skanska did not want to get into a situation where its obligations were in excess of the contractual, unless it is mandatory obligations according to Maltese law. The lawyers advised Camilleri that they wanted FMS to retain all its rights in terms of Maltese law, whereas SMJV wanted to avoid this. In a later email, the legal ad- visors inform Camilleri that they had opted to remove the conten- tious wording from clauses 2.1 and 2.2 but expressed their opin- ion that FMS's concerns were still protected by the wording in clause 51.1 "which seems to have been ac- cepted (perhaps inadvertently!) by Lars". On 19 February, 2009, the agree- ment was signed. A day later, Camilleri wrote to then-FMS CEO Brian St John suggesting a "prepa- ration of the justification document for this Project Closure Agreement to be submitted to Minister Dalli for possible onward transmittal to the Cabinet". On 5 April, 2009, Camilleri wrote to Dalli briefing him over the Project Closure Agreement that had been signed six weeks before, "despite the fact that Brain advised me that he had briefly informed you about it". The Sciberras inquiry In its conclusions, the Sciberras inquiry found that the responsibil- ity and contractual liability for the failures identified in the present day technical reports ultimately lie with Skanska. "The documentation seen by board indicates that FMS in the Project Closure Agreement and actions of the client may have hin- dered its right to vaunt any fur- ther claims against the contractor which could limit FMS and gov- ernment in pursuing the necessary redress," the board of inquiry con- cluded. In 2011, Skanska invoked the waiver after FMS tried to with- hold a €200,000 payment to cover costs to repair a faulty reservoir at Mater Dei. Paul Camilleri told the inquiry that failure to reach an agreement with Skanska over the claims would have led to lengthy arbitra- tion proceedings involving mil- lions. Camilleri said that he was constantly under advisement and also sought reassurances that all works were done in accordance with the standards and specifica- tions established in the contract of works. Pressed by the board, Camilleri "made the startling declaration that negotiations with Skanska JV were being held in bad faith from their end, and that there could also have been fraudulent or ma- licious intent." "There could have been naivety from our end," Camilleri told the board, adding that no one had ever drawn attention as to the consequences of such a blanket waiver. Camilleri added that St John had been requested to make a full presentation to the board and did not raise any concerns regarding the clause in question. PHOTOGRAPHY BY RAY ATTARD BICC chairman unaware of Gaffarena expropriation deal Lawrence Gonzi shares a joke with Simon Busuttil (right)