Issue link: https://maltatoday.uberflip.com/i/628647
maltatoday, WEDNESDAY, 20 JANuArY 2016 5 News Continues from Page 1 So the Gaffarenas started supporting Labour candidates' cam- paigns. In 2014, their petrol pump finally reopened under a change of MEPA policy that granted the Gaffarenas a three-year "temporary clearance". Then in 2015, news broke that Marco Gaf- farena was compensated the total sum of €1.65 million – half in cash, half in lands he personally selected from the Lands De- partment – for the expropriation of his 50% ownership of the Valletta palazzo on Old Mint Street, which housed the Build- ing Industry Consultative Council. He had purchased the two quarter-ownerships for just €150,000. Suspiciously, Gaffarena had bought a 25% stake years before the Government Property Department agreed to the expropriation in January 2015. But confidently, he proceeded to buy another 25% stake from the palaz- zo's unwitting owners – a sparse group of cousins who were earning a pittance from the rent-controlled building – in February 2015, and then got his expropriation money in May 2015. Michael Falzon first dismissed the case, saying Gaffarena's name made him an easy target. But questions arose on how expro- priation money was paid out in so timely a manner, for a piecemeal ownership of an unimportant building (the BICC can func- tion out of any rented building), and wheth- er the valuation itself had been too gener- ous, given that Gaffarena was granted lands that were soon to appreciate fast in value. Some of them were lands close to where he already owned property; others included a convenient ground-floor shop lying beneath a Sliema property he wanted to develop into an apartment complex. Two investigations Joseph Muscat was quick to acquiesce to an investigation. He tasked his internal au- dit investigations department, the IAID, to investigate the expropriations. The IAID results were passed on to the NAO, an inde- pendent office that was requested to inves- tigate by the Opposition. By putting up his junior minister for in- quiry, Muscat was evidently aware of the public's discomfort at news that Gaffarena had made a killing with the expropriation. If the NAO and IAID inquiries provide conclusive evidence of irregularities, the scale of which would imply Falzon assum- ing some form of political responsibility, Muscat could be obliged to demand his res- ignation. But in a similar outing with his former home affairs minister, Manuel Mal- lia refused to consent, forcing the prime minister to sack him from the Cabinet. If Falzon loses his Cabinet role, Muscat could choose to simply take direct control of lands and the new planning authority himself – portfolios which already fall un- der the Office of the Prime Minister – with- out promoting anyone out of the backbench. The chances of a reshuffle at this point be- yond the mid-term, are scant. If more serious allegations emerge, maybe meriting a criminal investigation, the con- sequences would be more serious for Fal- zon, who would find his MP's seat under attack. All throughout 2015 as time went by, Mus- cat's position also became more difficult: having to wait for the NAO to conclude its inquiry, the more time passed the harder it was to nip his problem in the bud. The Gaf- farenas became part and parcel of the news cycle, more notoriously when their business relationship with the former Commissioner of Police Ray Zammit and his two police of- ficer sons was revealed; and Michael Falzon was once again in the limelight for hav- ing negotiated a €260,000 early retirement scheme from Bank of Valletta, the partly state-owned bank, that he could repay pro- rata should he be back in the bank before the next election. In the meantime, the IAID could have given the OPM a strong legal position to re- coup lands granted to Gaffarena, because its investigations revealed that the lands were valued in excess of a legal 30% ceiling which such valuations cannot exceed. The ceiling is set in the Disposal of Government Land Act: that in land exchanges, the value of the government land to be given cannot exceed 30% of the value of the expropriated land. Sources privy to the investigation told MaltaToday that the Attorney General was consulted on the findings, and that the AG surmised that the lack of compliance with the 30% ceiling was "the only basis" for which the land deal could be considered to be null and void. The IAID in fact engaged auditors Price- waterhouseCoopers to confirm the valua- tion of the Old Mint Street building and the other lands granted to Gaffarena. Falzon mounts a defence Falzon however did move in to assume some form of responsibility for granting the expropriation, although he denied any wrongdoing had taken place. He told MaltaToday that he had signed the valuation, carried out on the GPD's orders by a departmental head from the University of Malta's faculty of architecture. Falzon insisted that it was usual practice for the minister responsible for the GPD to sign such valuations by the GPD. But he failed to explain how the lands in question were selected for the compensation, espe- cially since some of the lands abut on prop- erty already owned by Gaffarena. Additionally, his own aide, Clint Scerri, personally accompanied Gaffarena to the GPD so that he could finalise the business on the expropriation and select the lands that would be passed on to him by way of compensation. Falzon said Scerri's job is to assist people seeking the GPD's services. "I spoke to Scerri and frankly I feel the reports against him are unfair. I'm not de- fending him if he did something wrong." In an interview with MaltaToday, Falzon revealed that Gaffarena personally peti- tioned the GPD to have his share of the Val- letta palazzo on Old Mint Street expropri- ated during the summer of 2014. But he also challenged anyone to say that he had com- mitted anything illegal. "I could have gone to the GPD and rum- maged through the documents. But I am here to work. I am man enough to shoul- der my responsibility if I did anything ir- responsible; I have no problem in obeying the Prime Minister if he asks me to suspend myself. But I challenge anyone to say that I did something illegal." He also denied having accepted any po- litical donations from Gaffarena despite his friendship. "Gaffarena came to speak to me on several issues, much like others such as [construction magnates] Nazzareno Vas- sallo and Charles Polidano do," Falzon said. "I receive people on a daily basis. On this particular case I made it clear to him that the matter should only be discussed with the GPD." Falzon even claimed there was nothing suspicious about the fact that Gaffarena had acquired a 25% share in the building in February, just two months before the sec- ond compensation. "Under the previous ad- ministration, contracts were signed in just six days… I am comforted by the fact that all laws, procedures and regulations were followed." He defended the GPD's decision to first expropriate Gaffarena's 25% share, and then proceed on the second 25% share of Old Mint Street. "Yes, it is something that happens… it doesn't happen every day but there were instances where it occurred. You cannot ignore the importance of the build- ing in question, a palace in Valletta that had housed a school and an examination centre. The government risked losing the property by 2028," he said. Falzon has reiterated that there was "no political involvement in the valuation of the properties or the choice of lands". "There are a number of parameters to fol- low when an exchange takes place, includ- ing that the value can't vary more than 30%. The choice of the site is something that GPD discusses with the individual and in- dependent architects value the property. I reiterate that I didn't interfere in the choice of lands." Falzon neither confirmed, nor denied Gaffarena's personal role in choosing the land parcels. "I'd imagine there were dis- cussions on the land choice but I didn't in- terfere at any point. I'm not saying 'yes he was accommodated' or 'no he wasn't'. I'm saying that in no way did I indicate which lands should be passed on," he said. Speaker rules not enough evidence to prove NAO report leak to press Speaker of the House Anglu Farrugia yes- terday ruled that not enough evidence ex- ists to lend credence to Falzon's claims that information from the National Audit Of- fice report was leaked to the press. Delivering his ruling, Farrugia said that he had held a meeting with the Auditor Gen- eral and the deputy Auditor General earlier yesterday – during which they insisted that they had no information that any NAO offi- cials leaked the report to the media or that any journalists had approached them for such information. The Times of Malta reported on Saturday that the NAO report into the expropria- tion deal will be tabled in Parliament on Wednesday and will spark a Cabinet re- shuffle. The paper reported that the findings' main focus is on Falzon, who as planning parliamentary secretary signed the contro- versial deal. In a letter to the Speaker on Monday, Fal- zon urged for the leaks to be investigated before the tabling of the report. However, Farrugia in his brief ruling said that not enough evidence exists to prove unauthorised leakage of information, not- ing that the article itself didn't refer to any leakages. nao report could cost falzon his seat Chronology • Up until the summer of 2014, Marco Gaffarena owned a 25% share that he had acquired back in 2007. • In August 2014, the GPD received a request from the landlords' lawyers demanding the eviction of the Old Mint Street palazzo which housed the BICC, since it was no longer being used as a school as per the original lease agreement. "The GPD risked losing the palace so they went for it," Falzon said – although he also said that the lease was to expire in 2028, somewhat contradicting the impression of the need for an urgent expropriation. • Between 11 August and 28 September, the GPD appointed architect Joseph H. Spiteri to carry out valuations on the Old Mint Street offices, agricultural land at Tal-Handaq where an unlicensed restaurant operates, 26,000 square metres of agricultural land in Haz-Zebbug, and 6,000 square metres of land at Tas-Salvatur in Mqabba. These were all lands granted in compensation to Gaffarena. • In October 2014 a senior GPD architect valued a Sliema shop on Manwel Dimech Street at €65,000. As it happens, Gaffarena had a year earlier purchased the adjoining three-storey house for €72,000. • In November 2014 – as told to MaltaToday by seller Anthony Mercieca – Gaffarena was also busy negotiating with him for the acquisition of another 25% share in the Old Mint Street building, which he eventually bought in February 2015 for just €139,762. • In January 2015, the GPD started the expropriation of 25% of the Old Mint Street building. • In May 2015, after the second 25% expropriation, Gaffarena applied with MEPA to demolish the townhouse and shop to build 10 apartments and a penthouse over four levels. Clint Scerri Marco Gaffarena