Café Premier | Labour deputy leader calls for blacklist of defaulting tenderers

Labour deputy leader for party affairs Toni Abela has called for a blacklist on tenderers for public contracts, if they fail to pay their dues to the State or live up to conditions on government leases and contracts.

Abela was commenting on the Café Premier saga in a phone-in on RTK Radio, after the Auditor General revealed numerous shortcomings in the way the government reacquired a 65-year-lease from Cities Entertainment Ltd, for €4.2 million.

“The success of a tender lies in who gets in the first place… a system of due diligence on those who tender for a contract would ensure they are first in a position to pay,” Abela said.

“Instead we are lumbered with a system that has seen leaseholders failing to pay their taxes, their rental arrears, and leaving the government no choice but to spend years in court trying to recoup what they are due.”

READ MORE Café Premier owners get €4.2 million in amicable ‘bailout’

Abela defended the Auditor General’s report into the Café Premier bailout, which has been dubbed “scandalous” by the Opposition.

“I have consistently harped on the principles of accountability and transparency… to me the Auditor General is a sacred institution that gives me peace of mind, be it under administration. There has never been any major tender that the Auditor General did not tear to pieces.”

But Abela also said that the Labour government had welcomed the NAO report with the necessary serenity of a government that would take note of the failings identified.

“We are taking note of the shortcomings pointed out. I have a long list of episodes when the former administration was unwilling to accept the Auditor General’s verdicts: the BWSC audit, the minister threatening the Auditor on the Voice of the Mediterranean report, even the Ombudsman was demonised. The difference this time is that this government has taken the Auditor General’s decision with serenity.”

Abela’s comments came soon after shadow justice minister Jason Azzopardi dubbed the Café Premier bailout as “scandalous”, saying the Prime Minister had entered into negotiations to reclaim a property that was government’s in the first place, paying taxpayers’ cash when a private operator was already making an offer.

“What interest did Joseph Muscat have in doing this? This is scandalous. Not even the government’s own valuation of the property was included in the Government Property Department’s file on Café Premier –  a sign that there was an interest in keeping this deal hidden.”

Instead of forging ahead with its court action to recoup the arrears that had to be paid by Cities Entertainment, or even dissolve the emphyteutical grant - as the government was empowered to - the Government Property Department paid Cities Entertainment €4.2 million for the return of the lease.

Of the total sum, the owners had to pay back: €307,346 to settle outstanding arrears with the government property division and €504,000 in capital gains tax owed on the land; then the sum of €192,748 to the Inland Revenue Department to settle income tax and social security payments, €227,058 to the VAT Department on outstanding dues and legal procedures against the company, and €130,963 in energy bills for ARMS; and also €210,000 to the company's own shareholders M&A Investments - a 5% commission on the €4.2 million - and €3,265 to creditors Golden Harvest.

Finally, another €2,560,800 was paid to Banif Bank, in settlement of the outstanding bank loans that Cities Entertainment held with the bank, payable in four instalments.