Resolution on longstanding issue made Café Premier deal ‘value for money’

Bonnici: Resolution on longstanding issue made Café Premier deal ‘value for money’

Justice Minister Owen Bonnici defended the Cabinet’s approval of a €4.2 million acquisition of a government lease to the owners of the Café Premier in Valletta, arguing that “value for money was rendered with the settling of a long-standing issue”.

Speaking to MaltaToday, the minister insisted that the government took “the bull by the horns” and addressed the problem by approving the settlement and returning the property back to the people.

“We were elected to take decisions. We found several problems waiting to be settled and Café Premier was one of them. We are a government that decides and we tackled this one by offering a settlement,” Bonnici said.

He added that he was comforted by the NAO’s statement that its estimate of the property value was higher than the government’s own estimate.

“The NAO report cannot be ignored and we have to learn from its considerations,” Bonnici said, adding that he himself had read the report to ensure that certain mistakes are not repeated.

An investigation by the National Audit Office has found reservations in the way the value was achieved and a lack of governance.

The NAO said it had reservations regarding the manner by which €4.2 million reacquisition of the lease held by Cities Entertainment Ltd when it had fallen behind on its rent. The money was used to pay back the State its dues in rent, VAT, tax, energy, and other debts to Banif Bank.
It said the price reflected a fair market value, but that this did not necessarily imply that value for money was achieved.

In early April 2013, a Cities Entertainment director wrote to the Prime Minister and negotiations between CE and government were concluded in August 2013, and the matter approved by Cabinet in September 2013. On 29 January 2014, Government and CE signed an agreement whereby Government bought back the lease for €4,200,000.

This resulted in the eventual withdrawal of legal proceedings without clear justification or documentation, which action detracted from the required level of transparency expected in such a decision, the NAO said.

“This must be seen within a context where the tenant, CE, was in breach of the lease agreement, as the three-year threshold in ground rent payments had been exceeded when negotiations commenced. Poor governance was a factor central to this shortcoming, with Government’s negotiating team failing to involve the Government Property Department from the initial stages of negotiations,” the NAO found.

Government’s justification for the reacquisition of the Café Premier focused on four main objectives, namely, the removal of possible danger posed to the National Library, the provision of greater accessibility, resolution of the problem of arrears faced by CE and the re-dimensioning of available space.

However, the NAO said the absence of documentation substantiating these policy objectives was considered as a significant shortcoming.