No mere mortal: Gaffarena’s unique expropriation carried out fast, and no questions asked from top brass

The Prime Minister’s internal audit and investigations department (IAID) found discrepancies in the valuations of lands transferred to Mark Gaffarena, revealing the ease with which the property developer simply ‘requested’ an expropriation and was then personally accompanied by Michael Falzon’s aide to the Government Property Department (GPD).

While Falzon was adamant with the IAID that he left the matter entirely in the GPD’s hands, his private secretariat’s customer care officer, Clint Scerri, was put in copy of most matters related to the unique expropriation – initiated by none other than Gaffarena’s lawyer way back in July 2014.

In both expropriations of Gaffarena’s two 25% shares of the Old Mint Street palazzo housing government offices, the GPD committed the irregularity of expropriating only his shares – and not the 50% share of the building from all co-owners.

When Gaffarena requested that his 25% share be exchanged for land at Tal-Handaq in Qormi and at Hal Mula, of which he was already the agricultural leaseholder, Michael Falzon directed him to deal with the matter at the GPD.

But director-general Raymond Camilleri told the IAID that since being appointed chief in 2013, it was “the first case when a citizen approached the GPD to have his property expropriated. However there is nothing in the law that prohibits such an expropriation.”

Even the director of estate management (DEM), Carmel Camilleri, said this was “the first case of its type”.

It is usually the government that first publishes the expropriation in the government gazette, and then the owner comes along to either accept the price, or contest the valuation of the land in the Land Arbitration Board; compensation can be made in exchange with other government property.

The Gaffarena land valuations were carried out at breakneck speed between August and November 2014, and then again in February 2015.

June 2015 • Chronology of timely acquisitions suggests GPD intimacy aided compensation

The case for expropriation was not even detailed. The DEM said in his minute on 31 July that “it would be wise to consider this transaction, considering that this property is in Valletta and in future could be utilised for other purposes such as a ministry or museum, while the government property requested is agricultural land.”

But the IAID found no evidence of supporting documentation substantiating the statement. “The timing of this minute is just three working days after the date of a letter sent by Mr Gaffarena through his lawyer.”

Falzon endorsed the DEM’s minute on 11 August 2014: that same day at 11:19am the GPD’s valuations office requested architect Joseph Spiteri to indicate the freehold value of Old Mint Street. The email was marked ‘urgent’ and gave Spiteri seven days to give him a market value. He valued the building that same day.

Later on that same day, Falzon’s aide Clint Scerri accompanied Gaffarena to the GPD offices at 1:15pm to meet the DEM. “Originally Gaffarena met the parliamentary secretary in Castille,” Scerri told the IAID. “He referred the case to me. I accompanied Gaffarena because there was a legal letter from his lawyer which was already sent before.”

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4 June 2015 • Gaffarena offered to sell share in Valletta property before sealing the deal

6 June, 2015 • Member of Michael Falzon’s secretariat cannot explain why he accompanied Gaffarena personally to Government Property Department

Gaffarena had not even finalised the deed of purchase for his second, quarter-share of Old Mint Street when on 13 February 2015 – two weeks before the formal acquisition – he requested the GPD to consider taking another 25% share; architect Spiteri’s valuation came three days later.

On 27 February, the DEM’s minute for acquiring this share was approved by the GPD director and the following Monday, 2 March, Falzon approved the minute: “Make sure that values are reasonable. It makes sense government acquires ownership of said premises thus owning half.”

The following day on 3 March, the GPD referred the file for the publication of the President’s declaration.

GPD organisational structure

But it also turns out that one top official, Commissioner of Land Peter Mamo refused to endorse the payment of €377,500 in cash to Gaffarena because he felt the €822,500 compensation on the second expropriation was “a relatively high amount of money… the payment of the difference of €377500 from the GPD acquisition fund required prior sanctioning before further action.”

This minute was however approved by Michael Falzon that same day, 12 March 2015. “Given that person we are expropriating from is the same person to whom we are transferring land in exchange, and given also that amounts fall within the bracket stipulated by law, we may proceed accordingly.”

Mamo later endorsed Falzon’s approval when the file was referred back to him.

What is the legal basis to recoup the lands?

The IAID has confirmed that the value of government land transferred to Marco Gaffarena had been in excess of a 30% ceiling set in the Disposal of Government Land Act, that will give government a legal basis on which to recoup the lands passed on to Gaffarena.

The report, carried out by the Prime Minister’s internal audit and investigations department, found that the Government Property Department (GPD) failed in promoting the profitable use of government property when it gave Gaffarena €1.65 million in a cash-and-land compensation in two expropriation processes for his two, quarter-shares of 36, Old Mint Street, Valetta – a palazzo housing the BICC government offices.

The IAID found that the value of government land transferred to Gaffarena – namely €683,000 for the January expropriation and €445,000 in the April expropriation – was in excess of a 30% ceiling set out in the Disposal of Government Land Act.

There was no formal policy in place when it came to appointing architect Joseph Spiteri to value the lands. The IAID found a lack of rotation when it came it outsourced architects. “Property valuations are considered as highly sensitive and consequently rotation of architects deserves immediate attention.”

As an example, the IAID said Spiteri valued the Old Mint Street building, of 445 square metres at €3.29 million when another architect had valued the Old University building in St Paul’s Street in Valletta, with a footprint of 2,100 square metres, at €3.3 million.

The IAID found that in two separate valuations he made of a 12,000 square metre site in Siggiewi in January and August, Spiteri appreciated the original €123,000 value to €210,000, claiming this was “fair appreciation”.

And as for Gaffarena’s two sites in Bahar ic-Caghaq, Spiteri first valued in November 2014 the 3,437 square metre parcel at €250,000 (€72.74/sq.m), and an additional 298 square metres at €10,000 (€33.56) in December 2014. Then, in the second expropriation, the adjacent site of 1,663 square metres was valued at €42.09/sq.m – a total of €70,000.

Additionally in all valuations for Gaffarena’s six properties, the “marriage value” – the strategic value of the property – was not taken into consideration.