Lawyer who spoke to Azzopardi on Lowenbrau redemption says company acted correctly

The Marsovin lawyer who told the National Audit Office he had spoken to Jason Azzopardi prior to redeeming the Lowenbrau factory’s ground rent in 2009, has refused to comment over what sort of political contact the company enjoyed in the lucrative deal it secured on the Qormi land.

Joseph Chetcuti, famed presenter of the makeover show Arani Issa, had told the NAO he had “earlier informed the PS [Parliamentary Secretary] Revenues and Land [Jason Azzopardi] of the company’s intention to redeem the ground rent” on the 21,000 square metres it had on perpetual emphyteusis since 1990.

In the contentious saga over whether the Government Property Department was pressured to drop the Qormi land’s condition to retain a brewery on site, a tit-for-tat between justice minister Owen Bonnici and Jason Azzopardi has left the public none the wiser.

Azzopardi, former parliamentary secretary for lands, is denying even knowing that in 2009 Marsovin redeemed the ground rent on the land it was granted in 1990 – days after signing a €7.8 million promise-of-sale agreement with Vassallo Builders Group Ltd (VBGL) for the land, that was conditional on the removal of an onerous requirement to leave a brewery on site.

The NAO has been unable to determine with any degree of certainty whether political pressure was applied with the GPD to remove the condition for a brewery, part of the deal the government had with Marsovin for the land it rented for Lm10,000 a year, in perpetuity.

The removal of that condition by the GPD was now found to be irregular, and doubly suspicious when it was so instrumental for Marsovin to sell the land, freehold, to VBGL.

The GPD’s chief notary, Keith German processed the redemption of the emphyteusis over a 48-hour period, with approval from director Fred Bezzina. German has denied taking instructions from either Bezzina or former finance minister Tonio Fenech and parliamentary secretary Jason Azzopardi.

But he actually attributed an element of pressure to the Marsovin company secretary, Joseph Chetcuti, who – in turn – denied exerting any pressure, but admitted seeking information from German on any progress registered, as well as informing Azzopardi of the company’s intention to redeem the ground rent.

Contacted yesterday, Chetcuti told MaltaToday he did not wish to comment further on the issue, especially since legal proceedings were still underway. “All I can do is assure you that the company always carried out all its dealings with the greatest responsibility and correctness,” he said.

Owen Bonnici, who leads the charge that Azzopardi should be held politically responsible for the irregularity, said that VBGL chairman Nazzareno Vassallo has stated under oath that when in 2011 the Attorney General demanded he pay a higher premium for the emphyteusis, he met a minister who had reassured him that a compromise would be reached.

Bonnici suggests this compromise was with Azzopardi, who in 2012 appointed a committee of architects to reappraise the value of the brewery condition that had been irregularly removed.

Vassallo would not comment on the latest revelations, and attempts to reach German proved futile.

Reappraising the brewery condition

A big question mark concerns the way in 2012 that a three-man committee of architects led by Prof. Alex Torpiano appraised the value of the brewery condition – an effort on the part of Azzopardi to address the wrongs of the 2009 redemption, raised in the House of Representatives by the then Labour opposition.

Azzopardi had asked Albert Mamo, Commissioner of Lands, and the Attorney General to take action, which resulted in a judicial protest against Vassallo. Vassallo – a PN donor who at that time was building the PN headquarters – was allowed to nominate one of the three-architect committee to re-appraise the brewery condition. 

Vassallo never paid a cent of the reappraised €706,000, because he ‘paid’ the resulting difference from the original redemption value by dropping a claim for expropriation with the GPD on other land he owned. And he still sued the GPD later, with the case still ongoing.

On his part, Prof. Torpiano says that it was the director-general of the Government Property Department at the time who instructed that the valuation of the direct dominium – the brewery condition – be based on ‘1990 values’.

He adds a caveat. “In 1990, the perpetual emphyteusis was set at Lm10,000 – that means the emphyteusis remains unchanged, in perpetuity. That value had to be our starting point in any case, because it would be unchanged at any time the ground rent was redeemed.”

Prof. Torpiano suggests any qualitative difference between the 1990 value of the brewery condition and the 2012 value, would be inflationary. “Any adjustment would be minimal,” he claimed.

The NAO claims that had the GPD retained the condition, it could have demanded at least €7.8 million from Marsovin. Prof. Torpiano contests the assertion: the company could have redeemed the ground rent in 1990 or in 2020, and would still have paid only Lm200,000 (€465,975) – 20 times the emphyteusis, as laid down at law.

The reason the land was granted for just Lm10,000 a year was a way in 1990 for the Nationalist government to encourage Marsovin’s business and investment in the beverage industry.

When in 2012 the architects were told to upscale the value of the brewery condition, they calculated what premium Marsovin would have had to pay, over and above the redeemed ground rent, and that would have been in 1990: €706,400.

Prof. Torpiano insists the architects could not value this condition on a ‘freehold’ basis, because the redemption meant the government had rendered the land free and unencumbered. “It is true that, in 2009, a mistake was made during the redemption process, because the condition limiting the type of industrial use allowed, was removed.”