Updated | ‘Stop Corinthia deal or face Brussels’ businessmen warn Maltese MPs, government reacts

A consortium of Maltese businesses with an alleged interest in developing the so called ‘Golden Mile’ in Paceville and St George’s Bay, have written to MPs to stop the transfer of a 99-year lease to International Hotel Investments, owners of the Corinthia hotels. 

In a letter to MPs from TCVMamo lawyer Joseph Camilleri, in the name of the Foresite consortium, lawmakers were supplicated to stop the €52 million deal for Corinthia to develop its six-star tourism and residential complex, at a price they said was “far below market price and without having issued a tender.” 

IHI holds a lease on the land at St George’s Bay where it owns three hotels, but it wants to raze two of them and redevelop its Corinthia San Gorg hotel into a six-star hotel, as well as have the lease extended to 99 years, and for MPs to remove the restriction on tourism development to develop two high-rise residential blocks on the coastline. The price has been radically reduced by tourism minister Konrad Mizzi so that it compensates for the two hotels that will be demolished.

“IHI will benefit from a substantial waiver of public revenues by the government, an unfair advantage which will lead to distortion of a level-playing field within the Maltese tourist industry. This is in breach of EU state aid rules, which require that, when granting concessions for public land, the government should act in a commercially sensible way like any market economy operator.

“Any legal act in conflict with EU state aid law cannot be enforced. Unlawful state aid is void and has to be recovered from the beneficiary with interest. 

“There is still time to stop this from happening. Hence our appeal to you,” MPs were told in in the letter. 

[WATCH] Corinthia boss Alfred Pisani defends his project: ‘you must always accept progress’

Foresite also warned they will proceed with a formal report to the European Commission and other authorities, as well as court action in Malta, on what it said was a “clear breach of State aid regulations”. 

The MPs were told that with the deal, in which IHI pays just a €17 million premium while the rest of the €35 million is paid in ground rent redemptions, the hotels multinational would have received “a discriminatory gain from State resources”. 

“Thanks to the proposed deal, the government of Malta would effectively be granting special and exclusive rights on land owned by the government to IHI, in an entirely arbitrary manner and following no form of call for the expression of interest or consultation with other potential bidders,” the Foresite consortium said, quoting case of EU state aid breaches. 

Foresite said the grant of public land to IHI, was not a normal market condition but a direct State intervention. “By replacing the existing concessions by a new concession, the government is categorically granting unto IHI special and exclusive rights in an arbitrary manner and without granting the same opportunity to competitors in the market.” 

Foresite said that there was no doubt this was State aid, granted at values far less than the true property market price, as well as allowing IHI to redeem the land to transfer it third parties at a premium in their favour.

Government statement

In a reaction, the government said it could not ascertain the interests of the anonymous group of businessmen, but said it was still engaged in the process of the IHI transfer.

“Clearly the government would not enter into any transaction in relation to which it would have received expert advice that it was not consistent with Maltese or EU laws.

“There will be a parliamentary interface as regards the conclusion of such a transaction, as provided by the law, and this will naturally fully respect its EU obligations. As a matter of standard practice, the government is addressing in an appropriate manner the points raised by the various stakeholders.

“The government maintains that this would be a very important project and tallies with its vision to aim towards a more qualitative level of tourism based on value rather than volume, through the creation of a six-star luxury environment so necessary for Malta. IHI would also be undertaking significant investment, with significantly direct and indirect income for the government, and creating tangible benefits to Malta.”