Old guard’s disgust over Qala sign of unease on Labour’s pact with big business

There is no easy way to speculate over two unexpected developments, both relating to Malta’s contentious planning regime.

The first was the resignation of the Planning Authority’s executive chairman Johann Buttgieg, believed to have had frigid relations with the transport and infrastructure minister Ian Borg. The second was Gozo developer Joseph Portelli’s decision to renounce a permit from the PA board – largely thanks to its government appointees.

Portelli yesterday took aim at the PA, claiming it had placed his application to turn a countryside ruin into a villa under excessive scrutiny. It was an indirect reference to Buttigieg, the latter having previously claimed that Portelli, and some of his business associates, view him with “antagonism”.

Buttigieg last week said he will resign, but asked to be placed at the helm of either the tourism authority or Mater Dei hospital, both under the purview of two ministers vying to be Labour leaders one day. It is clear he is passing into somebody else’s slipstream. Portelli’s fortunes on the other hand do not include just development, but also the recruitment of foreign workers on Malta’s expansive roadworks, which fall under Ian Borg.

Clearly the din of outrage at the PA’s vote on the Qala project, also opposed by the Labour-led local council, was too loud to ignore.

Former Labour leader and MEP Alfred Sant demanded the PA issues a public and detailed explanation on its “risky decision” when it was recommended not to issue the permit. “The PA should properly list the reasons that led to the decision, given that there was dubious evidence for the development of the site. If this explanation is not convincing, it is no wonder that one gets suspicious over how judiciously the PA carries out its duties.”

News of Portelli stepping back from the permit brought with it a new condemnation, with Sant calling on Elizabeth Ellul, the chairman of the PA’s planning commission, to step down over an alleged conflict of interest. “The tactic on environmental destruction is clear: get your foot in the door to force it open, then stuff your knee and finally open it wide open,” he said of Malta’s maligned planning regime. “Those who are expected to defend us from this flood cannot look like they are benefiting from it.”

Another Sant ally, former Labour secretary-general Jason Micallef, also piped up. “Disgraceful. Shameless. This government and the absolute majority of its electors do not deserve this. This mess should be stopped before it is too late. Labour should have the internal means of bringing to the government’s attention such strange decisions.”

So who is Joseph Portelli, anyway?

Before Labour was elected to power in 2013, little was known of the Gozitan businessman behind the Zaha Hadid-designed, 32-storey Mercury high-rise in Paceville, even though he had been a successful developer on the sister island.

Yet over the past six years, the realtor has grown into one of Malta’s foremost developers, whose footprint can be witnessed in the various, bold statements that carry his signature. In the quaint hamlet of Mensija, Portelli wants a six-storey luxury apartment block that will effectively kill the streetscape. Behind the Intercontinental Hotel on St George’s Road, just a stone’s throw away from Mercury House, he plans a 15-storey hotel for 50 studio apartments; in Mellieha, a nine-storey residential complex; and he brings together investors in a reported €90 million offer for Jerma hotel site and also fronts a Maltese group recruiting Turkish workers for the island’s infrastructural reconstruction.

Mercury House in Paceville

Earlier this week, Portelli became just the latest beneficiary of the ill-thought out rules the Planning Authority devised in 2014, which allows landowners like him to turn old, derelict, countryside ruins on land outside development zones, into larger villas. Those rules short-circuited previous rules banning construction outside the building zones, by allowing landowners to ‘prove’ that the ruins once provided someone a domicile – usually with an old telephone book entry or historical reference that it was once lived in.

The Planning Authority approved a controversial permit to redevelop a 31sq.m countryside ruin into a 114sq.m villa and a swimming pool on the pristine Qala coast, on land belonging to Portelli, despite objections from the Labour-led Qala local council and the Environment and Resources Authority. Even the PA’s own directorate recommended refusal. Portelli carried the day, thanks to all Labour government-appointed members on the PA board voting in favour, and also with the assistance of lawyer and former PA chief executive officer Ian Stafrace, acting on his behalf.

“A doer from day one,” Portelli says of himself on his company website. A self-made businessman who did not look back after his first house-flip. Earlier this year, he reported that his yet unbuilt Mercury House already had 92% of its prospective apartments placed under promise-of-sale agreements. With 260 apartments to be constructed in the tower, as at end-2018 almost all of these units had been prospected to be sold by preliminary agreements, including Malta and international buyers – some of whom had committed to buy entire floors – for at least €32 million.

Today he is sub-letting the former Nationalist minister and European commissioner John Dalli’s offices in Portomaso, and even employs his daughter Claire Gauci Borda, who handles finances for him. Dalli this week denied to MaltaToday that he handles any aspect of the Portelli business or that he presents clients to him.

Former EU Commissioner John Dalli

But added in this mix of success, is a curious and unfriendly exchange with the outgoing PA boss. Johann Buttigieg had claimed Portelli and two developers of his Mellieha hotel project, Daniel Refalo and Mark Agius, had shown “antagonism” towards him, leading him to abstain from the PA vote on the hotel project over a conflict of interest “in view of allegations made towards him by the applicant”.

“There was antagonism against me personally from one of the developers involved in the project,” Buttigieg had said, probably emanating from his close friendship to hotelier Adrian Buttigieg, the owner of the neighbouring La Salita and Maritim hotels in Mellieha. Johann Buttigieg’s wife had in the past been a business partner of Adrian Buttigieg, who also happens to be godfather to one of their sons.

Planning Authority executive chairman Johann Buttigieg (Photo by Ray Attard)

Yet curiously, Portelli and Adrian Buttigieg enjoyed a business relationship of sorts.

Just after August 2018, Portelli – who was then the sole owner of Mercury House’s bond finance company – had issued Adrian Buttigieg with 50% of share capital. But only a few months later, Portelli and Buttigieg agreed the latter would no longer be involved in the project, and by December Portelli was once again the sole owner of Mercury Projects Finance.

Johann Buttigieg has always denied having business interests with Adrian Buttigieg.

Just how far Portelli’s influence has grown inside the inner circle of Labour’s government is yet to be established. Both his business and influence on development and infrastructure expansion cannot be ignored. Yet some cracks were visible this week, and all came straight out of the shaky edifice that is the Planning Authority.