Cassola gives NAO list of reasons to investigate Fortina deal

Green politician Arnold Cassola has written to the Auditor General to request an investigation into the granting of public land to the owners of the Fortina Hotel, citing several grounds for the contract to be rescinded.

The hotel is currently working on the addition of five storeys to the existing hotel tower, a 15-storey block of 109 apartments as well as a ground-floor 3,500sq.m shopping mall and three levels of underground parking. The development also includes a 2,460sq.m open space set between the refurbished five-star hotel, the spa block and the residential complex.

The letter, sent yesterday to Charles Deguara at the National Audit Office (NAO) asks Deguara to investigate as to whether there has been full adherence to the contractual terms in contracts pertaining to the disposal of public land by the government and whether there has been a transparent and fair process for the evaluation of public land and “rescission of servitudes over public property to private interests.”

Cassola asked the NAO to query whether there has been effective monitoring by the Government Property Division and its successor, the Lands Authority, to ensure that the terms of the contract or contracts transferring public land to private parties have been respected and whether the law regarding the disposal of public land has been adhered to in all aspects.

The NAO was also asked to investigate whether “the Lands Authority and/or the Planning Authority have acted with the required degree of prudence and exerted sufficient standards of scrutiny to ensure that the terms of the contracts transferring public land have been adhered to, and not circumvented.”

In addition, it was asked to establish whether there was transparency and a level playing field during the evaluation process and the decision as to the amount of compensation for the waiver of any conditions.

Finally, Cassola asked the NAO to confirm whether fair and good value for money has been obtained and whether factors such as public and social wellbeing have been taken into consideration.

Background: A deal in three parts

Cassola said it transpired that the land in question was transferred by title of emphyteusis in three separate deeds dated 1991, 1996 and 2000 respectively.

This information was published by the former Minister for Lands, Transport and Infrastructure Ian Borg in parliament Borg in reply to a parliamentary question filed by Nationalist MP Karol Aquilina.

• 1991 contract (dated 12th June 1991)
  The first plot of land consisting of 465sq.m was sold for €256,000 in 1991 as an extension of the Fortina Hotel complex.
• 1996 contract (dated 25th January 1996)
  The second plot consisting of 2,992sq.m was sold for €250,000 in 1996 for the “exclusive use as an extension of the Fortina Hotel.”  One of the conditions specifies that any “building permit” on the site is at the discretion of the Commissioner of Lands. 
• 2000 contract (dated 15th February 2000)
  The third plot consisting of 1,421 sqm was sold for €920,000 in 2000.

Breach of Emphyteutical condition

But Cassola says there was a fourth contract dated 15th January 2000, in which it is stated that the emphyteuta are obliged to provide a bocci pitch and attendant facilities for free to the public. The clause states that if the bocci pitch is not situated within the confines of the site, it has to be relocated elsewhere and also be accessible for free to the public.

“There is no evidence that this clause has been complied with. Nor is there any evidence of a rescission of this servitude or obligation,” Cassola said, contending that such a recission would require parliamentary authorisation as well as payment to the government, commensurate with the market value of the land. There is no information or record of this payment being made, he added.

Other clauses restrict the construction of buildings in the area other than those specified in the contract and that any buildings constructed should not exceed the height of the road levels specified in the contract. “There is very clear evidence to show that these conditions were not respected.”

But the recently approved development application PA 6252/17 clearly showed that multi-storey buildings will be erected, rising well above the level allowed by the initial emphytheutical deed.

The application approved is for: "Demolition of existing 4 star hotel and the Spa Wing of the 5 star hotel, and excavation of site. Construction of 3 levels of below ground car parking; construction of ground floor retail complex under a landscaped Public Open Space; and construction of residential complex rising to a maximum of 15 floors above street level. Development also to include complete refurbishment (including internal alterations) of the existing 5 star hotel, the construction of five additional floors on the hotel tower and construction of stepped hotel block rising to 13 floors above the plaza, in place of the Spa Wing."

Evaluating Committee not given access to contracts and was misinformed regarding onerous conditions

Three architects had been contracted by the Lands Authority to evaluate the property, explained Cassola. These architects claim that they were not provided with the relevant contracts and furthermore they were informed that the property was freehold and that there were no onerous conditions attached to the contract. “This is clearly incorrect as the conditions explained above are onerous and impact the evaluation of the property. It is also untoward to have an evaluation without scrutinising title deeds,” wrote Cassola.

Former CEO of Lands Authority associated with Fortina owners

Cassola further pointed out that the former CEO of the Lands Authority while these evaluations were taking place was James Piscopo, whom he described as “a business partner of the owners of the Fortina site and is now acting as their consultant following his departure from the Lands Authority.”

“It is not known whether this had any impact on the evaluation proċess,” Cassola said.