Updated |PN, MFCC publish denial of Vassallo donations to electoral campaign

Updates, adds PL reaction.

The Nationalist Party has "categorically denied" that the company MFCC Ltd, partly owned by PN donor Nazzareno Vassallo, had written off €1 million the party owed to the company for events-related services.

In a letter to MaltaToday, PN secretary-general also denied that Vassallo had committed or paid €350,000 to the PN for the 2013 electoral campaign.

"The PN has rented the services of the MFCC as well as other suppliers to organise its activities on commercial arrangements involving payment, including barter agreements, as is normal practice for both parties."

Borg Olivier has demanded that MaltaToday's story be retracted, claiming the PN will take legal steps against this newspaper.

MFCC directors Nazzareno Vassallo and Ruben Caruana also denied the allegations as being "totally incorrect and untrue... the company provides its services to a mix of companies and organisers, including political parties. This was a policy adopted by the former directors and shareholders of the company and continues to be followed by the existing directors and shareholders."

Documents seen by MaltaToday reveal construction magnate Nazzareno Vassallo approved a budgeted sum of €350,000 in expenses for the Nationalist Party's electoral campaign, through a company he bought into when the company had already been crippled by almost €1 million in bad debts.

The respective sums of €250,000 for February and €100,000 for March under the entry 'electoral campaign' were approved during the last company board meeting of the Malta Fairs and Conventions Centre (MFCC Ltd.), of which Vassallo became chairman and director through his joint-venture catering company Catermax, with the Corinthia Group.

The monies were approved on 11 January, 2013 following various board discussions about the Nationalist Party's pressing needs to have tents, stages and other equipment set up for its electoral roadshow until voting day on 9 March.

Vassallo, formerly PN mayor in Mosta and widely regarded to be one of the PN's main donors, took over 65% of MFCC in 2011, when the company - then run in partnership between Nexos Lighting and Sign-It Ltd - faced near bankruptcy with one of its largest debtors, the Nationalist Party, had debts of almost €1 million since the company's inception, written off.

News of Vassallo's donations to the PN come in the wake of a bitter feud between the magnate and former business partner Ruben Caruana, who before setting up Sign-It Ltd had been employed by the PN as its outdoor activities coordinator.

It is said Caruana bent himself backwards in giving the party his stages, equipment and manpower for the September Independence activities over the past years, but only received minor payments in return, many of which were bartered.

Caruana, who still holds a 35% shareholding in MFCC through Sign-It Limited, the company which started out the Ta' Qali tent venture, was this week locked-out by order of Nazzareno Vassallo.

The lock-out, complete with all phones disconnected and office door locks changed, was interpreted as a coup by Vassallo on Caruana having diluted his share value within the company, which remains heavily indebted after no new capital was injected by Vassallo despite his takeover in 2011.

The company allegedly continues to rely heavily on bank borrowing, and the accrual of a hefty, unsecured and low-interest loan obtained in 2008 during the merger with the Malta Trade Fairs Corporation that set up the Malta trade fair under the MFCC tent when it relocated from the Naxxar trade fair grounds.

That debt was on the verge of a call-in during 2009 until the new board of directors, then composed of Nexos and Sign-It shareholders, reached new repayment terms.

Notwithstanding this precarious situation, the PN allegedly pressured MFCC shareholders to supply it with its equipment and manpower.

Following on from the PN's and MFCC's denials, the PL has put the ball in the PN's court, challenging Lawrence Gonzi to publish his Party's accounts, as is the practice of the Labour Party.

"Prime Minister Lawrence Gonzi lacks all credibility when speaking about relationships with contractors. It is worth bearing in mind that it was not a member of the Labour Party that went gallivanting on a yacht around Europe with a businessperson who had been granted a government contract worth 1 million", a PL spokesperson said.

"Lawrence Gonzi is obliged to provide answers on how much the Nationalist Party has received in donations from Zaren Vassallo over the past eight years. The onus is on Lawrence Gonzi to answer to, and publish the details and values of contracts awarded to Zaren Vassallo's company over the past years," the spokesperson continued.

The PL has also called on Gonzi to answer to allegations that PN officials have put pressure on business magnates to donate money to the Party coffers.

On the PL's MEPA proposal, the spokesperson pointed out that environmental NGO's have long asked for MEPA to be split, in order to give more focus on the environment.

"Under a new government, environmental policy will no longer fall under a directorate, but under an Authority that will also have a vote on the planning Authority. Environmental NGO's will be granted a vote on the planning authority, whereas persons on the planning authority will not have a vote on the environmental authority," the spokesperson said.