Labour to lease former Raffles disco, part of 1970s expropriation deal

The Labour Party is setting out an expression of interest for the commercial lease of the former Raffles discotheque in St Andrew’s.

The PL was granted the land back in the 1970s as compensation for Marsa land expropriated by the same Labour government of the day to build the Malta Shipbuilding.

The Marsa land was originally acquired from the private sector in 1963, where it was earmarked for its headquarters, a printing press, and a theatre. The land, located on the inner harbour, was identified by the government as the ideal location for its shipbuilding enterprise, so it proceeded to expropriate the land from Labour.

In exchange, the party was granted the 6,000 sq.m of land in Pembroke which included Australia Hall, which served as a theatre for British servicemen living in the barracks nearby, as well as the Admiralty House that later became ‘Raffles’ discotheque, and the British army force’s cook house.

The Labour Party is now being accused of having undervalued the land and property occupied by the historic Australia Hall in Pembroke, by millions, and has been called upon by the Inland Revenue Department to pay up thousands in capital gains tax.

The PL is opposing the tax charge by the Commissioner for Tax, who first said the Australia Hall land was worth nothing less than €5.5 million – merely months after the party sold the land – and then revised the value downwards to €2,025,000.

In 1997, the party entered into a promise-of-sale agreement with the company Tamarac, a company owned by the Fino business group, to sell Australia Hall. Then Labour prime minister Alfred Sant cancelled Lm250,000 (€600,000) in arrears owed by his own party on government lands since 1979, through a parliamentary motion.

The Nationalist government, which took power in 1998, however filed a constitutional case so that it could request a parliamentary resolution to rescind the 1979 expropriation deal, claiming the property compensation had not been a fair one.

The promise-of-sale was renewed periodically, until the Nationalist government ceded the constitutional case. At that point, Tamarac moved to seal the deal, but the Labour Party wanted to renegotiate the price of the land. This prompted Tamarac to start its own legal action against the Labour Party, and in 2010, the PN government opened a new case, this time to take the land back through the Lands Department. To counter this last action, Labour requested that the government return the land at the Malta Shipbuilding if it was to lose the land at Pembroke.

Labour finally sold the land to Fino subsidiary A.H. Development in 2014 for just €582,000, claiming it had also settled an unspecified amount of debt with the buyers.

The party is now opposing the tax assessment in court, after it was told to pay an additional €14,426 in capital gains tax over and above the €23,296 first incurred on the original selling price.

The party is also claiming it is exempt from paying capital gains tax, since political parties do not pay income tax – a claim that is being opposed by the Commissioner for Tax, who has told a court that nobody is exempt from capital gains tax.