Updated with Repubblika’s reaction

The National Audit Office (NAO) has highlighted major concerns and discrepancies in the site transfer of the Institute of Tourism Studies.

In a report tabled in parliament on Wednesday, the NAO said that Projects Malta Ltd, who issued the tender, had failed to obtain the authorisation from the Contracts Department prior to issuing a request for proposals in November 2015. 

“This omission casts doubt on the regularity of the Request for Proposals (RfP),” the NAO wrote.

Projects Malta was the government’s privatisation arm for which former Tourism Minister Konrad Mizzi was responsible. The body was the umbrella under which several Public Private Partnerships (PPPs) have been established, including the Steward Healthcare hospital privatisation deal.

Mizzi remained in charge of Projects Malta even after he was stripped from his energy portfolio following the Panama Papers expose. 

The report explained that since the government had intentionally classified the land transfer as a concession rather than being processed in terms of the Disposal of Government Land Acts, “this created additional obligations on government in terms of the Public Procurement Regulations.”

The key concern which emerged “was that Projects Malta Ltd was not listed in any of the schedules of the Public Procurement Regulations at the time of the issue of the RfP,” the NAO said.

This resulted in the classification by default of Projects Malta under Schedule 2 of these regulations, which necessitated that procurement beyond a certain threshold, such as the case of this concession, be affected through the Department of Contracts.

In this case, the involvement of the Department of Contracts was not sought, casting doubt on the regularity of the RfP, the report concluded.

Concern was also raised over the decision to dispose of the ITS site which was “inappropriately prioritised” over finding a new location for the school.

“Reason would dictate that the inverse should have happened… the false sense of urgency that drove the government to dispose of the site, despite the fact that no alternative premises had yet been secured for the ITS and that the development of the masterplan had not yet been set, was of concern,” the report said.

It revealed that they found no reference to the plan to relocate the institute featuring in any document or related policy and that the decision to relocate was not supported by analysis.

The government also failed to involve the ITS Board of Governors in a key strategic decision such as this, it said.

In a controversial move, the land had been given to Silvio Debono’s DB Group to build a massive complex including a hotel, a retail area, and a residential area, among other facilities.

The NAO said the origin of the decision to dispose of the site was unclear. This was of “grave concern” to the audit office, given the nature of the site.

The report said the office was unable to establish who was involved in the decision, and they were provided with “conflicting accounts” from the Office of the Prime Minister and the Ministry of Tourism “each assigning responsibility to the other,” it said.

The damming report also highlighted concerns about transparency when it came to information disclosed in the RfP, raising further doubts about the regularity of the proposal.

The report also noted that the residential component of the project, which was key to securing its viability, was given “limited exposure” in the government’s call. The DB Group was the sole bidder amid great controversy at the time.

No records of negotiations undertaken were made available, disallowing the office from understanding the negotiation process, the NAO pointed out. 

“These concerns arise not only in respect of the meetings held by the Negotiation Committee but also extends to others held with various Ministers of Government towards the end of the negotiation process,” it said.

In a statement, civil society NGO Repubblika called for a public inquiry to determine responsibility for the decisions about the transfer of land and said the police must investigate the suspicion of corruption in the deal. It was imperative that the land, which is of public domain, be given back to the Maltese people.

The 99-year deed was entered into in February 2017. The Planning Authority approved the development application in September 2018 but the Appeals Court ruled against the permit the following June.

The company then submitted a fresh application for excavation works despite the original application still being active.

The NAO began to review the land transfer in January 2019, almost two years after it was requested to do so by the Public Accounts Committee in March 2017.