The €274 million deal the government struck with DB Group and James Caterers is in fact costing taxpayers far more than originally thought, thanks to a revision of the agreement last year that increased the cost by another €53 million.
The investigation by the National Audit Office (NAO) that concluded the ongoing deal is “illegal” did not evaluate the increase in cost in 2020 when the construction of the four blocks at the residence for the elderly was completed, and Social Solidarity Minister Michael Falzon agreed to a 20% increase in costs for services provided.
The new arrangement means the cost of the scandalous deal went from €274 million to €327 million over 15 years.
In its report, the NAO already made it clear that the consortium led by Silvio Debono and James Barbara was charging the government far more than other competitors in the field providing the same services.
Through this revision, the consortium went further, charging the government €60,000 a day instead of the €50,000 originally agreed.
In its investigation, the NAO found that the daily rates on which the original costings were based were flawed and based on inflated prices.
The NAO report states that after reaching a deal in which the consortium was to be given the management of the project for 15 years by direct order, the CEO of St Vincent de Paul Josianne Cutajar, who is a protagonist in this scandal, commissioned an unnamed audit firm to assess the running cost for each bed at the facility at the time.
According to the audit, based on information supplied by St Vincent de Paul, each bed was costing taxpayers €105.50 per night in 2016.
To make the direct order look ‘acceptable,’ the consortium then agreed to charge the government a ‘discounted’ rate of €99.17 per bed per night.
However, the NAO found that the original audit was based on wrong information.
“The rates established (by the audit firm in 2016) were inherently laden with inefficiencies, resultantly false and overstated,” the NAO concluded.
To add insult to injury, just before the new blocks were completed, the prices the consortium were to be paid were revised upwards by another 20% per cent last year.
While the government’s illegal deal is being defended as some achievement in obtaining value for money, this is far from reality.
The NAO findings make it clear that taxpayers are paying much more than they should, with James Caterers and DB group pocketing the highest rates on the island, even when compared to similar private facilities. This did not consider the revision in 2020 for a 20% increase in costs.
In reality, taxpayers are being charged an extra €25,000 a day by the consortium, amounting to €9 million a year.
The owners of the two companies involved, James Barbara of James Caterers and Silvio Debono of DB Group, are well known in political circles for their ‘support’ of the two main political parties and their candidates.
These contributions include direct financial ‘donations’ to the parties and ‘sponsorships’ for social gatherings and catering facilities, particularly during electoral campaigns.
Political candidates host their regular coffee mornings and other activities at venues owned by Silvio Debono, while catering is often ‘procured’ from James Caterers.
In return, both companies have profited from government deals over the years, including the acquisition of public land for hotel extensions and multi-million euro tourism projects, such as the controversial ITS deal, and the building of new catering facilities, including factories.
Despite the findings related to the St Vincent de Paul scandal, neither of the two political parties have made a clear call to end the contract. The Opposition has called for the government to carry political responsibility while the government said it would look into “mistakes”.