Malta Business Registry’s €31m rent for bathroom showroom ‘prohibitive’ – Auditor General

The premises the Malta Business Registry (MBR) chose for the location of its offices has caused concern, according to the Auditor General’s latest report describing the €2 million per year being paid by taxpayers for a showroom in Zejtun as “prohibitive”.

The audit found that through a 15-year agreement, signed in 2018 under the guidance of Economy Minister Silvio Schembri, the government will be paying a total of €31,264,126 to use the premises at Alex Mercieca’s Bathroom Centre.

In addition, the lease agreement, which was concluded following an expression of interest instead of a proper public tender, did not include expenses amounting to more than €5 million, also funded by taxpayers, for the shell form floors to be transformed into offices.

All these publicly funded improvements will be passed back to the owner of the private building at the end of the lease in 2033.

The NAO’s audit found these costs “prohibitive” and warned that this contract “raises questions on value for money”.

Just a few weeks ago, Minister Silvio Schembri refused to publish the lease agreement for the MBR premises but insisted that the lease was costing the government less than half a million a year.

A scandalous deal

Until a few years ago, the Malta Business Registry formed part of the MFSA and produced substantial revenue for the Authority.

When the since-disgraced Joseph Cuschieri was appointed to lead the MFSA, he decided that the registry should become a different government entity with its own premises and administration, significantly increasing its operating costs.

MBR new offices inauguration – now-disgraced former Prime Minister Joseph Muscat, CEO Joseph Farrugi and Minister Silvio Schembri addressing employees

The MBR moved to a bathroom showroom in Zejtun and signed a contract while the site was still under construction.

Through this 15-year agreement, the MBR agreed to lease several floors and car parking spaces in shell form.

Instead of obliging the owner to finish the building to its required standards, the MBR decided to conduct this massive infrastructural work itself, paid by taxpayers.

The lease agreement was amended a year later, allowing the government to rent more space in the same building, paying the owner much more than his original bid.

This government deal will eventually mean that at the end of the lease Alex Mercieca will get back a fully finished building paid by taxpayers.

The NAO found that the MBR spent as much as €5.1 million on “building improvements” including almost €1 million for heating, ventilation and air conditioning.

The MBR also agreed that the annual lease was to increase by 3% every year for the 15-year period, independently from actual inflation costs.

In its report, the NAO noted that while “the evaluation process for the award of this contract was properly documented and backed up by a lease agreement, “payment of over €26 million in rent for premises, which at the end of the lease term will still be property of the lessor, raises questions from a value for money perspective.”

MBR paying company for canteen business

The lucrative rent contract was not the only area found to be lacking by the NAO.

The Auditor  found that part of the newly leased premises is now being used by a caterer to provide a canteen service to the MBR’s 130 members of staff.

However, through a three-year contract, the caterer is not paying any rent for conducting his business and instead is getting paid €40,000 a year from public funds to provide daily meals for the MBR’s staff “at a fixed subsidised process”.

All profit made from this business venture is retained by the caterer, who doesn’t pay any rent at all for using the fully equipped kitchen paid for by the MBR.

In its investigation, the NAO also found several other irregularities in procurement including the expenditure of hundreds of thousands of euros on security and cleaning tenders.

                           
                               
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Jools Seizure
Jools Seizure
8 months ago

They were so vociferous about €19 million spent to BUY a ten-storey property in central Brussels! But you know, RENTING in Żejtun is probably more expensive than BUYING in Brussels.

James
James
8 months ago

Sounds about right… rip iff the tax payers and then hand it back free of charge to the owner at the end of the 15 year agreement.

I wonder if the FIU can smell the same rat as the rest of us do and will order a forensic examination of the bank accounts which receive the rent to see where these funds eventually end up.

Just a suggestion…

Lisa
Lisa
8 months ago

The auditors of Alex Mercieca Bathroom Centre (C63136) happen to be Nexia BT!! What a surprise.

The company was registered in December 2013, just after Labour got into power. Yet, another surprise!

Gee Mke
Gee Mke
8 months ago
Reply to  Lisa

Incredible

Brenda
Brenda
8 months ago
Reply to  Gee Mke

Other companies of Alex Mercieca such as Villa Fermaux Limited and A & R Mercieca Limited, also happen to have Nexia BT as auditors.

Paul Bonello
Paul Bonello
8 months ago
Reply to  Gee Mke

Most credible I would say, rather than incredible. As we say in Maltese KMB, Kollox Maghmul Bizzilla

John Cutajar
John Cutajar
8 months ago
Reply to  Lisa

Looks like Freemasons at work.

Paul Bonello
Paul Bonello
8 months ago
Reply to  John Cutajar

Not really; more like pigs at the trough at all ends of the contract

Franco Galea
Franco Galea
8 months ago
Reply to  Lisa

Someone may want to check whether Alex Mercieca is a front for a certain former labour leader of opposition…

carlos
8 months ago

Incredible but true. IS IT POSSIBLE THAT THE GAHAN MALTI CAN TAKE ALL THIS?

Jools Seizure
Jools Seizure
8 months ago
Reply to  carlos

Of course it is!

Joe Borg
Joe Borg
8 months ago
Reply to  carlos

Without doubt.

Elizabeth Ellul
Elizabeth Ellul
7 months ago
Reply to  carlos

Once it’s not on ONE TV they probably won’t know about it. Control the content on TV stations and subsequently, control Gahan!

carlos
8 months ago

Malajr tghallem silvio. Kollha pizza Wanda- jisirqu l-haddiem malti -ISTHU

saviour mamo
saviour mamo
8 months ago

This government is milking us dry.

Carnel camilleri
Carnel camilleri
8 months ago

Such generosity with the people’s money makes us suspicious.

John galea
John galea
8 months ago

Prosit alex. Ghallinqas ghamel donation generuza ghal favur iz zejtun u zwieten. X’tahseb????

JOHN CASSAR
8 months ago

Imma possibbli li dawn l-iskandli jibqghaw addejjin qisu xejn mhu xejn go dan il-pajjiz. Mela Ministru bhal Silvio Schembri ghandu jkollu l-awtorita u l-ardir li jhalli dan it-tip ta’ kuntratt ta kiri meta l-istess Gvern ghandu bizzejjejed propjetajjiet li jista jaghmel uzu minnhom jew inkella b’inqas flus jibni binja ta dak it-tip flok jikriha. L-Ombudsman ghandu jinvestiga dan il-kuntratt

Michael Buttigieg
Michael Buttigieg
8 months ago

Dan suppost li hu gvern tal-haddiem li tela biex inaddaf il-korruzjoni li kienet tezisti fil gvern precedenti.

Il-hnizrijiet ta taht din l-amministrazzjoni certament jizbqu lill dawk ta qabilhom. Pika min jahtaf l-aktar.

Gar ta' Gahan
Gar ta' Gahan
8 months ago

Tal-bliegh. Kemm dahhlu fil-but minghand Alex Mercieca il-kapurjuni Laburisti? It’s so bloody obvious that the project was designed for sleaze.

diffidentia
diffidentia
8 months ago

Never in my life, was so eager for an election. Problem is, that I do not know what I am going to do with my vote!

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