Refused: FOI request to disclose ‘prohibitive’ €31 million MBR rental contract

Economy Minister Silvio Schembri has once again turned down a request to disclose the contract to lease parts of a new building in Zejtun from the owners of Alex Mercieca Bathroom Centre, currently hosting the offices of the Malta Business Registry (MBR) and costing taxpayers as much as €31 million.

The 15-year lease contract, signed in 2018 and amended after the closing of an expression of interest was adjudicated, is costing taxpayers some €2 million a year and has been described by the NAO as “prohibitive”.

The Shift filed a Freedom of Information (FOI) request asking for the lease contract to be made available, but this has been refused.

A few weeks ago, the minister also refused to make available a copy of this contract to parliament, telling PN MP Joe Ellis that the terms of the lease were “commercially sensitive”.

In its response, the MBR, under the instructions of Minister Schembri, said it cannot publish the contract, citing provisions of the FOI law which it says exempt the document from publication. The CEO of the MBR, Geraldine Spiteri Lucas, was appointed to the position by Minister Schembri in October.

According to the MBR and the minister, the lease contract may not be published because it’s subject to “trade secrets” rules. They also cite a legal provision which states that “any other information having a commercial value that would be, or could reasonably be expected to be destroyed or diminished if the information were disclosed”.

The Shift has already filed a complaint with the authorities for a review of this decision, as provided by law, and is insisting that since this lease contract is being financed out of public funds, the taxpayer has a right to full transparency and accountability.

A very suspicious contract

So far, Silvio Schembri has resisted calls to publish the contract, even though the NAO has flagged serious discrepancies between the spending on this lease and current market prices, as well as having described the cost as “prohibitive”.

While refusing to disclose the contract in parliament, he said the 15-year lease was costing the public €454,000 a year, with an increase of 3% annually for the duration of the contract.

While the minister said the contract would cost taxpayers some €9 million over 15 years, the NAO report found that the total outlay will reach a much larger sum of €26 million by 2033.

So far, Schembri, who has already been found to have misled parliament on other occasions, has not explained the €17 million discrepancy between his replies in parliament and the NAO findings.

Also, apart from calling the lease contract “prohibitive” in terms of value for money, the NAO also found out that the government had paid a further €5 million on building improvements – on a building that will be returned to the owners at the end of the contract. This brings the total cost of this contract to taxpayers to as much as €31 million.

The government has also denied requests for details about this additional €5 million spend, or to list the companies involved. The NAO has already established that most of this work was awarded through direct orders.

New CEO paid €90,ooo a year

In October, Schembri appointed one of the employees at the MBR, Geraldine Spiteri Lucas, 35, as CEO of the public authority.

Spiteri Lucas had been working as a lawyer since 2010 at Farrugia, Fenech, Fiott legal firm before she moved to a junior lawyer position at the MBR in 2014, on Schembri’s watch.

Spiteri Lucas has been given a four-year contract for €90,000 a year, as well as a range of other benefits including a fully expensed car. Her contract also allows her to sit on other boards.

Before her latest appointment, Schembri had already appointed his MBR CEO to act as company secretary of Indis Malta – another public entity falling within his portfolio and responsible for industrial estates.

Schembri’s wife moves in

Minister Schembri’s wife, Deandra, is also a senior manager at the MBR.

After she graduated as a lawyer in 2012, Deandra Schembri was hired by the MBR in 2014 as a desk officer shortly after her husband joined Joseph Muscat’s Cabinet.

In 2019, Schembri joined the senior management team at the MBR, after she was promoted within the same department where the new CEO used to work.