€17 million in public industrial land given to property developer to sub-lease

A large parcel of public land in Hal Far designated strictly for manufacturing has been allocated to a property developer to be turned into a sprawling development, with substantial parts of it to be sub-leased.

The multimillion-euro deal was struck between INDIS Malta – the state agency responsible for the administration of public industrial land and Josef Dimech – the majority shareholder of JD Holdings Ltd who is also involved in the aluminium business.

The deal is also being used as collateral for a bond issue in which the developer is seeking to raise funds for the project.

According to the prospectus of the €11 million bond issue currently floated on the market by JD Capital plc, once the development on public land is realised, the company will be able to “generate substantial revenue to the group” from the rentable property area.

In a departure from established rules, INDIS Malta has agreed that the large industrial plot is to be used to conduct business with third parties not strictly related to Dimech’s manufacturing business.

Crucially, INDIS Malta also allowed Dimech to use the public land, which he revalued at €17 million, as a collateral guarantee for the bond issue.

In the prospectus, Dimech states that the deal with the government, which has so far been kept under wraps, was reached in 2018 through a 65-year temporary emphyteusis concession endorsed by INDIS Malta.

The law and Dimech’s project

According to the law, the government can allocate public land on its industrial estates to investors strictly for manufacturing purposes. The allocation is usually tied to the number of conditions including the number of new employment opportunities the new enterprise will be generating.

The law stipulates that an ‘investor’ is to use the public land only for manufacturing activities and no other activity, including storage, is normally allowed. Tenants are forbidden from subleasing the allocated land, factory or parts of it and can only do so with the written permission of INDIS Malta. Under normal circumstances sub-leasing is not permitted.

The Shift has already reported how in recent years, INDIS Malta has lowered its enforcement bar and is permitting abuse across many industrial estates with sub-leasing and allowing businesses not connected to manufacturing.

But this latest episode, including the allocation of industrial land to Dimech for sub-lease is being considered by experts as a step too far and completely unorthodox.

Josef Dimech and other connections

Better known for his aluminium business, Josef Dimech started working in wrought iron at the age of 16, together with his father, from a small garage in Msida.

A decade later, at the age of 25, he branched out into large scale aluminium manufacturing and property development, turning over a revenue of some €11 million a year by 2016.

His only other shareholder in JD Holdings Ltd, with less than 2%, is lawyer Stanley Portelli – a former Transport Malta CEO.

Apart from his many aluminium and property development Dimech also recently became a shareholder of Business 2 Business Ltd, a PR and marketing company controlled by Saviour Balzan, the co-owner of Malta Today.

Balzan’s company was also allocated a factory by the government a few years ago in Mosta at a subsidised rate and which is still unutilised.

Asked to state whether he has conducted any property business with Dimech during the last few years, particularly on a seafront apartment in Ta Xbiex, Minister Silvio Schembri, responsible for INDIS Malta refused to reply.

Schembri, known for his close connections with property developers, has recently been outed by The Shift as using properties developed by Paul Attard of GAP Developments and Anton Camilleri known as Tal-Franciz as his constituency offices.

He has refused to declare whether he is paying any rent for the use of those properties.