PM under pressure to sack LA Chair and CEO over Fortina mess

Prime Minister Robert Abela is facing internal pressure to request the resignations of John Vassallo, Chairman of the Lands Authority, and CEO Robert Vella. This pressure arises from their mishandling of the Fortina dossier, which resulted in the removal of significant restrictions on land that had already been acquired by the hoteliers.

A damning report by the National Audit Office (NAO) focuses on the omissions made by the former CEO of the Local Authority, Carlo Mifsud, the late Chairman Judge Lino Farrugia Sacco, his Deputy and current Chairman John Vassallo, and the current CEO Robert Vella. The report highlights their role in misleading the government, Parliament, and the NAO.

The NAO also raised concerns about the role of the other board members, most of whom are still in their positions. They accepted the directions from the then Chairman without question, despite appearing to be aware that something was wrong.

The report reveals that after a two-year complex process, LA architects determined that the value of removing the Fortina restrictions was €8.1 million. However, Fortina contested this valuation and presented a counter report from Deloitte, which lowered the estimated value of the deal to €2.7 million.

In March 2019, just a few weeks before a resolution was to be presented for parliament approval, the Board of Governors of the LA discussed and approved a proposal from Chairman Farrugia Sacco. The proposal was to engage a new audit firm, Grant Thornton, to conduct a fresh evaluation of the two inconsistent valuations that had been previously made.

The NAO determined that the Chairman directly instructed Grant Thornton, requesting that the firm communicate solely with him regarding this matter.

Although the Grant Thornton report, which cost €15,000, was presented to the Chairman in just a few days, it was never presented to the Board.

Instead, the Chairman informed the Board, Minister Ian Borg, and Parliament that the valuation was not ready in time when the House of Representatives discussed the resolution approving the new contract with Fortina. This results to be false.

The Grant Thornton report, which was kept secret from the Board, the Minister, and Fortina, estimated a new valuation between €18.3 million and €23.8 million.

No questions raised by Board members

In its findings, the NAO was shocked that, despite their earlier decision to commission Grant Thornton, none of the Board members inquired about its conclusions before approving the final resolution to be sent to parliament.

“The NAO sought the views of the members of the Lands Authority board as to the rationale of the Board in submitting to the Minister what effectively was an incomplete process of valuation. In testimony to this Office, the Deputy Chair John Vassallo (now Chairman) conceded that no member of the Board questioned why the Board was proceeding with referral to the Minister when the valuation by Grant Thornton firm was pending. The Deputy Chair (Vassallo) acknowledged that the Chair drew the Board’s respect and consequently none of the members doubted the pending status of the audit firm’s valuation report. In hindsight, the Deputy Chair agreed that the Board could have insisted on refraining from acting until the valuation report was in hand,” the NAO stated.

Vassallo became Chairman of the LA following the passing of Judge Farrugia Sacco in 2021. So far, he has not submitted his resignation, taking responsibility for the LA’s shortcomings.

CEO Robert Vella gave the NAO false information

The report emphasises the role of the current CEO, Robert Vella, in misleading the National Audit Office (NAO) during its investigation.

In 2023, when the NAO requested a copy of the controversial Grant Thornton valuation, Vella claimed that the LA did not possess a copy. However, the NAO points out that Vella misled them, noting that the Office became aware on 3 April, 2023, that the LA was aware of and had access to the valuation report long before Vella informed the NAO that the report was not in their files. The evidence for this claim includes internal correspondence exchanged among LA officials.

The NAO indicated that the LA, led by Vella, continued to hide the existence of the report.

When asked if he had requested the resignations of CEO Vella and Chairman Vassallo, Prime Minister Robert Abela chose not to comment.