Government slashed price of public land given to PAVI by €10 million

As the Fortina debacle continues to rage with accusations that the Lands Authority gave a significant discount to the Zammit Tabonas over a change of use of land in Tigne’, another similar case has emerged, highlighting another possible significant discount, which went under the radar.

Highlighted by political party Momentum Chair Arnold Cassola as part of his criticism towards the recent Fortina deal, the latest ‘discount’ – also arranged by the Lands Authority and approved by Parliament -concerns Paul Gauci, one of the Big Ben siblings and the owner of the mega shopping complexes of Pama and Pavi, among other business interests.

Like the Zammit Tabonas, Gauci is also a donor to the ruling Labour Party, as well as the PN.

Research by The Shift found that in 2023, while Parliament was busy debating a request for the controversial Jean Paul Sofia inquiry, Parliament’s National Audit Accounts Committee unanimously approved a change of use of government land in Qormi so that Gauci could expand his PAVI shopping complex.

The catch was that while the first Lands Authority valuation established a €14 million price tag for this change of use, the government had ordered a new valuation, slashing the final price paid by Gauci to €4.9 million.

From Nylon Knitting to PAVI

The resolution approved by Parliament concerned approximately 8,000 square metres of land, which in 1963 was transferred to Nylon Knitting, a textile company, for a period of 150 years, subject to the condition that it would be used exclusively for industrial purposes.

The land is adjacent to Gauci’s massive PAVI complex in Qormi.

In 2022, Gauci had made a private agreement with the owners of Nylon Knitting to take over the remaining 90 years of the concession, allowing him to expand his commercial complex.

For this transaction, Gauci paid €7 million to Nylon Knitting.

However, Gauci still had a problem to solve as the public land he took over could not be used to expand his business, as it was to be used only for industrial purposes.

While the Lands Authority could have stopped the deal, arguing that the land was needed for industrial use, as this is very scarce in Malta, a process was initiated so Gauci could obtain a change of use and reach his objective.

Three independent architects were selected by the Lands Authority and asked to assess the price difference for a change of use from industrial to commercial land.

The architects presented their report to the Lands Authority, establishing a price difference of €1,700 per square metre. Since the land in question was the size of a large football ground, this came to a total of €14 million.

Gauci was not asked to pay the price, as Lands CEO Robert Vella deemed it too high.

Instead, a Lands Authority committee ordered another valuation, this time from audit firm Crowe Consultants, owned by John Abela and his son, Alan – close associates of former PN minister John Dalli and disgraced former prime minister Joseph Muscat.

Using a different methodology, which CEO Robert Vella deemed to be the correct one, the price tag for the 8,000 square metre public land’s change of use was slashed to €4.9 million, or €10.1 million less than the original valuation.

According to the Lands Authority CEO, the original valuation was based on wrong assumptions. Then, Vella passed on the second valuation as “acceptable” and passed on the file to Minister Silvio Schembri (responsible for the Lands Authority at the time) to obtain Parliament’s approval.

Gauci’s political donations ‘support democracy’

Paul Gauci’s close connections to the Labour Party emerged publicly in 2017.

According to a Labour report presented to the Electoral Commission in June 2017, the Party received a €15,000 donation from Marlene Gauci, Paul’s wife.

In 2022, it was reported that Labour received another €10,000 from PAVI, which is owned by Gauci and was the beneficiary of the Lands Authority deal just a year later.

When asked by The Shift, Gauci admitted that he had donated to the Labour Party and said he had made an equivalent donation to the PN.

According to Gauci, his group believes that “a business organisation of its size should support the country’s democratic process”.