Who benefits while the State loses millions in unpaid leases?

By the end of 2024, the government failed to collect €10.85 million owed to the State for leases of public properties, according to an audit by the NAO that revealed that, in the age of AI, the Lands Authority depends on manual systems to monitor whether millions of euro were actually being paid.  And in many cases, they weren’t.

The NAO found that even in cases where Lands Authority officials knew that the lessee owed millions of euro, there was no follow-up and no escalation.  In instances where the courts ruled in favour of the Authority, no effort was made to recoup the millions owed to the State. You wonder why.

You also wonder who these privileged lessees are who are leasing our property and are being allowed to pay nothing for it.

At the same time, Minister Miriam Dalli has approved two direct orders worth €450,000 to lease office space from Avenue 77 Business Centre, located in Mriehel’s Centra business district.

Avenue 77 is owned by Paradocs BIS SARL, a privately owned investment firm registered in Luxembourg with an affiliate in Malta. The ultimate beneficial owners of Paradocs are unknown. The earnings of Paradocs BIS SARL exploded to over €700 million in 2024, from amounts under €100 million in previous years.

Prime Minister Robert Abela insisted that “a foreigner can’t just come to Malta and buy properties as they please”.  So, how come Minister Dalli is spending almost €500,000 on leasing property in Malta from a Luxembourg company when the State owns thousands of properties?  It’s leasing thousands of them and failing to recoup millions of euro owed.

Minister Dalli approved two separate direct orders – one to lease office space for Project Green and the other for the Climate Action Authority. Project Green paid Avenue 77 €289,860 for a temporary lease.  The Climate Action Authority paid the same company another €166,200 to lease office space for just 12 months.

She could easily have asked the Lands Authority to provide those two entities with state-owned properties. Dalli must explain why competitive public calls weren’t issued.

While Minister Dalli squanders our taxes on questionable direct orders, the Lands Authority conveniently turns a blind eye to unpaid lease payments totalling millions.

Out of 23 properties examined by the NAO, nine had unpaid leases due, another nine had made no payments at all in 2024, and another five properties were recorded as having made payments but did not even appear in the Lands Authority property list.

The Authority failed to collect over €10.8 million in arrears.  Over €4 million, amounting to 37% of the total outstanding arrears balance, dates back between five and 15 years. Another €2.4 million was due within two to five years, and another €4 million accrued in the last two years.

That’s not surprising.  The NAO found that Lands Authority officials practically never took any action.  Occasionally, they telephoned the lessees who owed money, but kept no records of those calls. Sometimes an arrears letter was sent out, but often this wasn’t even by registered post. Beyond this, there was no further escalation in the vast majority of cases, even in cases of longstanding arrears.

One company that owed €483,748 in leases was eventually struck off the register without the Land Authority escalating the issue to collect its dues.

Another company owed €9.3 million and was meant to have an active repayment agreement programme.  Despite not making any payments at all since 2021, the Land Authority took no action.

In seven other instances, with an aggregate amount due of €882,147, the Lands Authority took action only because the NAO was conducting its audit, and the action taken was limited to issuing a letter or simply flagging it for further follow-up.

The court found in favour of the Lands Authority in the case of one company, which owed €5.2 million, yet the Lands Authority made no effort to recoup that money.  To add insult to injury, despite the court ruling, the Lands Authority still registered that debt as “under contestation”.

By the time the NAO had flagged this issue, the company was inactive. It had not been submitting documentation to the Malta Business Registry, making it extremely unlikely that the €5.2 million owed would ever be repaid to the taxpayer.

The utter inaction by Lands Authority officials is in direct breach of established standard operating procedures, which stipulate that action should be initiated if an invoice remains unpaid for more than three weeks – not five years –  if necessary, serving judicial letters.

The loser in Labour’s mix of incompetence, corruption and cronyism is always the taxpayer.