Auditor’s Report declares the DB concession reflects the true land value but highlights shortcomings
Auditor General, Charles Deguara, in his report regarding the concession given by the Government to DB Group for a project to replace the Institute for Tourist Studies at St Julian’s established that the final land evaluation after the project was revised concurs with the value agreed between the Government and DB Group.
However, the Auditor noted a number of shortcomings in the process while observing that DB was the only entity that in 2015 tendered for the project. The Auditor was critical of the lack of involvement by the Lands Department and because priority had not been given to the relocation of the Institute.
In the report tabled in Parliament it was stated among other matters that the land evaluation, according to the Auditor, was evaluated in 2016 at €67 million while the Government’s estimate was €56 million. The report remarked that in a development approved in 2018 the spread of the project was reduced and therefore the Auditor reviewed the evaluation and estimated it at now being €45 million. Deguara said this is a figure that corresponds to the figure in the contract.
The report goes on to explain that the process for this concession commenced in November, 2015 and was concluded in 2017. It explains the original offer made by DB was €17 million but during negotiations in which the Government was assisted by Deloitte, the value was established at €56 million and was approved by the Cabinet that the Group be given a concession for 99 years.
The Auditor’s investigation of this contract took over a year and Deguara stated the origins of the decision to transfer the site use remained unclear and this was a matter of concern because no information was located as to who was involved in the decision with the Prime Minister’s Office and the Ministry for Tourism assigning the responsibility on each other.
The report further states that the decision to transfer the site was given priority over the relocation of the Institute when it should have been the other way down because the Government wanted to assign the site without having an alternative for the ITS. Regarding the transparency factor, the Auditor’s Office also expressed concern about the information given during the call for tenders. Although the residential aspect of the project was a basis to assure its viability, this matter was given limited importance.
The Auditor observed that although negotiations attained a greater value, in the negotiating committee some members failed to give their contribution in the process. No recorded documentation had been taken of the negotiations and therefore the auditor and the Committee failed to achieve the standards required by good governance.
Regarding the relocation of the Institute the report stated the Government’s expense to arrange an alternative location at Luqa had cost €2 million while the expense for a new campus at Smart City has been costed at €80 million. The report also noted the lack of involvement of the Lands Department in the site transfer while Projects Malta had control of the process.