NAO casts doubts on ITS land transfer

Tista' taqra bil- Malti.

The Auditor General, Charles Deguara, has expressed his doubts on the regularity of the tender issued by Projects Malta to transfer the Institute of Tourism Studies building to the DB Group. The tender was issued five years ago.

This was published in a report by the National Audit Office which said that Projects Malta failed to obtain the authorisation from the contracts department before the offer was issued in November 2015, to build, design and operate the project which is to be built on the site occupied by ITS in Pembroke.

The report said that “no information supporting this decision or who was involved was provided, with the Office of the Prime Minister and the Ministry of Tourism each assigning responsibility to the other.”

The Auditor General also stated that the sense of urgency that drove Government to dispose of the ITS site was of concern given the fact that no alternative premises had been secured for the ITS. The NAO also said that the government failed to develop a masterplan for the area which was also a great concern.

Another element verified by the NAO was the residential aspect of the project which with respect to the information in the Request for Proposal was given limited exposure.

Other major concerns mentioned in the NAOs report emerged with respect to the Negotiation Committee. The report says that certain members of the Negotiation Committee failed to provide any input and no records of negotiations were made available. This made it difficult for the NAO to understand the negotiation process.

The NAO’s valuation of the site in 2016 was estimated at €67,000,000. This differed with the valuation determined by Government which was at €56,000,000.

The deed allowed for the adjustment of the value of the site based on the approved extent of development.

The application for development was approved in 2018 with one residential tower instead of two and a reduction in the hotel element.

In consideration of these revisions, the NAO established a land value of €45,000,000. The reduction in value was due to the reduced extent of development and a substantial increase in development costs between 2016 and 2018.

In the report, the NAO gave brief details on the transfer of the ITS land

  • In November 2015, Projects Malta Ltd issued a request for proposals (RfP) for the design, build and operation of a mixed tourism and leisure development in St Julian’s on the site occupied by the Institute of Tourism Studies.
  • In February 2016, the Seabank Consortium, the sole bidder, was nominated the preferred proponent with its €17,000,000 bid.
  • Negotiations ended in January 2017, with Cabinet endorsing the €56,000,000 value established by Deloitte who assisted Government in this respect.
  • On 1 February 2017, the Commissioner of Land and the dbSG, entered into a deed for 99 years.
  • In July 2019, the dbSG submitted a fresh application for excavation works while the original application was still active.
  • The National Audit Office (NAO) was requested to review this disposal by the Public Accounts Committee in March 2017. The audit commenced in January 2019.