The transfer of the former Löwenbräu brewery site in Qormi has raised multiple concerns, the National Audit Office has said.

On 23 June 2015, the Government Members of Parliament on the Public Accounts Committee requested the Auditor General to investigate the transfer of the site of the former Löwenbräu brewery in Qormi.

The National Audit Office (NAO) was requested to ascertain whether the principles of good governance, value for money, transparency and accountability were respected and whether political pressure was exerted with respect to this transfer. "In 1990, the land was directly allocated on a perpetual basis to Löwenbräu Ltd, later LBM Breweries Ltd, for the production of beverages. In 2009, the Company redeemed the ground rent for €465,875 with Government simultaneously consenting to the cancellation of conditions. This was later deemed to be in breach of applicable legislation and corrected through a contract of exchange in 2012, when the freehold value of the land was set at €706,400".

"The manner by which the request for the redemption of ground rent and the cancellation of conditions burdening the land at Qormi was processed by the Government Property Department (GPD) raised multiple concerns. Of concern to the NAO was the fact that this process was initiated by the GPD without a request to this effect retained in the relevant GPD file".

"The subsequent authorisation, concluded in one day, was deemed highly suspect by this Office, for no true consideration or consultation regarding the merits of the case was carried out by the GPD, indicative of pressure exerted in this respect".

"This Office established that ministerial authorisation was not sought and the Department proceeded to the contract on the following day. No charge was levied for the cancellation of conditions, despite the fact that this lifted any limitation on use, hence exponentially increasing the value of the land to the Company. In the NAO's opinion, the gratuitous renunciation by Government was intrinsically wrong and represented an abject failure in securing Government's interests".

"Compounding matters was the agreement that was to lead to the transfer of the land at Qormi, entered into by Marsovin Ltd and Agrico Ltd (shareholders of LBM Breweries Ltd) and Vassallo Builders Group Ltd, prior to the 2009 contract. This agreement was contingent on the Government acceding to the cancellation of conditions burdening the land within a seven-week period which, in the NAO's opinion, was a highly improbable outcome had the appropriate legal mechanisms for disposal been adhered to".

Other concerns related to the corrective action taken in 2012, when the freehold value of the land was determined as at 1990. The NAO deemed this as fundamentally flawed, resulting in a site of 20,000 square metres of developable land being valued at €706,400. This Office considers this valuation as grossly understated and maintains that compensation payable to Government should have been valued as at the time of the renouncement of conditions".

The NAO contends that value for money was not assured, particularly in view of the fact that the value of the land, as at 2012, was determined by this Office as €7,839,000. The land was disposed of through exchange with expropriated land following cancellation of part of the 2009 contract. In the NAO's opinion, although this was a legally valid option, it circumvented the level of scrutiny provided by Parliament and exercised in public calls for tenders.

"The actions of the GPD officials involved in the 2009 and 2012 processes may, to varying extents depending on their involvement and responsibility, be considered as negligent and draw the NAO's gravest concerns. This Office maintains that the Minister for Fair Competition, Small Business and Consumers also shoulders an element of responsibility for the serious shortcomings noted in 2012, for he was aware of, yet failed to question, the grossly misrepresentative value of the land".