Economy Minister Chris Cardona extended Dragonara Casino’s land lease by 64 years “by stealth” in a deal which will see the public “short-changed,” according to an industry operator.
Dragonara Gaming Ltd had been given a 10-year extension in 2010 but last week, the extension was extended by another 64 years through a motion put forward by the economy minister and which was approved by both sides of the House. The deal, however, was reportedly not presented to the cabinet.
The operator, who asked to remain anonymous, told The Malta Independent that Cardona had “sneaked” the deal through Parliament at the height of summer when most of the Opposition was not there.
“How he thought this public travesty would not have raised the ire of everyone is beyond me. As well as being a bad financial deal it is clearly a case of state aid,” the operator said.
The deal is “unfair on everyone,” the source continued. “Mostly, it is the public that has been shortchanged.”
“From a lease where they [Dragonara] are paying €1.2m a year they will now be paying €500,000 per year for first 15 years and then €1 million thereafter, with 5% increases every 5 years. This means that they will be paying the same amount they pay today in another 35 years. Surely, such prime property should appreciate in value not depreciate significantly. The amount would be much higher had this deal been granted through a public bid.”
Since the concession allows the operator to use the land for other uses, such as retail, catering and entertainment, the deal is also unfair on the business community at large, the operator continued.
“Most people in the business community would find this attractive, especially at such a ludicrously low rental price of €500k.”
The deal is also unfair on any other casino operators or entities who might have an interest in operating another casino and who were waiting for the public tender to be issued and bid on it, the source said, adding that, while the deal is not tied to the casino license it will “virtually guarantee its renewal.”
“It is unfair on previous concession owners who would have bid significantly more had they realised that the land could be acquired for 64 years at a fraction of the cost. The terms of the tender that were issued and awarded has been materially changed,” the source added.
The concession for the Dragonara peninsula, which is tied to public land, had always been given by public tender, with bidders clearly bidding on a 10-year deal. “This is likely a way to bypass the need for a public call for the casino concession next year and to get an automatic renewal.”
“We would have certainly entered into the bidding process and I can assure you that the benefit to the local coffers would have been substantially higher than what it will get if this deal is finalized,” the operator said.
Unanswered questions
Sections of the media reported this week that the deal could be in breach of EU state aid rules but Minister Cardona told Times of Malta that the agreement does not involve any public procurement and that legal advice had been sought before the deal was presented to Parliament.
A spokesperson for the European Commission told The Malta Independent yesterday that the commission “is not in a position to comment about this story.”
Questions sent to the Office of the Prime Minister and to the Economy Ministry yesterday remained unanswered by the time of going to print.
The Malta Independent asked why the deal had not been presented to cabinet and whether Prime Minister Joseph Muscat had spoken to Chris Cardona after the deal was voted on in Parliament. We also asked why the concession was granted for 64 years, rather than 10, and why the process was not carried out through a public call, allowing other interested parties to submit their bids.