Dr Gonzi did not seem as if he minded it, even though the questioning was rather relentless and at times even sharp.

For seven long hours, the PAC met under the gaze of eighteenth century popes who looked bemusedly at the goings-on,

nostalgic for the times when a pope-king could do pretty well what he wanted to do, without such committees to scrutinise him.

Opposition leader Alfred Sant walked in while Richard Cachia Caruana was testifying.

Mr Cachia Caruana saw the building in 25 Rue Archimede for the first time on 2 September.

On 7 October, Mimcol advised government that the best value for money could be obtained from purchasing this property.

On 15 October, Mr Cachia Caruana discussed the issue with then Prime Minister Eddie Fenech Adami, then Foreign Minister Joe Boig and then Finance Minister John Dalli. At this meeting it was decided that Albert Mizzi should join the team in the latest stages of negotiations since he was considered to be a very able negotiator.

On 18 October, Mimcol told Mr Cachia Caruana they had roped in architect Martin Xuereb, as the architect who had worked on the British High Commission and the Netherlands embassy in Malta. Mr Cachia Caruana, who agreed with the choice, informed Mr Falzon that Mr Xuereb had done private work for him.

On 8 November, Mr Mizzi joined the rest of the negotiating team and they went to Brussels to discuss the purchase.

On 9 February, Mimcol presented its report to the Prime Minister, the Foreign Minister and Mr Cachia Caruana.

Here Mr Cachia Caruana added that Mr Dalli had insisted that the building be purchased, rather than leased.

The actual decision was taken at the 17 May Cabinet meeting. Mr Dalli was not present at that meeting, nor was Mr Cachia Caruana, since there was a General Affairs Council.

Prices

Dr Borg added some details regarding the comparative prices of the three buildings.

I Rue Archimede was 4,000 square metres but 25 Rue Archimede was 5,000. Government felt that it needed 5,000 at least, not just to house the staffers, but also to be able to house additional staffers in case they were needed, for example if Malta gets the presidency.

Government then decided it would pay up to E19 million.

The Schumann building owners wanted E24 million and would not budge.

As for 25 Rue Archimede, the owners at first had wanted a 24-year lease and a possibility of purchase later. The government of Malta wanted an outright purchase. The owners came to Malta to negotiate and they agreed to continue to negotiate. Agreement was reached in his last days as Foreign Minister, Dr Borg said. The agreed price is E15.5 million for the building and E4.5 million for its refurbishment.

Dr Borg added that it was felt that Mr Cachia Caruana was the best person to handle this exercise. He was still heading the Prime Minister’s secretariat at that time and he had handled the negotiations with the EU. The decision to appoint him Permanent Representative had not been taken yet but he was involved even in such things as IT and support services.

Dr Borg was asked whether then Ambassador Victor Camilleri had been involved in this. He answered that Mr Camilleri had given Malta sterling service during the EU negotiations. He had asked to be relieved from his post as soon as the negotiations were over and that he spend his last years in the diplomatic service in New York. It would not have made sense to involve him, said Dr Borg.

Questioned by Joe Sammut, Dr Borg said the other 16 properties were discarded: some were clearly not up to representing Malta and some lacked access or conference facilities.

As to why the purchase was not planned in last year’s Budget Speech, Dr Borg said the talks had not been concluded by November and it was not clear whether the ultimate choice would be to purchase as against to hire.

Another consideration was that the property at 25 Rue Archimede has parking spaces for 40 cars.

Besides, today some 40 people are working in a building planned for 20. This building, the present Maltese embassy, has a surface area of 800 square metres and costs Lm200,000 a year in rent.

Dr Gonzi

Straight off, Leo Brincat asked Dr Gonzi whether the building has asbestos problems. Dr Gonzi confirmed it does, but added that the costs for treating asbestos are included in the Lm2.5 refurbishment sum.

After the signing of the agreement, an exercise was carried out in June to identify the space needed for the embassy. It was established that this was around 2,520 square metres, or two storeys of the building. As to the rest, added Dr Gonzi added – that is four other storeys and the car park – government is still considering its options. The empty space may be hired out to government entities or to the private sector.

Mr Brincat referred to what happened at Malta House in London where MDC and Mid-Med Bank were forced out to let NTOM in but this did not work out.

Dr Gonzi said he will be involved in this decision so that the right one is taken.

Asked what profit was made by the sellers, Cofinimmo, Dr Gonzi said the company itself said on its website it had made a E1 million profit but it has been estimated that after paying tax, they only made some E400,000.

Dr Gonzi was pressed on Mr Cachia Caruana’s role in the

matter, especially since John Dalli had said in The Malta Independent on Sunday that it was all done by Mr Cachia Caruana.

Dr Gonzi replied that the decision was taken by Cabinet. Mr Cachia Caruana was the personal assistant of the prime minister and he was charged with getting this project over and done with.

Dr Gonzi was also asked about Albert Mizzi’s involvement. Mr Mizzi had already given advice on the purchase of Malta House in London and has huge experience in negotiations.

Any Belgian law restrictions on sub-leasing do not apply if a government is making the deal. It is for this reason that the Malta House experiment could not be repeated.

Government would not lose its tax exempt status if the empty space is leased to government entities. It is still not clear what happens if the space is leased to commercial entities, but government intends to maximise its revenue potential.

Dr Gonzi delivered a sharp rebuke to Mr Brincat when the latter repeated a rumour that has been heard in Court: that part of Cofinimmo belongs to a nominee company that has Maltese interests.

Dr Gonzi replied he had never heard that allegation until that very minute and his information is that it is not true.

Dr Gonzi added that government has now decided that the Lm2.5 million for refurbishment may not be breached, for no reason whatsoever.

Mr Cachia Caruana

Replying to questions, Mr Cachia Caruana flatly denied he had been the one to tell Mimcol of the two new properties.

Questioned about Mr Dalli’s letter in TMIS, Mr Cachia Caruana said it had been his idea to go for the Malta House template and Mr Dalli had accepted this advice. The decision to go for purchase was Mr Dalli’s decision. As for the choice of the consultants, he (Mr Cachia Caruana) was the go-between between Mimcol and government.

He added he agreed with the choice of experts but he did not influence their choice. Dr Caruana Galizia was chosen by Mimcol as was Mr Xuereb.

Referred to the Bondi+ programme which said the Baltics have a smaller representation, Mr Cachia Caruana said that Malta’s staffing level is still at 37 but will go up to 62. One should look at the Baltics staffing levels three years from now.

Questioned about plans to build a penthouse on top of the building, Mr Cachia Caruana admitted that government wanted to build another storey, or rather add some more rooms to the ones already existing on the roof. The idea was for this area to be residential. But then it was discovered this could not be done according to Brussels regulations, nor was it economical.

The team based their report by looking at what Luxembourg did. All permits are in hand.

Furniture at the present embassy will be transferred to the new building and this could mean that government has some Lm400,000 for any additional spending it may find necessary. The Lm2.5 million upper limit will not be exceeded.

Tonio Fenech

Parliamentary Secretary Tonio Fenech told the committee of his involvement in the decision after being chosen as PS on 23 March.

Prime Minister Gonzi asked him for his opinion and an update on the purchase.

When the Malta House template was to be used, government did not intend to take money from the Consolidated Fund but commercially. However, it was found that for Malta to take all the tax benefits available, the Belgian Government only recognises another foreign government. It was for this reason that government came up with additional budget requests.

The report also examines the advantages of purchasing rather than leasing. It found that if the building is leased, over 27 years it would have paid the same amount of money that would have been spent on outright purchase, without the building becoming Malta’s property.

Mimcol did their job well and there was no need to call in the Auditor General.

At this point, Dr Sammut pointed out that it was while Mr Falzon was alone in Brussels that the information regarding the two new properties seems to have come to him. Mr Fenech, however, saw nothing sinister in this. Property in Brussels is rising by five or six per cent annually.

The meeting was told that John Dalli was abroad and in the last minutes it questioned former Permament Secretary Gaetan Naudi, who began by saying he was not consulted, except to get Mr Mallia on board and after the decision was taken, but Dr Gatt, in a serried series of pointed questions, brought him to admit he was responsible for the Foreign Ministry’s operations, he never rejected Mr Mallia’s suggestions, nor did he object to the conclusions of the Report, nor did he say the building should not be purchased, now was he ever informed by Finance that the financial regulations were not kept.

The sitting continues today.