“He was delegated by Cabinet to find the site,” Dr Caruana Galizia told the committee. “He was involved in the choice of the site.”
The funny thing is that this was friendly fire in more than one meaning: Dr Caruana Galizia was not being questioned by the opposition MPs on the PAC, but by Parliamentary Secretary Tonio Fenech who asked the very last question in Dr Caruana Galizia’s questioning, an innocuous question to round up the question and answer session.
Members and media could not believe their ears.
Obviously, all this has to be put in context. Dr Caruana Galizia had also said he was not directly involved in the choice of the site nor was he privy to all that went on in the decision process.
Dr Caruana Galizia’s testimony, at least on face value, corroborates that of former finance minister John Dalli who said in the famous letter to The Malta Independent on Sunday that the purchase of the building was handled from top to bottom by Mr Cachia Caruana.
Dr Caruana Galizia’s testimony was immediately contradicted by the next witness: architect Martin Xuereb, who said that as far as he knows Mr Cachia Caruana was not involved in the decision regarding the choice of the site.
When he testified on Monday, Mr Cachia Caruana himself had said he was not present at the 17 May Cabinet meeting when the decision had been made.
All this now points to a high charged session this evening. The first to be questioned will be the officials from Mimcol, who handled the negotiations, followed by a quirk of fate, by former minister John Dalli whose plane comes in from Libya at 8pm and who is expected to testify as from 8.30pm onwards. Mr Dalli will thus be the last witness to testify.
Albert Mizzi
The first to testify yesterday was entrepreneur Albert Mizzi.
He said that in November 2003 Richard Cachia Caruana called him and asked him to help in the negotiations. He said that Mr Cachia Caruana told him to contact Ivan Falzon at Mimcol.
Subsequently, Mr Mizzi went to Brussels on Saturday 8 November, toured two possible sites (I Rue Archimede and 11 Schumann) on Sunday, and 25, Rue Archimede on Monday, held meetings with the three owners on Monday and left for London on private business that very same day.
Mr Mizzi said the list of 16 properties had already been shortened to three by the time he was contacted. He had not taken part in the short-listing exercise. He had never purchased property in Brussels but was called to help in the negotiations, not to carry out an evaluation of any of the three properties.
However, at the end he had given advice.
The choice was between three properties for which Mr Mizzi and the Mimcol team suggested the following prices:
1. 1 Rue Archimede: Had 27 car parking spaces for which they offered e19m.
2. 25, Rue Archimede: Had 45 car parking spaces for which they offered e20m.
3. 1 Rue Schumann: For which they offered e21m.
The different offers derive from the fact that the property in Rue Schumann was all ready for occupation, and was situated in the main square near the EU buildings. The two other properties were in the same street.
After a while the property in Rue Schumann was dropped since its owners continued to insist on e24m.
The owners of the two properties in Rue Archimede then came to Malta. The owners of 1, Rue Archimede wanted to lease, so did the owners of 25, Rue Archimede, but then these accepted to sell.
The property at 1, Rue Archimede had some problems: the metro is due to be dug there, there was a travel agency on the ground floor and the metro will have an opening right inside the building. It also had less car spaces
On the other hand, the property at 25, Rue Archimede was dilapidated and needed refurbishment. At ground level it had a pharmacy and an entry corridor.
Replying to further questions, Mr Mizzi said he told Mimcol that the property in 1, Rue Archimede was no good. On the other hand, the property at 25, Rue Archimede was managed by Cofinimmo, a great Brussels real estate company. Mr Mizzi said that when he met this company’s representatives, he insisted that the refurbishing be done by the contractor appointed by it as the Maltese government did not possess its clout to get work done as well. If the government of Malta wanted anything more to be done to the property, this would cost it more.
This was the extent of Mr Mizzi’s involvement. He does think that having a pharmacy and a small room for a bank on the ground floor are limiting factors because otherwise the building could be pulled down and rebuilt. An attempt was made to see if these two properties would accept to relocate but they refused. The price per square metre for 25, Rue Archimede was far cheaper than the other two.
Mr Mizzi also admitted his advice had been to purchase the property rather than lease it. Obviously, if one goes one block away from that very sensitive area, the prices would fall. In such a site the value of property will rise and rise. “Had it been for me, I would have bought it,” he said. No one influenced him and he still thinks that 25, Rue Archimede is good value for money. While the other property cost e4,700 per sq metre, this one cost e3,900.
Mr Mizzi said he was not involved in the discussions on the amount of space required. He said he felt it would have been wrong for the government not to make use of all the space because if it later needs more space, this will cost it more. Mr Mizzi said he accepted the assumption that refurbishment will be needed after 14 years as most of the things put in will be new. Only such things as carpets and curtains need to be changed earlier, he said.
Finally, Mr Mizzi said he never discussed the choice of sites with Mr Cachia Caruana. Had he been the owner of the site, he would not have sold it. After five or six years, it will start paying its way if property prices in Brussels keep rising.
If the government wants to sell it, he is ready to buy it, Mr Mizzi concluded to laughter.
Peter Caruana Galizia
Right at the beginning of his testimony, Dr Caruana Galizia said he needed his client (Mimcol) to release him from professional secrecy. Dr Gatt provided that assurance.
Dr Caruana Galizia said that on a Saturday in June 2003, he was called by Ivan Falzon and asked to help in the acquisition of property in Brussels. He had not applied to be the consultant for this acquisition and was therefore very surprised by this call.
Dr Caruana Galizia said he was invited to Mimcol (he did not even know where it was) and after some days went up to Brussels, met a Belgian notary and accountants at the embassy. These were nominated, in one case, by Mr Mizzi.
This was a fact-finding visit: to find out about Belgian law and practice, legal systems, as well as legal and tax implications.
Together with the two Mimcol representatives, he toured 1, Rue Archimede. Dr Caruana Galizia said the owners scared him away: they were Jews and had a weird way of negotiating. They wanted the government to purchase shares in their company as a way to purchase the property. This was risky, as you never know what debts are hidden. The owners at first wanted to lease for 15 years, but he got them to agree to lease for 30 years.
Dr Caruana Galizia said the owners of 25, Rue Archimede were much more professional and serious.
Dr Caruana Galizia said that his function, as he saw it, was to learn all about the legal implications regarding the purchase and to protect his client (Mimcol) from any legal mishaps. He thus learnt along the way that the law in Belgium exempts a State from paying any taxes but if the state in question re-leases the property or parts of it, it loses its exemption.
Dr Caruana Galizia said he has no idea who recommended him. He had previously been involved with the Lands Department and had also had a hand in the drafting of the Acquisition of Property Act. He had only seen 25, Rue Archimede from the outside. As to his fee, Dr Caruana Galizia said he was asked at the outset to name his fee, but he could hardly do so at the beginning when one does not know what work is involved. However, he had agreed to render his services at a rate of Lm20 to Lm25 per hour capped at Lm6,000. At the end, he did not work as many hours as he thought he would. Had he charged a percentage of the purchase, he would have gained around Lm35,000.
Following this involvement in late 2003, Dr Caruana Galizia’s involvement then kicked in again in May and June this year when he participated in the drafting of the Promise of Sale and the Contract. He was never involved in the negotiations for the purchase of 25, Rue Archimede, except for sitting on one meeting together with Mr Mizzi and the representatives of the owners in Malta some days before Christmas 2003.
Asked about any contacts with Mr Cachia Caruana, Dr Caruana Galizia said Mr Cachia Caruana but had no direct contact with him on this issue. However, Dr Caruana Galizia said he knew that Mr Cachia Caruana kept contact with Mr Falzon.
Dr Caruana Galizia also said he had seen 25, Rue Archimede from the outside in June 2003 as they were walking down the street. Dr Mangion pointed out that according to the testimony by Commissioner Borg, 25, Rue Archimede came to the knowledge of the negotiation team in August.
Concluding, Dr Caruana Galizia said that as a lawyer, he does not decide what property is to be chosen by his client. Yet, the property actually purchased was bigger and the owner was an easier person to deal with. Dr Caruana Galizia said he is totally in agreement with purchase as against leasing as leasing would mean some Lm1,000 a day, indexed and renegotiated after 15 years. No-one influenced him in his advice and he did not try and influence others, he concluded.
Martin Xuereb
The third witness was architect Martin Xuereb. He said he received a letter on 18 October 2003 to do a planning brief for a Maltese embassy in Brussels. This brief was not linked to any building but was based exclusively on how many personnel would there be and what gradings would they have.
Mr Xuereb said he obtained the information necessary for him to carry out his duty from Mr Cachia Caruana. At that time, the area discussed was about 4,000 sq metres and some 2,500 sq metres to 3,000sq metres were needed for the embassy alone.
Mr Xuereb said that some days later he went to Brussels and saw the two properties being considered. Mimcol also commissioned an architect and engineer based in Brussels.
The property at 1, Rue Archimede was still full of asbestos. Its walls and hangings had not yet been stripped. The property at 25, Rue Archimede had been stripped of everything save for a small area in the central core.
Tests were conducted on the structure at 25 Rue Archimede and it was found to be very good. The work on the property is being done by a local contractor under a local architect and under his general direction.
At first they had thought of building yet another storey on top but this had been discouraged: the planning authorities would have never permitted it, the building could not support it and the whole process would have been very costly.
There were many reasons for not delaying the purchase: the building is such a rare find that one risks losing it to others. All the applications for refurbishment were already approved and only an application of minor importance still needed to be lodged, regarding the partitions, since this will not have an open-plan design.
Mr Xuereb said he charged government as he would have charged anyone else. He has had no previous job with the government except for a small refurbishment job at the old air terminal at Luqa, for which he has still not been paid.
Concluding, Mr Xuereb insisted this is not a nine-storey building, but a 13-storey one, since one has to take into consideration the three levels of car park under ground level and the ground level.
Other people who testified included Charles Mifsud, Director Corporate Services at the Foreign Ministry who testified on the internal workings of the Ministry for Foreign Affairs; Pierre Pace, Director Internal Audit in the Investigations Directorate who testified that it was not felt this decision needed investigation once it had been a direct Cabinet order; Paul Zahra, Permanent Secretary in the Ministry of Finance and Salvu Gauci from the same ministry who testified how the funding for the purchase was decided upon and that no financial regulations were breached; and Architect Ray Farrugia, Director General at Public Works, who said they have architects and experts, were involved in the purchase of other embassies but not this time. This was the first time that Mimcol had been involved in something like this.
Today’s sitting will start at 5pm with the Mimcol officials, and continue with Mr Dalli when he arrives.