Although hard pressed by questions on the import of his letter to The Malta Independent on Sunday on 8 August,

Mr Dalli refused to allow himself to be brought to criticise the purchase of the Brussels site, Mr Cachia Caruana’s involvement or anything else that could have constituted fodder for further opposition criticism on the deal.

On the contrary, he argued that purchasing was much better than leasing the building, and he said he was kept generally informed of developments through the long months of negotiations, both as Finance Minister and later as Foreign Minister, and expressed full confidence in Mimcol as negotiators.

Nevertheless, Mr Dalli who was not present at the Cabinet meeting on 17 May when the purchase was approved, said he needs to see all the documentation before he could say that he approves the purchase. He also testified that during the negotiations he was never informed the purchased building would not be used for an embassy and Malta’s representation to the EU, and he was never made aware that there is extra space in the building.

The lateness of the hour, the accumulation of three days’ long sessions and the personalities involved created some friction while Mr Dalli was being questioned.

There was particular acerbity in the cross exchange between Mr Dalli and Leo Brincat with Mr Dalli refusing time and again to reply to Mr Brincat’s frequently pointed questions.

Basically, Mr Dalli refused to allow Mr Brincat to force him to criticise the deal or Mr Cachia Caruana’s involvement.

Austin Gatt got in first to question Mr Dalli and referred to the TMIS letter. Mr Dalli said he had written to reply to Joe Grima who had asked whether the purchase of Dar Malta was Mr Dalli’s “last fling” and also whether another embassy had been purchased in China.

Mr Dalli said his words had been misunderstood: all he was saying was that Mr Cachia Caruana as Personal Assistant to the Prime Minister and later as Permanent Representative had every right to be very much involved in the structures that were being set up in Brussels as a result of Malta’s accession into the EU. That was his responsibility, Mr Dalli said; he would have been irresponsible had he not done all he did to provide an adequate location for his staff.

Mr Brincat claimed that Mr Dalli was “watering down” his statement on TMIS but Mr Dalli countered that this was Mr Brincat’s “interpretation”. Whatever interpretations had been given to his letter, he had not replied to them as he does not waste time replying to every wrong assumption in newspaper articles.

Mr Brincat then picked up that there was no documented trail of the decisions taken as many of them were taken verbally. Mr Dalli said: “I do not walk around with a clerk following taking down all the decisions I make.” Nor did he feel the need to involve people like the Director of Contracts, the Auditor General or the Attorney General, once he had full confidence in the people who were negotiating. The representative of the Ministry of Finance was monitoring the whole process and came in with regards to sourcing the financing for the purchase.

At this point a minor storm broke out when Mr Brincat, referring to Mimcol, said they were not civil servants. Dr Gatt exploded: Mimcol have high financial qualities, he said, telling Mr Brincat to stop undermining such people.

Mr Brincat said this purchase was a direct order by order of Cabinet but Mr Dalli said that if Malta is to move ahead, it must move away from situations where decisions take seven years to come through, since they have to go through so much red tape. Nor did he feel he had to scrutinise the contracts he signed: there were experts at this and he let them do their work.

Mr Brincat tried one last time: You were not in the loop, he told Mr Dalli, but Mr Dalli, exasperated, told him he did not need to be informed of all the details. He will not be drawn into this trap or go along with this interpretation. He was generally updated on what was going on, not on the details.

Peter Caruana Galizia letter

At the beginning of yesterday’s sitting, the chairman read out a letter received from Dr Peter Caruana Galizia.

Dr Caruana Galizia referred to his appearance in front of the PAC on Tuesday and claimed his words had been “misinterpreted” by The Malta Independent.

He clarified that Mr Cachia Caruana had absolutely no connection with the negotiations and, as far as he knows, his interest at the beginning and until the report was presented on 9 February, was to ensure that government acquires a satisfactory property in Brussels from where it could operate after Malta’s accession to the EU.

Mimcol had identified three properties which were put on the short-list.

“My remark that Mr Cachia Caruana was involved in the choice of the site must be taken to refer to the period after he was appointed Permanent Representative. This appointment took place after the negotiation team presented its report and so any suggestion or implication that Mr Cachia Caruana was involved in the Mimcol recommendations is incorrect,” Dr Caruana Galizia wrote.

Mr Brincat however said that the transcript of the Tuesday meeting “speaks clearly.”

Joe Sammut said that what was declared had been said. It is not a case it has to be corrected.

Dr Gatt said this was a Dr Caruana Galizia statement and that’s that.

Mr Brincat said that what was reported was “100 per cent correct” and even under-reported.

Mimcol

Most of yesterday’s sitting was taken up by an extensive questioning of the three persons from Mimcol: chairman Ivan Falzon, CEO Mario Mizzi and Vince Mifsud.

They gave the chronology of the process;

• June 2003: They were called in by Mr Cachia Caruana and charged to coordinate the procurement of a building in central Brussels. Mr Cachia Caruana said 16 properties had been identified by the Ministry of Foreign Affairs but he only indicated to them one property, that of 1, Rue Archimede. He also told them to take Malta House in London as their model.

• 7 June: They told Mr Cachia Caruana they needed expertise and through KPMG London they were put through to KPMG Brussels. The notary was chosen on the suggestion of the manager of Malta House Joyce O’Conner, while the civil engineering firm SSAX was suggested by a French lawyer who was in Malta for the privatisation of the Lotto Department. Mimcol then chose Dr Caruana Galizia on the strength of his former work at the Lands Department.

• 12 June: The Mimcol delegation went up to Brussels and discussed 1, Rue Archimede.

• 18 June: Dr Caruana Galizia went up and discussed the demands by the owners of the building. Meanwhile SSAX told Mimcol they had visited the site and had found that part of the building had been requisitioned for a metro extension. The owners then started moving goalposts and demanded a higher sum for leasing.

While they were walking out of 1 Rue Archimede and felt unhappy with the situation as it was evolving with the owners, they chanced to notice that the building next door, 11, Rue Schumann, and further down 25, Rue Archimede, were both for leasing.

• 16 July: Mr Falzon went up to Brussels and was told by SSAX that in fact the Brussels authorities wanted to take a larger slice of the 1, Rue Archimede than the owners had told them and that the owners wanted to keep the appropriation compensation for themselves. The metro works would also touch the building’s foundations.

• 18 July: Mimcol was informed that Cofinimmo, the owners of 25, Rue Archimede, wanted to meet them. They were also informed that the owners of 1, Rue Archimede had made yet another change: they now wanted a significantly higher lease and were not prepared to sell.

• 14 August: A Mimcol delegation contacted Cofinimmo and was told the basic conditions: a lease for 27 years and sale thereafter.

• 11 September: KPMG provided the first indications on tax implications: it is better, they said, if government purchases directly.

• 15 September: the owner of 11, Schumann said he would consider selling but wanted e24 million

• 16 September: the owners of 1, Rue Archimede agree to sell but want e16 million for an unrefurbished building.

• 18 October: Mimcol appoint Martin Xuereb as the architect on the strength of his work at the British High Commission and Dutch Embassy in Malta.

• 24 October: Mr Cachia Caruana told them government had decided to rope in Albert Mizzi for the negotiations.

• 8 November: Mr Falzon and Mr Mifsud met Mr Mizzi in Brussels and he told them that in his opinion 25, Rue Archimede is the best as it has a huge potential while 1, Rue Archimede was all angles, without one single straight room.

• 18 November: At another meeting Mr Mizzi insisted that they must offer for the three premises as refurbished. Mimcol thus made its offers: e19 million for 1, Rue Archimede, e20 million for 25, Rue Archimede and e21 million for 11, Rue Schumann

• 23 November: The owners of 1, Rue Archimede wanted them to sign an exclusivity agreement. Cofinimmo came up with a counter-offer: e15.5 million with the client doing the refurbishment at his own cost but pays the owners 16 per cent.

• 17 December: Mimcol met the owners of 1, Rue Archimede. Once again, the conditions had changed: some money was being hidden. Had this gone on, it would have embarrassed the Belgian government. What the owners were suggesting was not illegal but dangerous.

• 15 January: Mimcol commissions a technical study of 25, Rue Archimede. Mimcol prepares the draft of the final report.

• 27 January: The owner of 25, Rue Archimede signified he was ready to lower his expectations: he now wanted e15.5 million for the building and e4.67 million for the refurbishment.

• 16 February: Report is presented. After a meeting, Mr Dalli tells them to start procedures for financing.

• 23 February: SSAX reports that 25, Rue Archimede presents no structural problems.

• 13 April: The contracts are drawn up and translated, later clarified at a meeting in Brussels.

• 17 May: Cabinet approves its purchase

• 25 June: Contract signed

Replying to questions, Mr Falzon said that the owners of 21, Rue Archimede had also hidden the fact that part of their entrance belonged to a third party, a doctor, who also wanted a cut.

The following is the structure of payments to the experts:

KPMG Belgium: e7255

SSAX: e9,200

Lawyer: e19,196

Notary: e12,166

Dr Peter Caruana Galizia: Lm5,500 plus VAT

Martin Xuereb: Lm2,938.

The three representatives said that they did not contact Mr Cachia Caruana at the early stage in their search. They had met him over three previous assignments: on state subsidies, meat processing and the pitkali reform. He must have been impressed with their work. Nor did they liaise with other government bodies, not even with the Ministry for Foreign Affairs.

Mr Brincat said it can be said the property had been identified by chance but Mr Falzon replied that Mimcol has enabled government to save money, as they worked on their own initiative. Had it been for others, they could have plunged for 11 Schumann.

Mr Cachia Caruana was not informed the group had contracted Dr Caruana Galizia. He was however informed about Mr Xuereb and pointed out that Mr Xuereb was doing some personal work for him.

When Mr Brincat tried again to ask why were not the local government resources tapped, Mr Falzon said they had approached the former Permanent Secretary in the Ministry for Foreign Affairs but he told them the ministry does not have the expertise they required. They also found, Mr Mizzi explained, it was better to source local resources.

Mimcol never took the decision to buy, rather than lease. It was Mr Mizzi who forcefully argued in this direction.

Nor did Mr Cachia Caruana choose the site: the only site he indicated was 1, Rue Archimede. They had gone to see the others to get some kind of comparison in their judgement. Nor did anyone tell them to buy this or that property. Comparisons were also made with the Luxembourg representation which is bigger and also structured on the Malta House model, although the commercial properties it houses are on a short lease since it can need extra space in a short time, due to the Presidency.

Dr Gatt then made the representatives list the Mimcol achievements: they were involved in: MIA, Lotto, Chambray, and Pender Place in Malta. They have tendered advice to government on an oil acquisition, advised the government of Latvia on privatisation as well as the Mauritius government and have been asked to advise the Cyprus government but have no resources to do so.

Finally, through a question by Robert Arrigo, it was found out that the amounts saved by having the government purchase the property directly, a 12 per cent registration fee, VAT at 21 per cent and a 15 per cent tax amount to some Lm3.5 million, enough to fund the refurbishment.