The fee paid by Fortina to secure the removal of land conditions from a government contract was three times what the company estimated it should have paid, the government said in a statement reacting to an NAO report which highlighted significant shortcomings in the process.

The report found that the government had pushed through a parliamentary resolution to remove conditions on land acquired by the Fortina Group which saw the private sector entity pay millions less than what an audit firm had valued.

It also found that the audit valuation was kept hidden – meaning that taxpayers were short-changed by €16 million.

In a statement soon after the report was issued, the government said it acknowledged it.

The government said that it had acted on these shortcomings when, in August 2024, a legal notice creating “clearer, consistent and objective methods and criteria” was issued to assess the removal of conditions in contracts concerning public land. It added that this legal notice had introduced a penalty of 25% of the value of the condition if it is realised that that condition had already been breached.

The procedure used to come up with this contract, which was investigated by the Office of the Auditor General, was in accordance with what is stipulated by the Government Lands Act (Chapter 573), the government stated. This means that the assessment of changes in the conditions was assessed by three architects who were not part of the Lands Authority and was also scrutinised by the Lands Authority’s Board of Governors.

“It was only after these steps were taken that the contract between the Government and Fortina was discussed and approved by both the National Audit Office’s Standing Committee on Accounts and also by Parliament,” the government said.

In addition, it continued that the agreement gone over by the NAO “does not concern a transfer of land but a change in two conditions within the contracts.” Through these conditions, it said that Fortina had previously purchased public land from the government in Sliema. This land was sold to Fortina, “to be used for tourism purposes,” in 1991, 1996, and 2000, and the condition amendments approved in 2019 “paved the way for a quality investment to be done in this location in recent years that was estimated at €55 million six years ago.”

The change in conditions obliged Fortina to pay a compensation fee of €8.1 million to the government, which is three times higher than the estimate made by the company itself that was presented to the Lands Authority during negotiations, the government said.

The government added that “contrary to what was alleged earlier this year, the Auditor General’s report never mentioned that the Office of the Prime Minister, or the Prime Minister himself, had obstructed any part or other of the investigation.”

Concluding its statement, the government noted that through a 2017 reform, the Lands Authority was formed instead of the Government Property Division, and that this allowed for decisions to be taken with greater autonomy, “beyond the direct involvement of politicians.” Adding another level of scrutiny, the Board of Governors – which includes an Opposition MP – oversees and approves the Lands Authority’s administrative decisions.

The government also said that a remedy has been introduced for persons or entities that disagree with the Authority’s decisions.