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Julian Manduca
Minister for Investment Austin Gatt has laid on the table of the House a draft contract for a new lease of Fort Chambray and the land in its vicinity to Gozitan businessman and lawyer Michael Caruana and his family. The contract will be the focus of discussion in Parliament this week when parliamentarians are expected to discuss it on Thursday and Friday and has already been the subject of some controversy.
The government and Maltese investors have welcomed the deal because, should it be approved, it will release them from what was a very tight corner with major shareholder and P2 freemason Roberto Memmo unwilling to invest in the project and Maltese investors seeing their bank overdraft balances rising with no hope of pushing the project forward.
But the deal has come in for heavy criticism in the media with former Labour minister Joe Grima claiming that the Caruana family are set to make a massive profit from what effectively amounts to property speculation. Grima calculated the Caruanas are set to make a profit of Lm92 million should the contract as drawn up go ahead. While that amount may be somewhat on the high side, it has been repeated several times in MaltaToday but has drawn no comment or rebuttal from the minister.
The most controversial aspect of the new contract is that the new developers are not being obliged to include a tourism element in the new development. One of the reasons given for the favourable rates offered to Memmo in the past was that his project would benefit the Maltese islands by bringing tourists here as he was duty bound to include a tourism complex in the project.
In the new contract being suggested for the Caruanas it is being left up to the developers to decide whether the project will include a tourism element.
The proposed contract was slammed by Opposition leader Alfred Sant last Friday. Sant said the Nationalist government had “presented a new contract wherein the land at Chambray will be sold at social housing prices to rich people to build houses for rich people and no hotel will be built.” Sant also reminded the government of the criticism made in the past by the Labour Party against the contract offered to Memmo and said that now Memmo was offered Lm2 million to withdraw from the project.
MaltaToday had also revealed that according to evidence given in court Caruana was the subject of police investigations into alleged welfare abuse. The allegation has not been denied but Austin Gatt told this newspaper that the matter had nothing to do with the Chambray issue.
The draft contract indicates a deal between the government and Michael Caruana who is to appear in the name of Fort Chambray Ltd, Forti Resort Hotel Limited and Forti Development Ltd, all previously owned by the former investors in the project. Caruana will appear in his own name and for and on behalf of his wife, Carol Caruana, his brother Anton Caruana and his wife Anna Caruana, his other brother Frank and his wife Pauline. Michael Caruana will also appear in the name of several companies: Mary Rose Holdings; Castellar Investments; Joseph Caruana & Company.
The proposed contract, which will be discussed in Parliament, will terminate the existing contract which was signed on 13 April 1993 and which had already come in for much criticism, both because of Memmo connections with the Italian underworld and because of what were perceived to be very advantageous conditions allowed to Memmo and his partners.
The draft contract sets the termination date to 2092 and is for a premium of Lm1.5 million and Lm12,100 annually with an eight per cent or higher interest charge should the rent not be paid in time. It was also reported that the government will sell its shares in the project for Lm1.2 or Lm1.3 million.
The Caruanas will also pay the government for the directum dominium for the remaining period of the lease before selling each of the residential units.
The Gozitan family will also be responsible for the management and maintenance of the historical fort and bastions and other historical buildings in the area. At the end of the contract, in 2092, the land including all improvements made thereon will pass back to the government without any compensation to the Caruana’s for improvements.
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