Prime Minister Lawrence Gonzi last Sunday declared that although Claudio Grech and chief financial officer Antoine Portelli had resigned, everything was going ‘according to plan’. MaltaToday analyses the hyped-up start and the potential fall of the SmartCity project
It all started in February 2006 with Prime Minister Lawrence Gonzi announcing a major project in the south of Malta two weeks before local elections were due.
A few days later, IT Minister Austin Gatt revealed that discussions were underway with Dubai’s Tecom Investments, a subsidiary of the Dubai ruler Mohammed bin Rashid Al Maktoum’s giant holding company, for the creation of a Smart City.
It was set to create 5,600 new jobs, 65 % which were knowledge-based, and turn the depressed south in “the core service hub of the island”.
From that point on, the word “smart” became an integral part of the Nationalist Party’s ( and the Government’s) political arsenal.
As early as September 2006, the slogan “Int@SmartMalta” was chosen as the theme for its Independence Day festivities. PN secretary-general Joe Saliba was so keen on reaping the political dividends from the project, that Austin Gatt himself said that using ‘SmartMalta’ as a slogan – while negotiations with Tecom were still ongoing – was not so ‘smart’.
But Gatt did not have any qualms of his own when he launched a blitz media campaign just a few months before the March 2008 general elections, in which the country was bombarded by photos of prominent personalities endorsing the government’s ‘Smart Island’ strategy.
The campaign included personalities such as then TMIS editor Noel Grima, PBS journalist Daphne Cassar, presenters Peppi Azzopardi, John Bundy, Claudette Pace (still working at NET at the time), Claire Agius Ordway and Gianni Zammit, GRTU director-general Vince Farrugia, actor George Micallef, author Trevor Zahra, footballer Carmel Busuttil, GO CEO Sonny Portelli, Children’s Commissioner Carmen Zammit, businessmen Jonathan Shaw, Ivan Bartolo and Desmond Vella (who passed away recently, KNPD chairperson Joe Camilleri, singer Konrad Pule, and Owen Bonnici of Zoo fame.
The attempt to broadcast the ads on TV was thwarted only by the Broadcasting Authority, claiming that their broadcast right before the election would be too “political”.
The makings of a sacred cow
Smart City was quickly projected as a panacea for the challenges to Malta’s future development. Those who raised questions on the way the project had been fast-tracked (namely through the Malta Environment and Planning Authority) were rubbished with a degree of intensity reminiscent of the treatment accorded to “enemies of the people” in Dom Mintoff’s time.
MaltaToday’s revelation in September 2006 that only 19% of the project’s footprint would be dedicated to information and communication technology purposes – the raison d’être of the project – and that 20% was for real estate, was dismissed as “absolute rubbish” and a “malignant and selective reading of a confidential document” by Austin Gatt.
Opposition leader Alfred Sant was also repeatedly accused of putting spokes in the wheel, when he questioned the real estate component of the project. Sant warned that Smart City would “serve to screen the transactions of luxury apartment entrepreneurs from abroad”, and that the government had camouflaged this intention by “boasting about the thousands of jobs in IT” Smart City would create.
“But we have been here before. At Chambray, at White Rocks, at Cottonera and elsewhere, the same generous job promises were made and then buried,” Sant said.
The ministry’s reaction was to condemn Sant for “consistently opposing the country’s technological development through a campaign aimed at sabotaging the greatest foreign investment in Malta’s history.”
And the campaign worked: Labour was forced to dispel any lingering doubts on the project on the eve of the 2008 election. Sant promised Labour would back the project, and his successor Joseph Muscat would go on to describe it as a “national project which has the full support of the Labour Party.”
Fast-tracking the project In July 2006, Austin Gatt presented a motion to Parliament’s standing committee on planning and development, to include the land earmarked for Smart City at Ricasoli for inclusion in the new development schemes.
In November 2006, MEPA went as far as changing the local plan to accommodate the development, earmarking Ricasoli for “information and communication technology industries” while permitting residential, hotel and commercial development on the same site.
The plan then paved the way for a new arterial road, linking Tal-Barrani road with Kalkara; and for the relocation of the proposed Sewage Treatment Plant from the Wied Ghammieq sewage outfall, to a pristine site in Xghajra.
The Ricasoli land – a vast industrial wasteland the size of 40 football grounds – was offered to Tecom Investments for a ground rent of Lm65,000 (€150,000) a year, increasing by 5% every five years.
On their part, Tecom promised to keep 33% of their investment development free, and invest a further Lm10 million (€24m) in its landscaping. Another 119,000 square metres of floor-space (the size of 20 football grounds) were earmarked for real estate and commercial development. Tenants could redeem their lease on the land earmarked for apartments and villas at just Lm1.75 (€4) per square metre.
Developing Smart City would produce 651,119 cubic metres of construction waste, the greatest generator of waste in Maltese history. Additionally, when fully operational the internet village would require twice the energy demand of Gozo, or some 9% of the peak demand of the entire country.
This significant impact notwithstanding, MEPA approved the project in October 2008, just two months after the environment impact assessment was issued for public consultation – a record time for any project of such a dimension.
Additionally, Tecom Investments and the Dubai Investment Group had also furthered their interests in Malta, with the acquisition of 60% of Maltacom – now renamed Go plc.
Dubai in control As soon as the Smart City project was launched, the Dubai sheiks soon imported their way of working with the press from their homeland, where press freedoms are suppressed. In the 2008 report on Press Freedoms, US-based NGO Freedom House warned that “despite high-profile attempts to lure international media outlets to Dubai, concentration of media ownership and restrictive legal provisions continued to constrain press freedom in the United Arab Emirates (UAE) in 2007”. This led the NGO to consider Dubai and the rest of the UAE as “Not Free” with regards to its press freedoms.
“While the constitution of the UAE provides for freedom of speech and of the press, the government uses its judicial and executive powers to restrict those rights in practice,” the Freedom House report insisted.
It said that UAE Federal Law No. 15 of 1980 for Printed Matter and Publications, which regulates all aspects of the media, was considered “one of the most restrictive press laws in the Arab world”.
It was perhaps indicative of this high-handed attitude with the press that the public relations agency at the time handling the account for Smart City had hit upon a novel way to control the way its clients are represented in the media.
On 19 October 2008, MaltaToday revealed that BPC International Ltd requested a deposit of €2,300 before releasing any comment to the press, refundable only if Dubai investors Tecom Investments Ltd were satisfied with the resulting coverage.
This unusual strategy was met with indignation in certain parts of the media, but BPC’s director of public relations, Carmel Bonello, defended the deposit scheme on the grounds that it offers immediate redress in the event of his clients being misquoted.
“We are not doing this to shut journalists up,” hesaud. “We are doing this to ensure fairness”.
Bonello explained that the agency hit upon this strategy after “a breach of trust” by a local media organisation. Without going into detail, he described how “a certain article” caused a lot of damage to a national project which is set to bring over €200 million in direct investment.
“We had agreed beforehand to see the article, and like all others it was also cleared by the investors in Dubai,” Bonello said. “But there was an abuse of trust, and the article which appeared was not the same as the one to which we had agreed.”
The controversial initiative was withdrawn two days later, following criticism by journalists’ organisations. BPC announced on 21 October 2008 it would reconsider the strategy after pointing out that the €200 million Dubai project had “nothing to do” with the original arrangement.
Cast in stone
What makes Smart City different to other projects, where public land was sold at a pittance to make way for speculation, is that the agreement signed between Tecom and the government sets a Lm400,000 (€920,000) fine for each year in which the developers fail to create the promised jobs. Failing to complete the job in time will be met by a daily Lm500 (€1,150) penalty until works are finalised.
But will the Arabian sheiks honour their black-on-white commitments, despite a global recession that left Dubai bankrupt and dependent on a giant loan from its oil-rich sister emirate, Abu Dhabi?
After abandoning a similar venture in India, Tecom reiterated its commitment to invest €208 million in Malta.
But during summer 2009, key resignations among Smart City architects started fuelling speculation of Claudio Grech’s impending resignation and the slowdown in construction works at Ricasoli. International architecture firm Arquitectonica was dismissed by Smart City’s management in Dubai, and chief financial officer Antoine Portelli resigned. Additionally, senior project manager Martin Attard Montalto and infrastructure manager Joseph Anastasi had also tendered their resignations.
On 17 September 2009, finance minister Tonio Fenech confirmed that construction works on the Smart City project at Ricasoli went through a slowdown during the first half of the year. Just a few months earlier, in July, Claudio Grech had insisted that the project was bang on schedule, and that the first office building would start its operation next year.
Austin Gatt also told The Times Business that Smart City was “definitely not in breach of the contractual obligations” – but by then, the resignation of his former right-hand man (and chairman of the Malta IT Agency) Claudio Grech was being strongly touted.
In August, Grech played down the rumours by specifying he was “currently still employed with Smart City at the moment.” He also denied he was serving his notice, stressing that he was on holiday.
Just a month later, Grech cited “diverging operating views” as the reason behind his resignation. It is an ominous statement, considering his major role in the project – first as the government’s chief negotiator with Tecom, and then as the CEO chosen by the Dubai company to head Smart City Malta.
What’s certain is that if Tecom backtracks on its commitments, the government’s political credibility will suffer. After trumpeting a 5,600 job promise before the 2008 election,, and urging university students to focus on ITC above other subjects, anything less will be a heavy political price for the government to pay.
Timeline Smart City Malta
2006 23 February – Government announces ‘advanced framework discussions’ with Dubai holding company Tecom Investments for futuristic “internet village” dubbed Smart City Malta.
29 March – Heads of agreement signed.
16 May – Tecom-Dubai Investment Group consortium acquires a 60% controlling stake in Maltacom, the national telephony company
2007 22 January – Cabinet approves agreement framework.
5 March – Smart City master plan finalised and presented in Parliament.
8 March – KPMG issues feasibility study on Smart City’s socio-economic assessment
20 March – Unanimous approval of project in Pariament.
24 April – Deed and final investment agreement signed.
11 October – Preparation for demolition at Smart City site begins.
2008 14 June – First phase of Smart City Malta launched.
15 June – Ratification of Claudio Grech’s appointment as CEO.
6 October – MEPA approves Smart City development permits.
9 November – Smart City Malta gets personalised postcode.
19 November – Smart City Malta / BV joint venture as SCM01 general contractor.
2009 14 June – Dubai announces it is dropping its plans for Smart City Kochi (Kerala).
30 August – Claudio Grech denies he has resigned from Smart City.
17 September – Finance minister Tonio Fenech confirms that construction works on went through a slowdown during the first half of the year.
22 September – Key resignations among project officers.
29 September – Claudio Grech resigns.
4 October – Prime Minister Lawrence Gonzi says project was still on track despite the resignations of Claudio Grech and Antoine Portelli from SCM.
Any comments?
If you wish your comments to be published in our Letters pages please click button below. Please write a contact number and a postal address where you may be contacted.
Download front page in pdf file format
All the interviews from Reporter on MaltaToday's YouTube channel.
