Pembroke: Not for sale

I have written to the European Commission and Malta’s State Aid Monitoring Board and the Competition and Consumers’ Affairs Authority to examine whether the DB transfer was a case of unlawful state aid

The development of the massive DB project in Pembroke is not a foregone conclusion.  

To begin with, NGOs have taken the lead and collected the €20,000 required from the public to be able to have an evidence-based appeal against the Planning Authority’s decision to grant approval. In this regard I will be offering my assistance in connection with a critique of the social impact assessment. 

The NGOs in question, Moviment Graffitti, Din l-Art Helwa, Friends of the Earth, Flimkien ghal Ambjent Ahjar, Birdlife, Ramblers Association, Nature Trust and Zminijietna Voice of the Left have once again shown that wide civil society and political alliances can be effective in Malta’s environmental politics. The fact that three political parties – PN, PD and AD – are opposing the development and that three surrounding local councils, Pembroke (Red), Swieqi (Blue) and St Julian’s (Blue) have joined forces with NGOs is a positive step forward. 

Based on evidence from successful or influential campaigns in the past, I believe that when civil society is supported by at least one major political party or influential exponents within it, this adds public legitimacy to the cause. However, it must now be seen whether Labour’s current popularity wave can help it afford to give Pembroke away to such massive development. 

On the other hand, it may well be the case that the Labour government has violated EU state aid rules in its assistance to the DB group. This was originally observed by Arnold Cassola through Green MEP Ska Keller. Consequently, European Commissioner Margaret Vestager replied that such transfer of land “has not been notified to the Commission by the Maltese authorities, nor has any competitor of San Gorg Property Ltd submitted a complaint in relation to that transfer. Consequently, the Commission is not in a position to pronounce itself on whether that transfer resulted in the grant of state aid by the Malta to San Gorg Property Ltd within the meaning of Article 107 of the Treaty on the Functioning of the European Union (TFEU).” 

Commissioner Vestager added that “as a general principle, the mere fact that a public tender process is not carried out is, in itself insufficient to conclude that a transfer such as this entails the grant of state aid. What ultimately matters is whether the public authority acted in its capacity as a private seller in concluding the transaction and that the land was sold to the buyer at a market price.” 

Consequently, I wrote to Commissioner Vestager and asked her to investigate further into whether the Maltese government did indeed act as a private seller and sold the land at market price, as this might not be the case. 

Let us keep in mind that in November 2015, Projects Malta, a State agency, issued a Request for Proposals for the design, building and operation of an upmarket mixed tourism and leisure development at St George’s Bay with the intention of awarding a 99-year concession for the site currently occupied by the Institute of Tourism Studies (ITS). No formal tender was issued as per EU procurement regulations, but only a request for proposals. Only the DB group submitted a formal proposal despite the Corinthia Group – owners of three hotels in the area – having originally also shown an interest in the government concession. In February 2016, the government announced the DBG goup as the preferred bidder and started formal negotiations, announcing that the company would be paying €60 million for the land. 

In February 2017, the Maltese Government transferred 24 000 square metres of public land at the prime seafront location St George’s Bay, locality St. Julian’s, to the company db San Gorg Property Ltd, in return for a total of 15 million EUR payable over a span of 7 years. No interest will be charged. 

Government claims that the valuation of the land for a total of 15 million EUR was based “on an innovative model” designed by audit firm Deloitte, which has not been made public. 

Hence, I asked Commissioner Vestager to  request from the Maltese government that the mentioned Deloitte valuation model is made public; to  evaluate whether the price of the sale of land corresponds to market value, also in relation to what included in the Paceville Master Plan, and whether the government acted in its capacity as a private seller. Henceforth, Commissioner Vestager can conclude whether the transaction is in compliance with EU state aids rules, or not. 

In addition, I have also written to Malta’s State Aid Monitoring Board and the Competition and Consumers’ Affairs Authority. I asked them to  examine without delay the non-notified transaction at stake, which may consist of non-notified aid, to examine such aid without delay, as foreseen by the legislation, and, should there be the grounded suspicion that it may constitute unlawful state aid, to require the provider to suspend such aid until the board issues its opinion (Subsidiary Legislation 325.07: State Aid Monitoring Regulations, paragraphs 7 to 10). 

Here one should refer to the State Aid provision that state resources, in any form whatsoever, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market. (Subsidiary Legislation 325.07: State Aid Monitoring Regulations). 

In the meantime, I will keep following the matter closely together with those who are active to save Pembroke.

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