An interesting thing happened in politics this weekend. The Nationalist Party and one of its long-time donors went to war over a big land deal, giving us a glimpse into the inner workings of the sort of relationships political parties have with big business. Here’s how it happened and what we learnt so far. Skip to the end to see where things stand today.
1. Four weeks ago, the government unveiled a major private investment in St George’s Bay on the former ITS site. It will be called DB City Centre.
Pitched as €300 million investment – the largest ever by a Maltese businessman – the finished product would include Malta’s biggest spa facilities, large spaces for live music and events, and a 315-room Hard Rock Hotel. The investor? Silvio Debono, of DB Group, who also owns Seabank Hotel in Mellieħa and San Antonio Hotel in Qawra. He happens to be a long-time donor of the Nationalist Party.
2. Questions were immediately raised on the price of the land deal, with Times of Malta claiming the company would pay just €15 million, not €60 million as originally cited.
The government originally said it gave the land to Silvio Debono for 99 years, in return for €60 million. This was aready criticised by some experts who estimated its value to be closer to €100 million.
But according to an analysis of the contract by Times of Malta, DB Group would only end up paying €15 million for the land. The rest of the money would come in the form of groundrent from those who buy apartments, offices and garages.
3. As criticism mounted, MaltaToday revealed that PN deputy leader Mario De Marco was Silvio Debono’s lawyer on this project, compromising the PN’s position.
At first, De Marco defended his involvement in the deal, saying it wouldn’t preclude the Nationalist Party from taking a strong position on the deal. But things turned sour very quickly.
4. Blogger Daphne Caruana Galizia called on De Marco to resign for the good of the party.
After Dr De Marco defended his right to professional world, influential blogger Daphne Caruana Galizia lashed out, saying he should resign or renounce the brief immediately. Later she revised her opinion: “His only choice is to resign. Now that it has been established that he is in Silvio Debono’s pay, sensible people will not trust him.”
5. In a speech last Sunday, Opposition leader Simon Busuttil said De Marco agreed to cancel the client due to a “conflict of interest”. He also said PN wanted the deal investigated by the Auditor General.
In a simultaneous speech, Prime Minister Joseph Muscat reacts in real time, after he is handed a piece of paper presumably reporting what Busuttil said. Muscat questions whether the PN has other forms of conflicts of interest on this deal.
6. That’s when DB Group decided to go to war with the Nationalist Party, sending an SMS to Busuttil asking for its donations to be refunded.
Busuttil reveals this SMS during a PN fundraising telethon which coincidentally happened to be held on Sunday while all hell was breaking loose.
7. DB Group went a step further, alleging that the salaries of PN’s CEO and Secretary General were being specifically covered by Silvio Debono’s donations.
The DB Group’s statement read as follows: “More specifically since [Busuttil] became leader we were asked to cover the salaries of both the secretary-general and the party’s CEO. Dr Simon Busuttil is fully abreast of both the request for these funds as well as their acceptance. Requests for funds from the PN have reached us as late as yesterday.”
The group also said it had no problem submitting its contract with government to the Auditor General for scrutiny.
“No one in this country is more eager for the truth to win out on this matter than our Group. The reason is obvious to those who have the decency to hear. For the first time in history, the price of the public land in question was not determined by the parties to the deal but by Deloitte, an auditing firm of international repute. And we, as a Group, abided by its decision. There can be no stronger proof that we never expected any favour and never received any. It is precisely for this reason that any allegation of corruption from the PN is simply a hurtful lie,” the group said.
8. Social media went into a frenzy, with the smaller parties seizing their moment and lambasting the political mess the country finds itself in.
9. Some 18 hours later, the Nationalist Party denied those salaries were paid by DB Group and said the only donations received from the company in 2016 amounted to €3,500.
PN also said that two companies linked to Silvio Debono had “commercial relations” worth €70,800 with the party’s media arm Media.Link Communications. Busuttil once again reaffirms that any donations to the PN should not be seen as a way to silence a political party.
Before that, the Labour Party said it received €2,000 from the DB Group in 2016, painting a picture of how Silvio Debono was donating to both parties.
10. But once again, DB Group insisted it paid more to PN and had receipts to prove it.
DB Group said it gave the PN two payments, one of €70,800 and another of €6,500.
“It was the PN’s highest officials who told us that the €70,800 they had requested were to be used to cover the salaries of its secretary general and CEO. The insinuation that we got back that value in adverts, is a total lie. We challenge the PN to list those commercial services rendered unto us in 2016,” the company said.
“On the request of these same officials, we were to be invoiced by Media.Link, as happened. In 2016, globally these invoices amounted to €70,800, exactly as we were requested for these two salaries, pertaining to the secretary-general’s and the CEO’s.”
11. PN now faces claims that it breached the party financing law, while PL hasn’t even registered as a political party…
The law disallows donations over €25,000, so if this Media.link’s barter deal is non-existent, PN could have breached the law. Meanwhile, the Labour Party has not even registered as a political party, according to the law it introduced itself. This means it has failed to submit the list of donations it received last year, although the party has said it will do so by the end of April after it changes its statute to be able to do so.
So where do we stand today?
Opposition leader Simon Busuttil
Simon Busuttil has pinned his electoral hopes on his anti-corruption message. But in tiny incestuous Malta, this is clearly going to be harder than he anticipated. On the plus side, Busuttil has gained some respect. He’s remained consistently against the project despite receiving donations and threats by Silvio Debono and despite the fact that his deputy was the lawyer on this deal. The downside is that everyone’s attention is now on PN’s donations policy and Busuttil faces criticism that he acted naively or hypocritically, while possibly not telling the truth on the actual donations received. Meanwhile, he is faced with a call to refund donations a year before the election – this can’t be easy for a party in financial trouble. Lastly, what if this project turns out to be a total success and is given the Auditor General’s stamp of approval? How will PN look then? Only time will tell.
Businessman (and PNPL donor) Silvio Debono
Silvio Debono is adamant that his project is good for the country and was fairly negotiated. But his tactics in asking for a refund on his donations do cast further doubt on his character and how this deal came to be. Now that PN has nothing left to lose in his regard, who knows what will happen next? This morning, for example, Daphne Caruana Galizia said he was named in Panama Papers and has a secretive company set up by Mossack Fonseca. There is probably more to come and this won’t be fun for a businessman who prefers to lay low. At least he’ll be making hundreds of millions of euro while putting out just €15 million himself. Things could be worse.
Prime Minister Joseph Muscat
As usual, Muscat has emerged somewhat triumphant and unscathed in all of this. Silvio Debono, a former PN donor – whose PR person also happens to be former TV-thorn-in-Labour’s-side Lou Bondi – is now busy fighting his battle against PN. But this case continues to drill home the message that political parties are in the pockets of business people who expect support for their projects in return for donations. Another project under Labour is being questioned for its good governance and he is once again seen as a schemer pulling strings from behind.
PN deputy leader Mario De Marco
Mario De Marco was at best naive to think his work for Silvio Debono would not conflict with his political role. But any internal criticism De Marco faced for taking professional fees on this deal could arguably be counteracted by the fact that PN itself was taking fees/donations/barters from the same company. Still, this is the second time De Marco has come under serious fire from party acolytes in recent weeks and his actions will not be forgotten fast by those he made angriest. De Marco could spin his actions to be a reminder to legislators that having part-time MPs is probably not a good idea.
The smaller parties
Alternattiva Demokratika and Partit Demokratiku have both sought political mileage from this mess, and they are probably the only parties who stand to gain from the escalating political bloodbath. Still, the reality remains that political campaigns cost money and all parties need donations to be effective. What one is willing to compromise in return for donations, is the question. Perhaps these incidents strengthen the call by smaller parties to receive some form of government funding.
The Maltese public
Besides some light entertainment, the Maltese public remains the big loser in all of this. A prime site of public land is going rather cheaply to a businessman who already owns huge other tracts of Maltese property. Residential units in the project will undoubtedly be unaffordable for the vast majority of Maltese people who face skyrocketing rent prices and diminishing quality of life due to traffic and other environmental pollution. Both major political parties appear less credible and trustworthy one year before an election – both seemingly ignoring the party financing law. And it’s another reminder that no matter how we vote or who we donate to, it will always be big business who holds the real influence and ends up the winner.
Perhaps at the very least, this could push us to demand real change to our system…