Withdrawal of Manoel Island deal may be the first casualty

It is no wonder that the Institute of Accountants (with 3600 qualified members) cautioned that the circumstances prevailing within the country are so extraordinary and grave that immediate actions are needed to restore serenity and confidence in our marketplace.

The Institute inter alia, demanded immediate changes in the executive arm running the country and those leading the relevant institutions. It harks that incumbents occupying executive political roles (somewhat associated with the prevailing uncertainty) should make way now to avoid further reputational damage for Malta and above all to carry political responsibility. The Institute said it had been let down by the certain elements within government and the institutions.

These are strong words from an institute whose members constitute the building blocks of diligent audit and business advisory services to the entire business community (including top government agencies).

The profession for many years guided its members to maintain good governance and a high level of professionalism. No, it is not business as usual as some apologists are saying.

The first tremor in business failure was the recent announcement by the Tumas group that talks with the Midi Group to transform Manoel Island into a top-end multimillion joint project had been dropped. The developer had faced strong public disapproval during its application for building permit yet one cannot overturn a 99-year concession.

The controversy was accentuated by the developer wanting - and obtaining - approval for the building of a casino and a hotel at the historic 16th century Lazaretto, apart from erecting various apartment blocks, retail outlets, a yacht marina, helipad and public plazas.

It was only last year that news came out that the affluent Tumas group (owners of Portomaso among other massive developments ) has started talks with MIDI to buy a majority share in the Manoel Island project estimated at €100 million. The public at large did not have to hold its breath fearing the project will lapse since MIDI quickly announced that it is fully committed to start its dream project once planning permits are processed.

It is obvious for bond holders to ask- what made the Tumas group shy away from such a profitable and prestigious investment ? The answer came last week when Tumas group former CEO Yorgen Fenech was  intercepted by the Armed Forces out at sea leaving Portomaso in his luxury yacht. He was arrested and later charged with complicity in the murder of journalist Daphne Caruana Galizia.

The Tumas group is a shareholder together with Gasan Group in a €450 million Electrogas utility together with an Azeri company and Siemens.

There is also a joint project between the Tumas and Gasan Group named The Quad which is being developed to provide upmarket business complex spread 4 towers ranging from 13 to 19 floors. One hopes that the Electrogas saga will not impinge on the building of The Quad as this will surely exacerbate the tension in the construction sector and hit employment prospects of the country.

Back to the Electrogas consortium, the saga unfolded when the murdered journalist had just started to investigate a cache of documents leaked to her on Electrogas’s internal governance. She discovered that an offshore company with the name 17 Black entered into a pact to pay substantial sums to two secret Panama companies registered (shortly after 2013 election ) by Nexia BT as personal advisers to the Energy minister and the Chief of Staff.

An independent consortium had later investigated the scene revealed that 17 Black offshore company belongs to Yorgan Fenech-he never denied it. A whistle-blower who was given a presidential pardon has named Jurgen as one of the masterminds in the murder plot.

The anger by the electorate learning that allegations of impropriety were hinted to touch the top executive class of government, resulted in unprecedented business uncertainty and united the nation to demand closure of the murder investigations which dragged over two years.

The public is insisting that following the abrupt resignation of two cabinet ministers and the Chief of Staff last week, caused high tension in the country. The crowds now demand the prime minister to step down immediately and take political responsibility. Another official statement was issued by GRTU (the union for SME’s) urging a quick settlement to calm the acute business tension.

They simply said it cannot wait anymore; the economy and domestic market dictate urgent closure of the murder investigations saying any conflicts of interest, actual or perceived, must not impact the process or outcome of the investigations.

The GRTU called for greater political responsibility and immediate solutions to the grave problems at hand. Their  statement continued saying that “Procrastination will only lead to more damage. The longer we take to turn the page, the longer it will take us to get back on our feet. As an official representative of a main strata in society GRTU  feel obliged to protect our social and economic segments.

In the meantime, Tumas Group quickly dissociated itself from claims that it benefited from corruption alleged in the Electrogas scandal, and immediately announced that it was seeking an independent, external report to ascertain whether it had benefited in any way from the illicit activities being attributed to its former director, Yorgen Fenech.

This week, Tumas Investments bonds suffered a 7% drop. To conclude, one cannot but mention the plea for caution issued by the Chamber of Commerce and Industry. It said that it disassociated itself from those who use business as a shield for criminal activity.

“This does a great disservice to the country and irreparable damage to the business community. We remain advocates of ethical business and hope that the forces of law and order will be empowered to investigate and take legal action against all forms of criminal activity that tarnishes our reputation. We also hope that politicians will safeguard ethical business and adopt a no tolerance approach to impropriety in future.”

It looks like Christmas is coming late this year.