Polidano won government contracts in 2021 despite pending €40 million tax bill

Building contractor Polidano Brothers – the company owned by Charles ‘ic-Caqnu’ Polidano – was awarded several tenders and direct orders by Infrastructure Malta (IM) last year, despite having been in court over unpaid tax bills since 2020. This is in direct contravention of public procurement rules.

While IM, the government’s roads agency, is now insisting Polidano does not qualify for some €30 million in new tenders that it won after posting the lowest bids, the agency gave the same company at least two contracts last year, one through a tender worth almost €2 million for works on a tunnel in Ghajn Dwieli and another through a direct order of over €1 million for repairs to a quay.

The contracts were signed with Polidano Brothers during the time when court cases had already filed by the Commissioner for Inland Revenue for unpaid taxes.

Asked to explain the inconsistency in view of its latest decisions to ban Polidano Brothers from qualifying for government procurement, a spokesman for IM shifted the blame onto the Tax Commissioner.

“The contracts awarded (to Polidano) in the second half of 2021 were given on the basis of valid tax compliance certificate issued in 2021,” the spokesman said.

“In February 2022, the same company was recommended as the cheapest, technically compliant bidder for the award of another two contracts. When the agency requested the company’s tax compliance status, it was presented with a certificate showing that it was not compliant,” the spokesman insisted.

The decision by IM to cancel the award of the latest two tenders is now being contested by Polidano Brothers in the Court of Appeal.

While it’s been public knowledge since at least 2020 that Polidano Brothers had a pending tax bill running into millions of euros and going back for many years, it is not yet known why the tax authorities continued to issue a certified clean tax bill to the company, at least until the end of 2021.

The discrepancy becomes even more pronounced when considering that the same Commissioner for Inland Revenue, then Marvin Gearty, had initiated court procedures against Polidano in November 2020. Gearty was replaced by Joseph Caruana earlier this year.

The Commissioner for Inland Revenue has so far declined to explain the inconsistency of its actions within the span of a few months.

Tax practitioners told The Shift that the Polidano Brothers story as it is unfolding reflects what has been going on at the tax department for many years, with many companies.

“The problem is rules are not followed and decisions on whether to pursue tax dues, sometimes running into millions, are taken by politicians as they deem fit and implemented by civil servants,” they said.

“It was obvious that the authorities were ‘finding’ a way to issue a tax compliance certificate to ic-Caqnu despite having millions in dues. Apparently, when this was not convenient anymore, for reasons still unknown, the finance minister sent a message that enough is enough, and the Inland Revenue Commissioner changed his tune. Obviously, the finance minister is going to say that he does not interfere in tax issues,” the practitioners said.

According to public procurement rules, private companies are precluded from getting public contracts if they’re not up to date with their taxes, including income tax, company tax, social security payments and VAT.

However, many companies are still being issued with a ‘clean’ tax compliance certificate after coming to an ‘agreement’ with the authorities on a payment plan. Once they manage to ‘win’ the contract, the payment agreement is often either ignored or delayed until the next tender comes up and a new compliance certificate is needed.

In recent weeks, the finance minister has warned private business that it is about time they pay their taxes. He also announced a spending review in view of the mega deficits which Malta has been registering in the past two years.