‘Range of issues’ in government’s €22 million private property leases – NAO

The government spent €22 million in 2022 to lease 260 private properties for its agencies, despite some 4,000 state-owned buildings remaining unutilised, according to a preliminary review by the National Audit Office (NAO).

The review, submitted by Auditor General Charles Deguara to House Speaker Anglu Farrugia, reported  an “increasing” number of rented properties, due to a “a range of operational issues” which prevented the Lands Authority from “more effective and efficient estate management”  of the portfolio of underutilised property.

It said the authority historically experienced an acute shortage of financial, human, and technological resources and the ability to refurbish properties quickly, leading them to rely on renting to fill the gap.

But when it comes to the leases and agreements signed, “The preliminary review uncovered various governance concerns,” the NAO said.

“Specifically, these concerns relate to compliance to the regulatory framework, economy, efficiency, and effectiveness as well as accountability and transparency issues,” it concluded.

According to the NAO, “In 43% of these leases, governmental entities did not carry out a formal or documented needs assessment prior to leasing private properties,” with some nine per cent of these properties being leased out in breach of procurement regulations.

Of the 260 private buildings, two-thirds were used as offices and in six cases, the government spent an additional €1 million each to upgrade the office space to suit the requirements.

The NAO recommended the “government needs to strengthen its statement management functions, both with respect to state-owned properties as well as the leasing arrangements within the private sector.”

Further investigations are being carried out by the NAO on the basis of risk and a subsequent report is expected.

The Shift has reported extensively on exorbitant rental contracts entered into by the government to lease private property.

Last year, Environment Minister Miriam Dalli’s Project Green, then led by its former CEO Steve Ellul, paid €400,000 per year for its offices.

Transport Malta’s renting from the General Workers’ Union of the A3 Towers in Paola costs some €490,000 a year under a lease agreement that began in August 2014.

Meanwhile, the premises of the Malta Business Registry (MBR) is being rented by the government at an even higher rate, with the Auditor General having described the €2 million per year being paid for the Zejtun premises as “prohibitive” in 2021.