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Sofia inquiry: Developers budgeted €260,000 to build multi-storey factory

The developers of the Corradino factory which collapsed and killed Jean Paul Sofia had proposed an investment of €260,000 for the project which an expert, presiding over the public inquiry, estimated would have cost over €1.1 million. 

That snippet of information emerged on Saturday morning when Malta Enterprise chief executive officer, Kurt Farrugia, took the witness stand at another session of the public inquiry scheduled at the weekend. 

Farrugia, who has held this post since August 2019, gave an overview of the process spanning the period between the application for a parcel of land at an industrial estate to set up a business project until the time that such application is approved by means of a letter of intent issued by Malta Enterprise.  

In this case, Allplus Limited, operated by Matthew Schembri and Kurt Buhagiar, had filed a first application in February 2019, along with the necessary financials to set up a furniture manufacturing business.  

At the time, they were already operating a small furniture-producing concern at Ħandaq and in fact, an official from Malta Enterprise had conducted an inspection at Ħandaq to verify that fact.  

However, their first application had to be revised since the financials did not cover the factory-building expense because the applicant assumed that there would be a factory ready to move into. 

So the application was re-submitted, along with the additional financials deemed sufficient to cover the building of the factory and the purchasing of new machinery for the project to take off.  

That second application was filed on May 14, 2019, said Farrugia, consulting the relative documentation which he then presented to the inquiry board.  

Malta Enterprise requested reference letters from the banks regarding Schembri and Buhagiar.  

The final application was vetted and approved by a special committee composed of Peter Borg, Paul Abela representing SMEs, Victor Carachi and Frank Farrugia representing the Chamber of Commerce. 

The project was approved and the relative letter of intent was issued, laying down the various binding conditions which INDIS was then to include in the contract signed with the investor.  

INDIS would normally be consulted before that stage in case of large projects.  

In this case, the project was classified as “small.”  

The letter of intent stated that the applicant, who was acquiring the land under title of emphyteusis, was to obtain all necessary permits and ensure that health and safety measures were taken.  

Questioned about the Sofia case, Farrugia said that Malta Enterprise imposed such “positive obligation” to make sure that the investor would not simply run off with the letter of intent but would follow up and go through all necessary permitting procedures.  

When questions turned to the financials of the project, the witness said that in this case the proposed investment was around €260,000.  

But architect and court expert Mario Cassar, sitting alongside board chairman Judge Emeritus Joseph Zammit McKeon, pointed out that “by [his] calculations such a project would have needed €800,000.” 

“€262,000 would cover a sizable garage!,” added Zammit McKeon. 

Moreover, in this case, the investors had later applied for an additional two storeys. 

So having five storeys on the original 300 metres square footprint “would make it €1.1 million to complete. €800,000 is on the low side,” persisted Cassar.  

And that €262,000 included the purchase of machinery for the furniture manufacturing, pointed out the board.  

“We approve the footprint,” replied the witness. 

“You do have a feel of the trends in industry. So when the furniture industry is on the decline in this country, what makes you approve such a project?” asked the chairman.  

Back in 2019, there were quite a number of applications of the kind, said Farrugia, pointing out that local manufacturers might offer a better product than the imported stuff. 

And Malta Enterprise had carried out checks at the applicant’s small business at Ħandaq.  

Nowadays, greater importance is given to projects having an added value on the country’s economy and obviously, the country’s priorities change.  

Who takes responsibility?  

So once the application is greenlighted and Malta Enterprise grants its consent, who shoulders responsibility to make sure that the investor abides by his commitments, asked Auditor General Charles Deguara, popping the inevitable question.  

So far, the board had put that question to several witnesses and still, the answer seems elusive.  

“We are somewhat puzzled that over the years, no one seems to have checked the construction [of the collapsed building]. That’s my concern. That’s what is worrying me,” said Deguara.  

Malta Enterprise did step in to check that the investor followed conditions such as the purchase of machinery, and they even carried out spot checks once the project is implemented.  

“We keep constant contact with INDIS  once the project takes off to make sure that they abide by conditions.” 

Pressed by family lawyer Eve Borg Costanzi about planning permits at the construction stage, Farrugia replied, “In this case no. To my knowledge, INDIS does that. We check once the project is implemented.” 

Yet the letter of intent stated that Malta Enterprise could withdraw that letter after serving due notice, if the tenant did not comply with conditions agreed upon.  

“But while construction is ongoing, you don’t get involved?” asked the lawyer. 

“No,” came the reply.  

Malta Enterprise boss Kurt Farrugia told the inquiry that developers' plan set a €260,000 budget for the project. Photo: Matthew MirabelliMalta Enterprise boss Kurt Farrugia told the inquiry that developers' plan set a €260,000 budget for the project. Photo: Matthew Mirabelli

The final assessment of the proposed project was based on the basic layout provided by the applicant.  

“We don’t see the architect’s plans,” said Farrugia when the lawyer insisted that the number of storeys and the volume of the building would make a difference on the proposed plan.  

“So you approve the business plan for carpentry purposes. Did you check who was experienced in carpentry? Was it the company or the workers it would employ?” asked lawyer Therese Comodini Cachia.  

In this case, they had a small going concern at Ħandaq which ME inspected and verified.  

“But what if the workers are registered as builders instead of carpenters?” pressed on the lawyer, pointing out that that was what happened in this case.  

“That’s what the inquiring magistrate found out,” she added.  

“Would that have affected your approval of the project? Were you informed?” 

 “I don’t know if we were informed in this case,” replied the witness.  

As for checking the applicant’s police conduct sheet and whether the person was facing  any criminal proceedings in court, Farrugia replied, “I don’t think if a person had a case in the past that should preclude him from applying.”  

ME were aware of the case filed by INDIS  against Allplus Limited in the wake of the Sofia tragedy to cancel the contractual concession.  

They had been briefed informally before the case was filed and consented, even though their formal consent was not required.  

“Are there lessons to be learnt from this tragedy?” asked Zammit McKeon, as the run questioning neared the end.  

“There always is, in every case. At application stage it’s difficult to foresee the future. We are now looking at applications in more detail….. We are making sure that checks are more rigorous even because industrial land is scarce.

"A project approved might not give the desired fruit so we always adjust. We also checked if the people behind a project were able to fulfill. But of course you can never foresee a thing of the sort,” concluded the witness.