Dragonara Claims of “Reverse-Engineering” During the Tender Process

Dragonara Claims of “Reverse-Engineering” During the Tender Process

18 Dec 2014 | 11:00 Author: King, George

After the failed attempt by Dragonara Gaming Ltd., to prevent the awarding of a casino tender to Eden Leisure with a court injunction, Dragonara has gone on to lambaste the Minister for Economy as well as the Privatization Unit for “reverse engineering” the entire process.

After Dragonara Gaming Limited was denied a prohibitory injunction to prevent the Minister of Economy, Chris Cardona, from awarding Malta’s latest casino concession to the Eden Leisure Group, they have gone on to make startling revelations regarding the tender process and the behavior of members of the Maltese Government.

After it was announced that a new casino concession would be put up for tender, a number of interested parties made themselves known, among which was the likes of eventual winners, the Eden Leisure Group, and Dragonara Gaming Limited, the runners-up.

Chris Cardona, the Economy Minster, as well as members of the Government’s Privatization Unit, handpicked a team, the Evaluation and Adjudication Committee headed by retired judge Geoffrey Valenzia. Mid-way through the adjudication process however, the committee was disbanded under the guise of a conflict of interest. Privatization Unit Chairman, Manuel Camilleri, said in court hearings that “Economy Minister Chris Cardona personally ordered the dissolution of a technical committee set up to evaluate bids relating to the concession.” Following the board’s dismissal, due to “three potential conflicts of interest”, the tender was awarded to Eden Leisure by the Economy Minister,

In reply to the dissolution of the committee, Dragonara Gaming said in a statement to press: “All the members of that same committee, chosen we assume for their competence, were appointed by the Ministry or the Privatization Unit itself. We assume this was done after some thought and deliberation. It is therefore baffling and not credible that the Minister had to dismiss this technical committee due to the fact that, allegedly, he had second thoughts on the suitability of the members of that committee.”

According to the Ministry, the dissolution of the committee was due to a board member, Kevin James Fenech, a managing director of a business advisory firm that gives strategic advice to the Malta International Airport, could have a conflict of interest. His conflict of interest arises due to the fact that the Bianchi family is both a major shareholder of Dragonara Gaming Limited as well as being a minor shareholder of Malta International Airport.

In response to these claims, Dragonara said: “this is the lamest of smoke screens. The Bianchi family members are in the same position as the other 6500 shareholders of the MIA and have no entitlement to its management. Ironically, the Government itself holds 20% of the shareholding of MIA and has a guaranteed seat on the board. This makes Cardona’s assertion of a conflict of interest on the part of the Bianchi family a joke in bad taste, were it not such a serious matter.”

Another of the conflicts of interests pertains to a member of the committee that was on the board of the Lotteries and Gaming Authority of Malta when Dragonara Gaming was awarded the tender to manage the Dragonara Casino in 2010.

The awarding of the tender as well as the dissolution of the committee is even more alarming when combined with a statement by Joe Mikallef, a reporter working for Media Link Communications. In a signed affidavit presented to the court during the injunction hearings, Mikallef states that he had already seen the completed report compiled by the Evaluation and Adjudication Committee and signed by retired Judge Geoffrey Valenzia, stating that the committee recommended the concession be given to Dragonara Gaming. However, the Minister stepped in, dissolved the committee and proceeded to award the concession to Eden Leisure based on their overall contributions and not according to the up-front fee, which has been one of the main contributory factors until this point. Privatization Unit Chairman, Manuel Camilleri said, after evaluating all the proposals, that it was “most advantageous for the Government”.

The advantages in question refer to a €31 million expansion of their InterContinental Hotel, the location for the casino, as well as the nat tax value instead of the up-front fee.

When talking to Dragonara Gaming’s Marketing and Business Development Director, Franco Degabriele about the tender process, he said that the last 3 concessions went to the highest bidder, the company that offered the highest financial reward to the Government as opposed to the overall contributions, such as the €31 million investment, which although good for the economy and tourism, has nothing to do with the casino.

Now though, the Minister has said that it was the overall contributions, which Dragonara Gaming say cannot be a contributing factor. “Saying it was the financial value, and if you look at how they’re looking at the financial value makes absolutely zero sense,” Degabriele said in his interview with us, “because they are taking the nat present value of the tax contributions of the ten year period. Now you tell me I don’t know what I’m going to be paying in taxes for the next 6 months, and I operate a casino, you just don’t know. You can predict what’s going to happen, but to put as a factor, the nat present value of a ten-year cash flow projection, and say that the cash flows I’m going to deliver are more than the cash flows he’s going to deliver and you base the adjudication process on a cash flow analysis, is just unheard of to say the least.”

Dragonara Gaming have also made reference to the Government “reverse-engineering” the tender process and, speaking about the results of the failed injunction, said in a statement: “This latest twist to this farce is in fact outright confirmation that the evaluation process was a circus disguised an official procedure intended solely to legitimize a foregone conclusion which the Government wanted to arrive at from the very start of the process."

George King
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A Writer, a Sailor and a purveyor of Facetiousness: Ladies and Gents, we give you... George "the" King

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