PRESS RELEASE BY THE NATIONAL AUDIT OFFICE Joint Audit: Government Leasing of Private Property – Insights from selected case studies

The Auditor General, Mr Charles Deguara, presented the Joint Audit highlighted in caption to the Speaker of the House of Representatives, Carmelo Abela. This Report, prepared jointly by the Performance Auditing and Financial and Compliance Sections within the National Audit Office, examined selected leasing arrangements between Governmental entities and the private sector in terms of compliance to the legal and regulatory framework as well as good governance and value for money.

The audit built upon the findings of the NAO’s Preliminary Review: Leasing of Private Property by Government published in February 2024, which highlighted the importance of strengthening public sector estate management practices. This Report focuses on three leasing arrangements namely concerning the Malta Gaming Authority (MGA), the Ministry for Agriculture, Fisheries and Animal Rights (MAFA), and the Malta Competition and Consumer Affairs Authority (MCCAA). Of note is that further investigations are ongoing in relation to another case study which featured in the original scope of this Review.

The audit recognised that the Government Entities involved sought to address legitimate operational requirements and ensure the continued delivery of public services from the leased property. However, the review identified several areas where governance could be strengthened, particularly in terms of planning and oversight.

The opportunity existed for broader assessments and evaluations of alternative options as well as more comprehensive and formal documentation of cost-benefit analyses. Procurement-related administrative practices varied across the leasing arrangements reviewed, with some cases demonstrating limited documentation of evaluation procedures and decision-making processes.

The absence of a comprehensive public sector leasing framework contributed to inconsistencies in how leasing arrangements were planned, procured, and managed. As a result, although not irregular, entities often relied on differing approaches and interpretations when addressing similar leasing requirements.

Opportunities for improvement were also identified in relation to contract management and value-for-money considerations. The review found instances where contractual provisions lacked clarity and where greater attention could have been given to the planning of capital investments and refurbishment works.

Overall, the audit concludes that while the leasing arrangements reviewed generally addressed operational needs, stronger governance arrangements and a more consistent strategic approach are required to enhance transparency, accountability, and financial stewardship across the public sector.

In addition to the Subsidiary Legislation (S.L.) 601.12 issued in April 2020, which sought to harmonise and to strengthen the regulatory framework, the NAO recommends the establishment of a centralised public sector leasing framework that sets clear standards for the undertaking of needs assessments, cost-benefit analyses, procurement procedures, contract management, and oversight. Such a framework would support more consistent decision-making, strengthen accountability, and help ensure that public funds are utilised effectively and efficiently.

The Report can be accessed by visiting our website nao.gov.mt or its Facebook page www.facebook.com/NAOMalta.