CM challenges audit report claims on contracts, housing and GIC 

The former Principal Auditor made “improper insinuations” about the Department of the Environment and the minister responsible, Dr John Cortes, when he said the handling of environmental contracts risked the “perception of corruption”, Chief Minister Fabian Picardo told Parliament on Thursday. 

The claim was contained in the 2018/19 Principal Auditor’s report, which had analysed environmental contracts that had not gone through a tendering process or been re-tendered after expiry, including a contract with Wildlife (Gibraltar) Limited for the management and maintenance of Alameda Gardens, Commonwealth Park Campion Park and Upper Rock areas. 

The audit report said the “family connection” between Dr Cortes and a director of the company – his wife – created a reputational risk of perceived favouritism or corruption that could lead to a loss of trust in the procurement process. 

But Mr Picardo said Mrs Cortes held no public office and should not have been subjected to “highly unfair and inappropriate public allegations” that ignored earlier explanations provided by the Government, including in Parliament. 

The report, he told Parliament, contained the allegations “but not the explanations”. 

Mr Picardo said the Government’s legal advice was that “…the unsubstantiated insinuation of corrupt practice involving Mrs Cortes — a private individual — was manifestly inappropriate, clearly defamatory, and potentially actionable in civil law.” 

Wildlife (Gibraltar) Ltd was set up by Dr Cortes in 1991 and at the time he held a 60% stake in the company, with his wife holding the balance, Parliament was told. 

Neither of them received fees as directors and the company was run on a not-for-profit basis, with any surplus income redirected to further improvements in the Alameda Gardens.  

Dr Cortes was paid as managing director under a contract agreed with the Government and maintained through successive administrations since 1991. 

On being elected to Government, Dr Cortes’ 60% stake in the business was passed to Dr Keith Bensusan, then deputy director at the Alameda. 

Mrs Cortes retained 40% “as a nostalgic link” to the company established by her husband, but to this day does not receive any direct or indirect benefit of any kind from the company’s activities, Parliament heard. 

Mr Picardo said Dr Cortes had put these facts into the public domain two years ago when the issue was raised in Parliament by the Opposition, and that the former Principal Auditor, as an officer of Parliament, should have at least reflected that in the report alongside his concerns. 

He said companies like Wildlife (Gibraltar) Ltd provided highly specialised services and the law allowed the Department of the Environment to preserve continuity and avoid disproportionate disruption, an approach that even the GSD had adopted when in Government and retained the company’s services. 

Additionally, case law showed the courts had concluded that “a mere personal link” between decision-makers and a supplier does not prove bias or invalidate an award. 

“It is rather as if the report, instead of cataloguing facts determined after serious investigations and enquiries, shared idle and unsubstantiated gossip,” the Chief Minister said.  

“In our considered view, the report did not rise to meet the seriousness with which a report of this nature must necessarily be prepared, on facts and only on facts.” 

“The report did not just fall into massive error. The report unfairly tarnished the good reputation of a private citizen.” 

“It did so by not reflecting explanations on issues which are part of the record of the proceedings of this House which flatly contradict the erroneous findings of this report now also laid in this House.” 

“Such plainly wrong conclusions, in a report laid in this Parliament no less, are unforgivable. It is a total failure of diligence on the part of the author.” 

Mr Picardo said too that the former Principal Auditor had written to the head of the Department of Environment and sought his response on these matters on Friday May 30 this year, a day before he was due to retire from the post on Saturday May 31. 

“The timing of the memorandum - delivered on the former Principal Auditor’s last day - left no opportunity for a proper response, plainly violating principles of procedural fairness,” the Chief Minister said.  

“In fact, it is nothing short of ludicrous.” 

HOUSING 

Mr Picardo was speaking during the third day of debate on a Government motion challenging aspects of the audit report as biased and wrong in fact and law. 

The Opposition, which has not yet had an opportunity to speak to the motion, has described it as an “assault on democracy” that seeks to “trash” its author and silence criticism. 

On Thursday, the Chief Minister also addressed criticism in the audit report that highlighted alleged irregularities in the allocation of some government properties. 

These included claims there were no documented policies governing allocations and concerns about 18 allocations made to applicants who were not first on the waiting list, including direct interventions by the Chief Minister in seven cases; alleged discrepancies between Housing Allocation Committee minutes and outcome letters; and a specific case involving a previous homeowner receiving an allocation. 

The audit report concluded that the Chief Minister’s involvement in housing allocations may have contravened the law and pointed to a lack of procedural transparency. 

The Government had already strongly refuted the allegations, something Mr Picardo reiterated on Thursday. 

The Chief Minister said allocations were guided by the housing allocation scheme and internal procedures that had long been in place. 

He said ministerial discretion had been exercised since 1969 in “exceptional cases” and this was supported by section two of the Housing Act 2007, which defines the Housing Authority as the minister responsible or any person designated by Government. 

He added too that the Chief Minister’s portfolio includes housing and all other portfolios – he can approve and sign decision as Chief Minister if a minister is unable to, for example - adding case law supported the proposition that housing allocations “should be exercised flexibly and rationally in the public interest”. 

He cited as an example the Privy Council’s decision in Rodriguez vs Minister of Housing, where the court quashed a decision to refuse a same-sex partner’s request for joint tenancy because the ministry it had “unlawfully fettered its discretion”. 

“Although Rodriguez focused on discrimination, it reaffirmed the fundamental principle that housing authorities must exercise discretion on a case-by-case basis and cannot apply rules inflexibly,” Mr Picardo said. 

He later added: “This principle underscores that personal circumstances can justify departures from waiting-list order.” 

“Absent evidence of dishonesty or bad faith, it is the Government’s considered view, on the basis of legal advice, that allocations driven by documented urgent need would be upheld as lawful and rational.” 

Mr Picardo said the report mischaracterised lawful exercises of discretion “as irregularities”. 

“At most, any deficiencies lie in documentation or record-keeping but such issues do not, and cannot, render the underlying allocations unlawful,” he told Parliament.  

“On the contrary, they are consistent with both the statutory framework and binding authority that discretion must be exercised to meet genuine needs.” 

Mr Picardo said most of the 18 allocations were supported by documented evidence of urgent needs such as domestic violence, threats to life, overcrowding or child safeguarding, but these details were not always recorded in the public database to protect applicants’ privacy. 

In five of the seven cases where the Chief Minister had intervened, documentation was present and justified the allocations, Parliament was told. 

“In the remaining two, the facts were known to senior Housing officials and based on referrals from agencies, such as the Care Agency and the Royal Gibraltar Police,” Mr Picardo added. 

“These were lawful, humanitarian interventions, not political favours which is how it appears to have been portrayed in the report.” 

He added that the Government’s independent legal advice was that the report’s findings on this point were “misleading or unbalanced”, and that the report’s portrayal of missing documentation did not acknowledge privacy obligations and risked defaming public officials by implying impropriety where confidentiality was lawfully maintained. 

“In so far as there were administrative errors, these concerned minor discrepancies in committee minutes and outcome letters were clerical in nature and have since been corrected through staff training,” Mr Picardo told Parliament. 

GIBRALTAR INDUSTRIAL CLEANERS 

Mr Picardo also spoke about the audit report’s criticism of excessive overtime at Gibraltar Industrial Cleaners, legacy working practices including a 74-hour week, a “finish and go” culture, inefficiencies and cost implications in staffing and scheduling, as well as a lack of reform in operational practices. 

The former Principal Auditor had written to the chief executive of the Department of Environment on May 22 this year, eight days before retirement, raising concerns about pay and overtime in a 10-page letter, Parliament heard. 

Mr Picardo said that breached procedural fairness principles because it offered insufficient time to respond before the report’s publication. 

He said the report’s findings were “outdated, incomplete and misleading” because they did not properly reflect steps taken by the Government that resulted in a collective agreement in March that addressed pay and overtime structures embedded in legally binding contracts dating back over two decades. 

Mr Picardo said the Government agreed with the auditor that these issues had to be addressed, which is why, he said, the Government had addressed them through a new collective agreement that would result in annual savings of £685,000. 

“Mine is the first Government to have taken the bull by the horns and acted, only to be mauled by a fellow matador,” Mr Picardo said. 

“This agreement abolished the manager’s overtime, restructured staffing, and introduced cost-saving measures.” 

“These significant reforms that have been in the making for many years were not discussed in the report.” 

“The omission of any analysis of the March 2025 collective agreement, which resolved most concerns, constitutes a breach of fairness by failing to present a complete and accurate picture.” 

Parliament adjourned on Thursday and will reconvene next Wednesday, when Mr Picardo will continue speaking to the motion.