Hyzler defends Maltapost privatisation

Parliamentary Secretary George Hyzler yesterday defended the government`s deal with Transend on the partial privatisation of Maltapost, telling parliament it was "a good sale with good conditions to a good partner" which would enable Maltapost to grow and become more relevant in the region.

He was speaking during a debate on an opposition motion calling on parliament to declare the deal as not being in the public interest. The motion was later defeated, with 32 government votes against and 25 opposition votes in favour.

Dr Hyzler said all questions about the deal struck with Transend had been answered during the meetings of the Public Accounts Committee, and he could not, therefore, understand how the opposition`s motion could claim the contrary.

The government`s purpose in the partial privatisation of Maltapost was to take on board a strategic partner who would invest in the company and help it grow and modernise its operations in an increasingly competitive environment. The postal service could not depend solely on its core business. Maltapost was a company which did not depend on government handouts and was relatively efficient, but it had practically done nothing to diversify its service.

The Labour government itself had felt the need to privatise the postal service, selling the majority of the shares to Mid-Med Bank and Maltacom. That process was mistaken in that the new shareholders had nothing to contribute to the postal service. And although the opposition was criticising the government for not having issued a public call for interest in the privatisation process, no such call had been made at the time, even though it was a majority of the shares that had been sold.

Dr Hyzler said that after the present government made its plans on the partial privatisation of Maltapost known, company officials had contacts with five companies which were eventually narrowed to two, Canada Post and New Zealand Post, the holding company of Transend. The talks were then taken over by the Privatisation Unit in February 2001.

The two shortlisted companies were among the leading firms in management consultancy and service providers in this sector. It had made no sense to hold talks with a European company since Maltapost wanted to develop a regional hubbing service, and this would have been in conflict with the interests of European companies.

Transend was selected after detailed talks and studies.

In terms of the agreement, 980,000 shares were sold for Lm1.25 each (35 per cent of the company shareholding for a total of Lm1.2 million). With the share value having been about 90c this represented a significant premium.

Lm490,000 were paid upon signature and the rest were being paid in quarterly installments. Transend was bound not to sell its shares during the term of the contract and after that the government would have the first option to buy back the shares.

Dr Hyzler said the funds from the agreement were ploughed back to the company.

The management agreement reached with Transend would run for two years at a cost to Maltapost of Lm300,000 per year. Transend was bound to attain certain targets and had to provide a number of experts on executive lease, including the chief executive and other senior officials. Transend also had to train Maltese in succession management, so that they could take over when the management agreement expired in two years` time.

Dr Hyzler said he was pleased to note that the company had identified a number of new services which could be introduced, substantially broadening its operations base.

Among them would be rationalisation and simplification of tariffs based on size not weight, a service of unaddressed advertising mail, value-added registered mail, a track and trace service, parcel customs clearance on behalf of clients, a local courier service and door-to-door locked box pick up and delivery service.

Other possible services included a mail house service for the management of large bulk mailings, a direct mailing service on the basis of a data base and the reporting of returns, a hybrid mail service where Maltapost printed material on behalf of clients and mailed it, an international express service, a better philatelic service, and e-money and e-commerce services.

Unless Transend managed to develop such services, the purpose of the contract would not have been attained, Dr Hyzler said. He observed that the management agreement laid down penalties if targets were not met. With Transend having bought 35 per cent of the shares, it had every interest to ensure that Maltapost performed well.

Dr Hyzler said Mr Alfred Mifsud had been misleading when he wrote that Maltapost had a surplus of Lm180,000 when the Labour government left office. At the time Maltapost had extraordinary revenue of Lm 250,000 from Libya because of the embargo on that country. The company also had extra income because of election mail.

The fact was that the Labour government had done nothing to improve the company`s income other than to increase postage rates by one cent.

Now, five years on, the opposition was claiming in its motion that tariffs would be rising "in a substantial manner." Yet this increase would also be of one cent.

Dr Hyzler observed that the government`s privatisation plans had attracted the interest of two of the leading companies in the sector. What need had there been to issue a call for interest, only to attract the same two companies and companies which were less qualified?

The parliamentary secretary denied there had been no transparency in the process. He said that no government ever debated in parliament or in the newspapers what it was negotiating. Transparency was about putting everything on the table of the House after the conclusion of negotiations.

Dr Hyzler said Transend was among the biggest international postal companies in the world, with a presence in more than 40 countries. It was true that its contract in South Africa had failed, but it was successful in the other countries. Did that mean that it did not have a good track record, as the opposition had claimed? Even in South Africa, the company argued that it had met four of the five targets that had been set, and it had its own reasons why it did not meet the fifth.

Referring to questions by the Opposition on the workers, Dr Hyzler said the contract signed with Transend did not change working conditions in terms of the collective agreement.

Dr Hyzler referred to the controversy over the new collecting times. He said that to date it was only letters mailed before 7 a.m. which arrived at their destination on the same day. The rest arrived on the following day. Very few people mailed letters before 7 a.m but because mail was collected at 7 a.m. sorting took place late and postal delivery took place late in the morning.

Now, as a result of the changes, mail delivery would be earlier. Mail posted the previous day, therefore, would arrive first thing in the morning, not several hours later.

Referring to comments about excess workers, Dr Hyzler said it was true that Maltapost had excess workers, and it was the company`s responsibility to absorb them in new sectors and activities.

Concluding, Dr Hyzler said the deal with Transend meant the government had sold well with good conditions to a good partner which would enable Maltapost to grow and become more relevant in the region.

Finance Minister John Dalli said Maltapost`s future was somewhat blurred given the speed at which communication technology was progressing and which was killing the use of letters.

Commenting on Labour MP Joe Debono Grech`s reference to Maltapost`s workers and their fate, Mr Dalli said the workers would have been given a raw deal, would have been shown disrespect and abandoned if things were allowed to continue as they were and so ended up engaged in an activity for which there would be no demand.

The privatisation of Maltapost was a step through which new services, already proven abroad, could be offered both in Malta and, hopefully, from Malta to third countries.

For this government the privatisation process did not merely consist of selling shares to raise funds. That was the philosophy which the socialist party embraced and whose sole objective was of a financial nature. In the case of this government the idea was to boost the economic value of the sector being developed.

The privatisation of Maltacom under Labour proved that the MLP was only after money. They had sold the shares, half of them overseas at a different price and even to people whose identity was unknown.

In sharp contrast, when this government sold its shares in Mid-Med Bank to HSBC, the move gave Malta a seal of high standards in the banking sector and contributed in the way it did to the further development of the financial services sector on the island. Such economic value could not be gauged in money terms.

This government was now discussing another privatisation, that of MIA. Talks were nearing their end, Mr Dalli said. The Labour government had also embarked on the privatisation process of the airport.

This government had been criticised because, the critics said, no public call had been made. What public call had been made under Labour in order for the country to know who was interested in buying shares in Malta`s airport? Had the privatisation of the airport been announced under Labour? Yet, Labour still proceeded to approach those with whom talks would have started on the airport`s privatisation and on the eve of the general election people had been encouraged to submit tenders.

One had not only to be clean in order to criticise but also had to have a vision for the country, Mr Dalli said.