The merchant of Venice

Prime Minister Eddie Fenech Adami, Minister Josef Bonnici, Marin Hili and his board at the Malta Freeport Corporation continue to deny the conflict of interest situation created by Hili's 50 per cent shareholding in the company running the Port of Venice. In Parliament (PQ 34,878) and out of it, Government has been saying that Hili has no conflict of interest as the Port of Venice and Malta's Freeport operate in different markets.

Since Mr Hili spent nearly Lm4 million to buy shares in the Port of Venice, plans are being drawn up to enhance its facilities and build up its international role. This is conveniently ignored by all those who have been trying hard to give the impression that Mr Hili squandered some Lm4 million on an insignificant and marginal port in some God-forsaken part on the other side of our planet!

Writing in The Times (July 16) Mr Hili stated that there is no conflict of interest because the role of Venice is totally different to that of Malta Freeport. He argued that Venice has a water draft of 12 metres so that the ships of 5,000/6,000 container capacity - used on the route between Asia and Europe/Mediterranean and that call at Freeport cannot enter Venice. He also claims that whereas Malta Freeport's business is predominantly transhipment because of its strategic location, Venice caters for its hinterland (of north Italy, Slovenia and south Germany).

This is a smokescreen. No one has stated that Venice will be served by the same ships of 5,000/6,000 container capacity on the route between Suez and Europe. Bringing into the picture such ships of a large capacity and mentioning Venice's draft limitation is a feeble attempt to mislead the public.

Venice has overtaken Trieste, Rijeka and Koper as the gateway port to the north east of Italy, south Germany, Austria, Czech Republic and Slovakia, and to a lesser extent to Slovenia and Croatia. There is a big flow of trade between these countries and the Middle East (exports to Saudi Arabia and the Arabian Gulf), the Far East and the United States.

This trade is predominantly routed via the transhipment hubs of the Freeport in Malta, Gioia Tauro in Italy or Piraeus in Greece and then shipped by feeder to Venice. There are also direct and competing services to Venice which are more attractive to shippers. Investing in the Port of Venice and striving to build its container facilities and increasing the volume of containers on this trade via Venice, larger ships can be used between Venice and the Middle and Far East that will call direct at Venice. In so doing, transhipment and feedering costs will compensate for the deviation to Venice, thereby reducing the transit time between Asia and Venice.

Venice competing with Malta Freeport

Direct calls at Venice mean a shorter transit time and lower transport costs and are more attractive to shippers. With 12-metre draft, a vessel having a capacity of about 2,500/3,000 TEUs (20-foot containers) can be accommodated at Venice. Today, Evergreen (Taiwanese) and Zim Lines (Israeli) call at Trieste and Venice direct from Asia without affecting any transhipment. Zim Lines use ships of 2500/3000 TEU capacity in their direct service from the Far East to Koper (Slovenia), Venice, Trieste, Piraeus and Haifa (Israel) on a weekly schedule.

Shippers of cargo and shipping lines strive for the fastest transit times at the lowest transport cost. By increasing the volume of cargo to Venice, as Mr Hili is committing himself to do in his private business, direct calls at the Port of Venice will be increased and costs reduced.

This is the same cargo that today is transhipped at Malta Freeport. It is inevitable that the increased traffic will move on the direct calls at Venice rather than be transhipped at Malta. Venice's gain - as it equips itself under the leadership of Mr Hili to enter the container business and handle 100,000 containers next year - will be Malta Freeport's loss. The Port of Venice will be chasing the same cargo being transhipped at Malta Freeport.

Whatever happened to the Code of Ethics?

Hili's present potential conflict of interest will become very real. He will be torn between his public responsibility at Malta Freeport where his duty is to keep this container traffic for transhipment and his private business at the Port of Venice where it is in his personal interest to generate bigger volumes of cargo to Venice, whether by direct ship or via transhipment at Malta Freeport, Gioia Tauro and Piraeus.

As chairman of Malta's Freeport his focus should be to move container cargo through the Malta Freeport but now he will be "distracted" by his private interest in the Port of Venice. As long as more traffic is passing through Venice, he will not care whether the cargo is coming through the hubs at Gioia Tauro, Piraeus or Malta Freeport. His investment in Venice will be more profitable if he can increase Venice traffic by a ship's direct call. If bigger ships of 2,500/3,000 TEU capacity call direct at Venice, the Port of Venice will earn more revenue from the bigger ships because they pay higher port charges.

Mr Hili has already said that if he were to choose between being a merchant of Venice and retaining his post as chairman of Malta Freeport he would choose the former. In November 1994 Prime Minister Fenech Adami presented a Code of Ethics for Board Directors in the Public Sector. Abiding by that code, "board directors are required not to put themselves in a position where there is a conflict (actual or potential) between their personal interests and their duties to the organisation."

Mr Hili has put himself in this position. The Prime Minister has so far failed to act and resolve this unacceptable situation.