Gatt rebuts Sant's claims over Brindisi port

Investments Minister Austin Gatt yesterday labelled as an "invention" the claim by Labour leader Alfred Sant that the government had squandered Lm4 million by investing in the "botched project" of Brindisi Freeport.

Speaking on Sunday, Dr Sant said the government had failed to give any explanation about the Brindisi terminal, in which the Malta Freeport had invested three years ago. Despite this "political scandal", and instead of halting the process at once, the government had decided to buy the Brindisi port's remaining shares last August.

Dr Gatt replied: "Not only was this an invention and an untruth, but I believe that either it was invented intentionally or else Dr Sant is unable to read accounts."

Dr Gatt said that in a parliamentary reply to a question by Dr Sant recently, he had placed on the table of the House the accounts of all the subsidiary companies of Malta Freeport Corporation for the past four years.

On page 14 of the accounts of Freeport Terminal Malta plc, which Dr Sant had in his possession, it was stated that during the current year (2003) the company had entered into an agreement with another shareholder of Brindisi Terminal SpA to acquire its shares in the company for a total consideration of €351,000 (including related professional fees), equivalent to Lm149,127.

The accounts further state that following this agreement, in February 2004, this investee (Brindisi Terminal SpA) became a 99.65 per cent owned subsidiary of Freeport Terminal (Malta) plc.

Dr Gatt said this had been reported in the issue of the newspaper Kulhadd on October 24.

He questioned why Dr Sant had made such claims when he had all the facts in hand. Dr Gatt wanted to know how an investment of Lm149,127 had become Lm4 million. He also asked how one could say the investment was done in August when it was clear that it took place in February.

Dr Gatt also questioned why Dr Sant had hidden the fact that the choice of the Italian partners Papalini had been made by his government and that the commercial strategy for the Italian investment had also been drawn up by the Labour government.

The investments made by the Malta Freeport in Brindisi were carried on the Malta Financial Services Authority's website, the minister said.

He also queried the timing of the allegations, suggesting that Dr Sant was perhaps trying to show the government in a bad light after the privatisation exercise of the Freeport Terminal turned out to be a success.

Was Dr Sant using the same strategy he was using to hinder the government's work with Skanska on the new hospital, while efforts were being made to sell the Freeport's shares in the Brindisi port, Dr Gatt asked.

He said the Brindisi port story dated back to 1994 with the opening of Gioia Tauro, envisaged to become one of Malta's port competitors. A strategy was then drawn up to see whether it was viable to buy shares in an Italian port.

The partnership between Freeport Terminal and Papalini was struck in November 1997.

The agreement that would lead to a commercial cooperation in the Brindisi port with the Comune di Brindisi was signed during Labour Minister John Attard Montalto's term of office in August 1998.

The company Brindisi Terminal was set up in December, 1998, through a strategy drawn up by Dr Sant's government. Dr Gatt said he agreed with that strategy.

When the company was set up, Freeport Terminal, a Freeport subsidiary, had a 40 per cent shareholding, Papalini had 40 per cent and 20 per cent were owned by the Comune di Brindisi.

Dr Gatt said that the Brindisi port authorities had entered into an obligation to extend the quay with a €14 million investment, but this had not been carried out and was creating serious commercial problems.

The arrangement was for the Italians to see to the management of the port while the Maltese subsidiary had to carry out the marketing.

At no time did the government make any guarantees and all the money was invested by Freeport Terminal.

Dr Gatt said that owing to the failure of the Brindisi port authorities to construct the new quay, the shipping lines started to leave the port and eventually the company Papalini was declared bankrupt in June 2003. In the meantime, legal action was started to hold the Brindisi port authorities responsible for damages as a consequence of their negligence.

He added that the problem which Freeport Terminal was concerned with were debts of €26 million with banks for machinery purchased for the Brindisi port.

Dr Gatt said that had Malta Freeport Terminal not bought the shares, which cost a nominal €3.5 million, for €351,000, it would have had to pay the €26 million to the Italian banks.

In a statement issued last night, in reply to further claims made by Dr Sant and quoted on Super One TV, Dr Gatt's ministry deplored the way information about a banking relationship between Bank of Valletta and a client had been leaked to Dr Sant.

The ministry said it was asking the bank to investigate.