Money transferred was 'bridging banking facility'

Acrimonious exchanges over the Brindisi port continued yesterday between Labour leader Alfred Sant and Investments Minister Austin Gatt.

The controversy centres around Dr Sant's allegation that the government bought the remaining shares in the Brindisi terminal for Lm4 million, and yesterday the Labour leader showed a letter which he claimed as proof of a "wasted investment".

Dr Gatt again denied the allegation and accused Bank of Valletta of leaking sensitive information.

Speaking at a press conference yesterday afternoon, Dr Sant made several calls on the Investments Minister to resign, saying he was only fit to manage a hen-coop. "Austin Gatt should resign or sue me for libel," Dr Sant said.

Dr Sant showed a letter sent by Paul Zahra, Permanent Secretary in the Ministry of Finance, to Ivan Falzon, chairman of the Malta Investments Management Co. Ltd (Mimcol), and copied to the manager of Bank of Valletta, on July 29, 2004. The letter confirmed that Bank of Valletta had made available a €10 million "bridging banking facility" to be repaid by Mimcol by not later than December 31, 2004. There was no mention of any share purchase.

Dr Sant claimed that the letter proved that another Lm4 million had been "wasted" on the Brindisi terminal.

Dr Sant said the letter confirmed that Dr Gatt was not telling the truth. He reiterated his view that this was a political scandal since the government had continued to invest in a botched project while the man in the street was expected to tighten his belt.

However, a letter sent by Dr Gatt to the Bank of Valletta's chief executive officer yesterday, referring to the Lm4 million mentioned by Dr Sant, stated that the money was not used to buy shares but was a loan granted by the bank to Mimcol in August 2004. It transpired that through this loan, the government intended transferring debts it had with Italian banks to BOV.

During the press conference, the Labour leader said he was not aware of Dr Gatt's letter, which was published by the minister just before Dr Sant's press conference.

In the letter, Dr Gatt told the BOV chief executive: "I believe there is a strong connection between what the Leader of the Opposition has alleged publicly and the loan itself. It cannot be coincidental that the Leader of the Opposition mentions the correct month and roughly the same amount involved."

Dr Gatt also suggested that Dr Sant's source of sensitive information had been someone from the bank and he called on its administration to investigate "a serious breach of bank secrecy regulations".

"Unfortunately, this is not the first time that commercial information from your bank has been used for political purposes since, in 2002, a document related to government loans was tabled in Parliament in breach of standing banking confidentiality rules," Dr Gatt told the bank in his letter.

But the bank replied that it was yet to be established whether the relative information originated from the bank or not.

"In this respect, it must be stressed that all bank officials are bound by their duty of professional secrecy and do not divulge confidential information except as may be allowed by law. On the other hand and in any case, the bank always takes a serious view of any such allegations, whether made in the media or elsewhere, and is doing likewise in this case," the bank stated.

Reacting to initial claims put forward by the Labour leader on the alleged squandering of Lm4 million to buy the Brindisi port's remaining shares in August 2004, Dr Gatt said on Monday that the allegations were "an invention".

The Investments Minister had placed accounts of all subsidiary companies of Malta Freeport Corporation for the past four years on the table of the House of Representatives on Dr Sant's request. The accounts stated that in 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.

In February 2004, Brindisi Terminal SpA became a 99.65 per cent owned subsidiary of Freeport Terminal (Malta) plc.

Yesterday, Dr Gatt also expressed satisfaction that Dr Sant had finally admitted the original decision to invest in the Brindisi port had been made by the Labour government.