'No prospects' for national shipping line

Investments Minister Austin Gatt insists that Sea Malta could not be rescued by the government. He tells Steve Mallia why.

If Marlene Mizzi was doing so badly at Sea Malta, why didn't you sack her earlier?

I would not like to go into the personalities issue but I do not believe Marlene Mizzi was doing badly. If I were convinced she was doing badly, I would have sacked her. The problem with Sea Malta is structural, as we've always tried to explain.

She handed in her resignation on June 8 and it was refused. By June 20 it was accepted. What changed in those 12 days?

I think she changed her mind, though I would rather you put this question to the Prime Minister. She resigned on June 8 and the Prime Minister asked her to withdraw her resignation which she did. I'd rather you ask the Prime Minister why she withdrew her resignation. And I was rather surprised that it came back two weeks later.

And, you, as the person responsible for Sea Malta, can't answer that question?

The meeting was held with the Prime Minister.

And you were not privy to it?

I wasn't present.

You said she wasn't performing badly, yet one of your ministry's statements said the plan which her board of directors was behind would only have raised a few hundred pounds...

...after four years.

...That surely is an indication that what she was proposing wasn't satisfactory.

Yes. But that does not mean she was managing badly. There were no prospects for Sea Malta. The basic argument between us and the opposition is that we all seem to believe and agree that Sea Malta needs huge subsidies every year. There is no way to turn it round commercially. Even Ms Mizzi agrees with this. The whole question is how you effect those subsidies.

The opposition is saying you should continue owning the line and subsidising it directly. We say that there is the public service obligation vehicle which you can use, which will give you a lower cost and increase efficiency. This is the base argument difference. The rest is incidental.

One of the criticisms was that while you never invested anything in Sea Malta, you invested in the Brindisi port.

We did not invest a penny in Brindisi. There were debts with Italian banks and we refinanced those debts with Bank of Valletta - changing the debt structure. We moved the debt structure onto Mimcol rather than moving it on Brindisi. We did not increase our debt position or investment position by one penny. There were other areas in which we invested, such as Malta Shipbuilding, which was the worst, because the plan we drew up showed there is a possible viability scenario.

Whatever plans have been drawn up since 1999 for Sea Malta have always shown that whatever investment we made would have left the company not only in a recurrent debt situation but would have decreased its value over time and would have meant in any case the redundancy of half if not three quarters of its employees. It would be crazy to invest in that kind of scenario.

She said that a capital projection was promised, that the government reneged on that and that it was a case of "taking people for a ride".

I didn't promise her any government injection in the past two-and-a-half years. I have never seen a paper saying that. Actually, there was an allegation in a newspaper last Sunday saying there was. This was denied by Josef Bonnici, who was the minister (for economic services) at the time; it was denied by Mimcol chairman Ivan Falzon. It was not denied by (then Finance Minister) John Dalli because they couldn't find him. I actually met Mr Dalli last Monday and he couldn't recollect it at all.

So she's not telling the truth...

(silence)

In an interview with The Times, she also invited you to repeat an accusation you made in Parliament saying that she "squandered" public funds.

I said that under her chairmanship, the net asset value, which was Lm1.8 million, has now been reduced to a net asset deficiency of around Lm1.4 million.

So did she, or did she not, squander public funds?

If we go from a positive asset situation of Lm1.8 million to a net deficiency of Lm1.4 million the conclusion is obvious.

And what is it?

That she lost money; that she went from a net asset position to a net deficiency position.

And that's squandering money?

There are some who would say it's squandering; there are some who say it's normal business losses. Everyone is free to define it as one wants.

And how would you define it?

I would say it's a situation which should have been brought under control long before. And the only way to bring it under control was to either sell off the company when it was in a net asset position or change it drastically from year one.

Wouldn't it have made more sense to get Sea Malta on its feet before selling it?

You cannot get Sea Malta on its feet. That is the problem. The problem is that since 1997, on average it lost Lm0.5 million every year - profit and loss.

There is this infamous report on Sea Malta. You have chosen not to make it public. Is this a lack of transparency on your part?

Absolutely not. I have already said that I am more than willing not only to put on the table this report but I will publish the 1999 report and the May 2003 report on the restructuring of the fleet which shows that Sea Malta was proposing we invest in a new boat which would have cost Lm2.25 million and improve the bottom line by Lm20,000. And I would also put the Mimcol analysis before we started the privatisation process which examined six different options - from an investment of Lm7.5 million to selling off the company.

Why don't you do it today?

Because we are still in the middle of negotiations and it would prejudice the negotiations. I will put it on the Table of the House the day after we sign off the company. And then I challenge the Leader of the Opposition to go to the Public Accounts Committee and request a full investigation, which he has not done with the Freeport which we sold last October - despite all his talk.

Isn't not publishing the report, which, incidentally has come out in the media...
...as usual...
...Not publishing the report and then inviting criticism afterwards is a case of shutting the door after the horse has bolted. No one can do anything then.

No one can do anything even if I publish the report because going ahead with privatisation is a government decision. The whole question is: now we are at the due diligence stage the buyer has access to all the reports and information. It is completely illogical to put the situation up front. But, as you say, at the end of the day if things keep happening as they are and everything is going to be leaked, I might as well put them on the table right now.

So, will you?

Till now, only one report has been leaked. If another is leaked, I think I will put them all together.