Thursday, 18th September 2008
Brussels wants liquidation of Malta Shipyards
File photo: Darrin Zammit Lupi
The European Commission is piling pressure on the government to declare Malta Shipyards bankrupt and liquidate the company before continuing the process of privatisation of all or parts of its assets.
Commission sources told The Times yesterday that the Commission's position did not change following last week's visit to Malta by Commissioner Neelie Kroes and that Brussels still feels that the best formula to be adopted in order to start a new shipyards operation with a clean sleet is liquidation.
"Under normal commercial circumstances, a company that is no longer viable and is registering losses, like Malta Shipyards, is declared bankrupt and put to liquidation. Although we see this as the most logical step forward, we will not impose it on the government as long as the privatisation process does not involve further state aid."
This rigid position by Brussels has been adopted in view of plans by the government, announced earlier this year, to absorb about €100 million in losses that are expected to accumulate by the end of this year when the seven-year restructuring deal agreed with the EU ends. Despite almost €1 billion pumped into Malta Shipyards over the past years, the company remains in the red.
At the meetings in Malta between the government and Ms Kroes, the government reiterated its intention to absorb the accumulated losses of the shipyards before passing over the company to the new operator, The Times was told. The commissioner insisted that could not be done under state aid rules and that a different solution had to be found.
This stand was reiterated yesterday, although in more diplomatic terms, by the commissioner's spokesman who wanted to further clarify the comments Ms Kroes made to the press prior to her departure from Malta.
"Ms Kroes said that the present restructuring plan, launched in October 2001, has failed to restore the viability of the shipyards and, therefore, cannot be the basis for the grant of further state aid," the spokesman said.
He pointed out that the European Commission agrees with privatisation "as long as this does not entail the grant of state aid either to the purchaser(s) or to Malta Shipyards Ltd".
If Malta Shipyards is liquidated, as the Commission is suggesting, the company will be declared bankrupt and all workers remaining on its books will be declared redundant with no right for compensation other than stipulated by law.
A senior government official said yesterday that talks with the Commission were ongoing in order to try to find a more "socially acceptable solution". However, he admitted that the position adopted by the Commission "is not being taken lightly".
"The government wants to ensure that all workers who apply to leave their job at the shipyards will be given a decent compensation and not just what is due to them by law if the company is declared bankrupt. That is why we are insisting to take a different approach from that suggested by the Commission," the official said.
He explained that, so far, the government has not made any formal privatisation plan to Brussels and will only do so when the bidder/s are chosen by the government. "Only at that stage will we know how the new operator(s) plan to manage the shipyards and it will be only then that plans can be given to Brussels for approval."
Meanwhile, Polish shipyard workers are facing the same difficult situation as their Maltese counterparts.
Hundreds of dockers protested outside Ms Kroes's office in Brussels last Tuesday in view of a Commission decision, expected later this year, on the restructuring of three shipyards in Poland.
Polish workers fear that their shipyards in Gdansk, Gdynia and Szczecin will be forced to close down if the European Commission rules that they must repay the state aid given to them illegally over the past years by the Polish government.
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Comments
You are right in a naive way re the rules of economics as written in the book but here we are dealing with a bigger problem that involves us whether we like it or not. A problem that a rule book never mentions as it is just theory.
Re the rest of your writing, I couldn't see the point by what you meant re the 95% surcharge and blaming it all on the GWU.
What was your point exactly? Maybe you can explain in a straight and clear way whay you really mean.
The rules of economics apply to all industries indiscriminately.The Goverment can nt continue to subsidize the docks according t EU regulations and because of it's responsabilities to Taxpayer's money. Other industry workers who became redundant were not given compensation above what the law stipulates. Therfoe what makes the dock workers more privilidged.
Where is the GRTU's voice in all this farce? It's members have been persecuted by Tax compliance for the past four years in a natonal effort to regularize the deficit and now after so much sacrifice by our self-employed, Government is arrogantly going to squander all those millions to cover the Docks and It's workers.
Furthurmore, The Nationalist Govermnet imposed a 95% surcharge on utilities because it was unable to cushion the inflated price of crude oil. Inspite of the drop in the price of crude, the surcharge is still at it's maximum while simultaneously it offers the hundred million euro write-off to the dockyards and arrogantly offers a handsome compensation to a bunch of workers who have been fleecing us dry for decades.
The core problem of the Malta Drydocks was the GWU. Let them pay the compensation!!!
Your latest statement was very factual and can be understood!
One has to understand that a company like the Dockyard is a very different company like those formed from the1970s up to yesterday, leaving out the banks, Airmalta, Seamalta and other Govt related companies. Of course the same rules apply but the Drydocks is a giant of a company, for many reasons and therefore one has to tread very carefully here as it has a large workforce, many sections, etc and most of all a very large area.
If a company does not perform well for a large number of years and the company knows that the workers are doing their best to their professional capabilities then where did it go wrong? Have a guess!
Just compare the skills of a tradesman from the Dockyard to any other tradesman coming from the Govt/Private and see the difference.
What would happen to the Drydocks workforce and area once it has been closed down? Have another guess!
I can understand the problems of the Dockyard as I worked there. Got the point now?
Anyway, I can only blame the politicians for the state of the MDD. They are the ones that appointed the management, and they are the ones that politicised the workers at the MDD.
An now, even if a different political party in govt, the politicians feel guilty and wat to give the MDD employees a 'decent payoff'.
What gives them this special right?
What should the govt do to all those employees that lost their job after a career of hard work, paying the NI and taxes?
This is an offence to all decent citizens. So whether MDD employees are productive or not - the taxpayer still carries their weight!
Unfortuantley, many MDD staff are highly skilled and very busy people, and we, in Malta, were unable to create a niche market for their work.
This has happened over and over again - we are unable to market our skills, instead, we close up all the places where we have most value added and instead start importing and retailing.
Why can't we cater for upmarket, niche clients instread?
What's next after MDD - Airmalta?
1Billion euros later the government insists on taking the burden of years of mismanagement . The EU's reaction is to slap the idiots in power in the face and ask to take the more sensible approach. How much MORE do we want to spend? Haven't we taken enough damage, may I say it again: "a billion Euros". Who's Euros? mine!, yours! the people who actually work, and hard! It's for ample reasons like these that the cash flow in Malta is slow.
We can't continue squandering money like idiots! we have emerging markets to compete with and a recession very likely on the way. Shape up, stop being obtuse and look at the bigger picture once in a while.
I can bet my bottom dollar that all those who are up in arms against the government and the EU for privatising, liquidating, closing-down the MDD are usually those who rant ad nauseum about the taxes they pay, the water and electricy surcharge, VAT, etc etc etc. Can't they realise that a substantial amount of these taxes are being mercilessly shovelled into a bottomless pit called the MDD? Those funds could be put to very good use.
A problem less to the government, whether it will be a 'blue' one or a 'red' one.
The PN government in its plan to destroy the shipyards! Because I still remember the pn promising no downsizing and blustering that the MDD was really improving!!
Do you really believe that Gonzi did not know that the EU Commissioner was going to stop him????
Everything has been planned finely for the workers to leave silently and the yards will be transformed into a construction estate. Finally their dream is coming true!!
You just don't have a clue.
You are so utterly confused, whatever you write is at best comical, at worst - tragic!
Unlike MDD, Alitalia did not have its debts written off but was given a ‘loan’ which would have had to be repaid (if the company survived, that is). Even this loan, however is being investigated by the EU and may not be allowed. The latest news is that Alitalia is likely to be liquidated and cease to exist.
Believe it or not, EU regulations are the same for all countries and many of the larger ones such as France and the UK have occasionally fallen foul of various rules and been penalised.
If the MDD is declared bankrupt, Government will not lose the 100 million Euros - well, not all of them anyway. Liquidating the company and selling off its assets could offset some of the losses.
It is an ignominous end to the once-proud (too proud?) Dockyard but I don’t see any use of prolonging the agony – might as well pull the plug.
If you read well my statement, I said that all those involved in the MDD be it admin or workforce, so that includes the management as well. I have never worked there, but when one of my Companies went bankrupt, we were faced with bills from Enemalta, WSC, Tax, Social Security, employers terminal benefits, and only we the shareholders had to face the music. There was no one to subsides or there were no dues which we didn't fork out. We had to pay whatever was due. That is Bankruptcy. MDD should not be any different from any other Companies or entities, and that what the EU are saying. I hope that I made it clear now for you.
Great job Brussels!
I still remember a write up in the Times by Berta Sullivan to this effect.
Brussels, through Ms. Kroes. has now served the minister and his Cabinet with an ultimatumthat is due to expire by mid December. What a humiliating mess for the Government. I wonder where the wonder PN MEP`s were doing in Brussels. Surely they have slept over their job or else were never in the Government`s `Yard Privitisation Think Tank if ever there was one.
And has Berta lost her pen ? Her comment on Ms Kloes visit to the Island are very much overdue now...
How much would it have been per person?
The opening of my blog was 'Without entering the political village arena between the blues and the reds as that is a very negative attitude, this situation is not adding up. '
So according to you the fault goes way back in 1970 (re the 9 months strike), Mintoff (whom you know so well as to perceive what he thought in those days) and the hundreds of MDD workers. Therefore the losses accumulated from the 1980s and not in the 1990s and even the 2000s as you pointed out.
And in some 20 years later what has happened ?
Such negative, ridiculous and pompous assumptions.
According to your perfect world, the management had no fault?
With my writing I must have hit you on very sore spot for you to come out blazing madly like that by trying to give me your side of story which is not that very convincing as you are seeing it as how it fits you.
Did you ever work there, Mr. Azzopardi? I'm sure you did as you know the 'facts' very well!
Ooops what's this?
The European Commission is piling pressure on the government to declare Malta Shipyards bankrupt and liquidate the company before continuing the process of privatisation of all or parts of its assets.
So does that mean that the Govt. does not even understand what they signed for WHEN JOINING THE EU?
Tajba hekk Martinelli?
So, how does it go again?
The European Commission is piling pressure on the government to declare Malta Shipyards bankrupt and liquidate the company before continuing the process of privatisation of all or parts of its assets.
KMB was and still is right and David Cameron in UK is also correct to refuse any more powers going to the EU.
So, dear Martinelli, what has KMB and David Cameron got in common?
They don't share the same political views, surely!
Yet, they are united against a United States of Europe.
In the accession treaty, why did PN not negotiate accept maybe divorce which would surely BE LEGALISED IN MALTA?
Deceit and lies. That's what we had, and some swallowed the bate like a bunch of hungry fish blinded in a small pond of murky water.
L-aqwa li ghandna l-Euro (sorry Ewro) hi!
I am not against ''giving the workers a decent compensation besides that stipulated by law''
but hey then give to all other workers!!!! What is wrong with the other workers??? Besides, didn't we know all this before we joined in 2003? Five years later and three and a half months before the deadline we are still struggling.
The people were promised heaven on earth if they joined the eu, but they are all finding that it is hell on earth.
The referendum result was based on mass deceit and treachery, both by the Nationalist Party and the eu itself.
As for politicians and their acceptance of the referendum, may I remind you that we do not have politicians but dermocrants.
If they were real politicians who have our future at heart and who have the proverbial balls they would have sent the eu to hell and declared our independence and freedom of the eu yoke or at least call for a referendum to see whether the people want to continue in this eu colonial slavery and dictated to by unelected petty dictators.
1. Government is shareholder in the company. Surely, government will not be intruded upon for capitalising the loans in its company (instead of writing them off - which is against EU legislation). This is normal practice in the business world.
2. Government sells all the shares (including the new shares), which practically have no value, as originally planned.
Now the ship has hit the rocks.
Our party had 20 years to fix anything Mintoff did. Why didn't we?
I think you weren't in Malta for many years. The losses that MDD accumulated weren't from recent years. They have been coming from Montoff's time. You don't remember the Dom in those days when MDDwas given to its workers and all raised their hands in appreciation. Dom knew in those days that there was no chance that this enterprise survives. Good to mention the 9 months strike before the Dom goverment. All those involved in MDD being admin or labour should be ashamed of themselves, putting the general Maltese public in such a position, and the taxpayer to pay so much. Now thanks to the EU we shall get rid of an enterprise which have been death for many, many years. Don't blame the PN or EU, but blame yourselves dear MDD circus.
You are forgetting that joining the EU was through a referendum with a majority of votes. So you have just to sit and abide with the EU rules, no matter what you say. we are not going out of the EU and now even that Dr. Joseph Muscat saw the majority of the Maltese were right when they voted yes.
Back to the future.....
Now, either this govt. of ours is utterly incompetent + a lackey or otherwise this was all planned from the beggining...after all PN didn't have much love lost for shipyard workers....
If you are going to comment on this article the least you can do is get your facts right!
Malta Shipbuilding ceased to exist several years ago; you actually do not even know which company you are talking about let alone the issues and consequences related to the closure of Malta Shipyards.
The fact that you state that the EU should protect Maltese citizens against decisions made by their own democratically elected government defies comprehension!
You are instigating that Malta is the equivalent to some third world country where citizens need to be protected from dictatorial governments which do not have their nations interest at heart.
Think again Mr.Bonello, our government is democratic and legal!!!
Silvio Berlusconi first scuppered the Alitalia merger with Air France for political reasons before the Italian elecions; then after the elections his government gave Alitalia, which has been bankrupt for several years, a massive loan to pay wages, fuel etc. He then put together a consortium of cronies (the "Cordata Italiana) to take over Alitalia at fire sale price whilst fiddling with legislation to try and stave off bankruptcy. What is the EU's position on this tragic comedy? Where is Neelie Kroes?
We should take a leaf out of Silvio's book and carry on with privatisation regardless of the EU's rantings. After all, besides platitudes, what tangible help have we received about illegal immigration ? A lot of hot air about "burden sharing" and "Frontex" (some help this has been!)
What can the EU do to us? Put us in the corner?!!
Whether the government sticks to its plans or declare the shipyards bankrupt makes little difference if any to any remaining workers or for those who chose, wisely, to accept the early retirement terms offered by the government and the GWU.
Any offers by outside investors will be net offers devoid of further negotiations regarding outstanding debts, number of workers to be retained and other financial complications associated with buying an ongoing business.
The decades long struggle by the shipyards will then be thankfully over.
So much for independence, freedom and sovereignty.
Those who want the Shipyard closed are only seeing up to their noses and clearly show the venom perpetrated by the Nationalist Party during the seventies and eighties against the Shipyard workers.
Where is the Church now to speak against the EU's dictatorial decisions and support the Maltese workers, Government and Opposition at all costs against the EU?
Let's get together and get out of the EU because everything that we had and that we may still have is being destroyed by the EU petty dictators or given to foreigners.
This is apart from foreign workers and illegal immigrants coming to OUR country and destroying the Maltese workers wages and working conditions and also apart from the future clashes between the illegal immigrants and the Maltese citizens and the social upheaval which the foreign workers and illegal immigrants are causing and will continue to cause to Maltese society as long as they are allowed to stay in Malta.
Maltese workers unite.
You have nothing to lose but the EU yoke and chains which have shackled you.
But more then likely the comment by Nigel Lawrence is closer to the truth. The goverment negotiated the entry to the EU and have MEPs, so they must have known the rules surely. If not then its organised incompetence!
The Maltese who voted in favour of Malta's entry to the EU should have realised that from the accession to the EU, important matters like this would surface and the EU is very rigid about this. These voters should have been wiser but.......
The idea that it was the workers' fault on the €100 debt doesn't tally up.
If so many people sat on the management then most probably wrong decisions were taken.
The Government has put the donkey before the cart and the same Government cannot pass this debt on to the Maltese citizens.
The Government should explain to the citizens on how this debt accumulated to €100, why it had been left to reach such a sum;what caused it to rise so much; how did the management do the planning; was this planning viable and the list gets longer.
The Polish situation was clear for more than 8 years ago. It was illegal.
Unfortunately we have to comply by EU rules and sadly that is a fact.
With immediate effect, the running of the Island should be taken over by a ‘Council of Administration’ appointed by Brussels.