BoV rejects property fund redemptions claim

Bank of Valletta has “very specifically” rejected suggestions that the level of redemptions in the La Valette Multi Manager Property Fund was due to BoV staff and their families or friends being given access to privileged in-formation, chairman Roderick Chalmers told investors in a letter last week.

In a statement, the bank said BoV chairman Roderick Chalmers told investors: “The bank, having carried out its own investigation into the matter (which it has shared with the Malta Financial Services Authority), firmly believes that it has acted properly and in good faith at all times, and that it took all the appropriate measures to guard the confidentiality of deliberations that necessarily took place concerning the suspension of dealings in the fund”.

Mr Chalmers said that since the bank’s €45 million conditional offer concerning the property fund was launched on May 26, BoV had significant contact with a number of investors. In his letter, the chairman provided brief and concise answers to three issues that have formed a common theme in the questions that were asked by investors.

On the redemptions investigation, Mr Chalmers reiterated that the level of redemptions experienced by the fund in 2008 was far from extraordinary and in line with that experienced by other funds in Malta at the time.

“I can assure you that BoV, more than anybody else, wishes to see the redemptions investigation brought to a rapid conclusion – and we have expressed this view to the MFSA, and have provided them with all the assistance and information that they require in this regard,” he said in the letter.

Mr Chalmers said the bank “will take the most serious view if ... any individual within the bank is shown to have acted in breach of trust concerning the use of confidential information”.

The chairman yet again stressed that the MFSA had not yet issued a final report. This was confirmed by a public statement issued by the MFSA, which stated that BoV had been given until June 6 to make further submissions concerning the gearing issue as detailed under Investment Restriction (v).

The MFSA has also stated that it will make a final determination following its consideration of these further submissions.

Responding to allegations regarding BoV’s control of the Fund, Mr Chalmers said the bank does not have control of 70 per cent of the fund as had been inferred.

He reiterated that every investor was completely free to accept or reject the bank’s offer which closes on June 30.

Investors were free to decide to pursue a legal claim; this right will remain intact irrespective of the percentage of investors who choose to accept the offer.

Investors wishing to pursue a “mis-selling” complaint, were also fully entitled not to accept the offer.

Mr Chalmers encouraged investors to contact their bank branches for further information and encouraged them to seek independent legal or financial advice about the offer and its implications.

In an interview with The Times Business last week, Paul Bonello, managing director of Finco Treasury Management, reiterated his argument that investors were entitled to a full refund with interest, rather than the bank’s offer of €0.75 per qualifying share, as provided by case law across Europe. Investors, he emphasised, were also entitled to know what the MFSA’s investigation into the matter had revealed.

Mr Bonello, who heads the Floriana-based firm spearheading claims by more than 400 investors in the under-performing fund, stressed that even if the €16 million withdrawals in 2008 were not the result of improper use of price-sensitive information not in the public domain, the effect on the fund and on remaining investors was still a “detrimental” €12 million.

“The conclusion of the MFSA report on this aspect is most relevant for clients in this fund to be able to consider BoV’s conditional offer on an informed basis,” Mr Bonello said.