Politics, bloody politics
I have never been in favour of the government retaining a shareholding in the Bank of Valletta. The underlying reasoning for continued involvement is probably twofold. One is the fact that, due to outstanding litigation, the bank might be considered to have a continent liability towards the shareholders of the National Bank Group. The other is that government involvement ensures that the bank acts in the best interest of Malta and its people. Both reasons are spurious.
Should it be the case that courts find in favour of the National Group shareholders, I doubt that Bank of Valletta can be made to carry the liability. That would rest with the government, and not the present shareholders. As for the bank giving some sort of preferential treatment, that presupposes that the institution does not act professionally. Even if the bank were wholly owned by the state it would still have to act in accordance with best practices, whether in regard to private customers or to the government itself. Even lending to problematic public sector bodies, like Enemalta, requires the lending bank to seek rock-solid security in the form of government guarantees.
The involvement of the state in the shareholding structure, then, is no more than a hangover which is benefiting no one, other than through the dividends it pays out to all of its shareholders.
That leaves only the negatives of state ownership on the table. Inevitably some politician or other will try to stick a finger in the pie, if only to help a constituent. Some employees will speak of real or perceived preference towards colleagues, whoever is manning the state machine, and count the hours to the time when “their” party will be in office.
In this context it behoves the trade unions more than ever to achieve the highest possible density of bank membership, and to act with as much honesty as can be in the interest of all the employees, whichever party they may support individually.
My aversion to the state’s continued involvement in the Bank of Valletta is being strengthened by the controversy that continues to engulf it because of a property fund managed – with bouts of mismanagement – by one of its subsidiaries.
The issue was taken up by the MFSA. While that banking regulator was carrying out its onerous task it came under a lot of fire from investors who had lost a substantial chunk of their money. It was also criticised by interests who were following a clear personal agenda. Those interests found it easy, given our political infrastructure, to mobilise support for their relentless attacks on the bank and the MFSA from the Labour opposition.
In time the MFSA pronounced itself and imposed fines on the Bank of Valletta group. That did not ease the pain felt by investors who were lead to venture into waters too deep for them to understand. Nor was the compensation offered by the bank an antidote strong enough to ease that pain.
The situation of angry investors who feel, not without good reason, that they had been misled makes them spill over their dismay in continued criticism. Above all they call for accountability, something which the bank did not give working on the premise that the group’s employees had acted in good faith. Instead Roderick Chalmers, the bank’s chairman, assumed responsibility for what had taken place.
He did not have to do that. The subsidiary which was found to be at fault was distanced from the office of a non-executive chairman. My understanding of Mr Chalmers’ move was that he wanted the buck to end up on his table so that he could initiate and oversee remedial measures to ensure, as far as humanly possible, that there was no repetition of what had taken place over the property fund.
Instead of appreciating that step a furore has broken out from the Labour opposition. Because the state has a 25 per cent interest in the bank and appoints the chairman the Leader of the Opposition wants at least one head to roll. He says it cautiously, but the intent is clear enough. The shadow minister of education, some distance away from his brief, is more specific. He says that the Finance Minister is not acting against chairman Chalmers because both of them come from the PwC stable.
That is undiluted nonsense. Roderick Chalmers left PwC Malta decades ago and rose to the top of PwC Hong Kong. To boot, he left the international PwC group 10 years ago, to eventually retire in Malta. Over here he was mobilised to head the Bank of Valletta Group when the previous chairman, JFX Zahra, called it a day.
Roderick Chalmers has done sterling work, in the bank itself and in its related activities, such as in insurance where I have shared exposure with him for a number of years. My assessment is that if Malta had 10 men like him, serving selflessly and without any political considerations, it would be a far better place operationally.
I would have thought that the Labour Party, as the alternative government, would ask him to continue to contribute to the public sector for, should it accede to office, it will sorely need a few people like him. Instead, it is after his head. Politics, bloody politics gets in the way of everything in this cursed island of ours, not least because of people working behind the scenes according to their personal agenda.