The unique early retirement package that Bank of Valletta granted to Parliamentary Secretary Michael Falzon was “a hybrid solution to cater for the unique circumstances involved in the case”, the bank said yesterday.

BOV said its main aim was to free Dr Falzon, as a member of government, from any potential conflict of interest when taking executive decisions.

The tailor-made €260,000 early retirement package granted to Dr Falzon – as an employee of the bank’s legal office – was revealed by The Sunday Times of Malta.

BOV has granted early retirement to 117 employees over the past five years but none of them received the special arrangement given to the parliamentary secretary, who retained the right to return to his job at the bank.

The bank is committed to help any employee who is called to give a national public service

Bankers’ union MUBE has described the arrangement as “defeating the whole scope of early retirement”. Admitting that Dr Falzon’s early retirement package “was indeed unique”, a BOV spokesman pointed out that “so were the circumstances whichled to it”.

“Dr Falzon was the first BOV employee called to serve the Cabinet. The Bank is committed to help any employee who is called to give a national public service.”

While declining to name the members of the bank’s remuneration committee, which ultimately decided on the arrangement granted to Dr Falzon, the bank explained it wanted to make sure the government’s junior minister would not have any potential conflict of interest in his new job.

“We wanted to ensure that the bank employee asked to serve in Cabinet would not find himself in a possible conflict of interest. A senior bank employee would know and have contact with most of the bank’s clients and this could create possible conflict of interest if he were to be confronted with requests from bank clients in his official executive role as Parliamentary Secretary.”

The bank decided that Dr Falzon should “sever his employment relationship with the bank while serving in the Cabinet. In this way the risk of conflict of interest would be reduced. Today, Dr Falzon is technically not an employee of BOV”.

Asked why he wasn’t given leave without pay instead of the payment of €260,000, since he has the right to return to his job, the bank said its remuneration committee had a different opinion.

“Leave with or without pay would have implied that Dr Falzon would still have been a BOV employee while serving in Cabinet. This could be construed as creating a conflict of interest whenever a BOV client or the bank itself approached his ministry for an executive decision.”

Dr Falzon’s early retirement was “a hybrid solution to cater for the unique circumstances involved in this case”.

The bank did not explain how it calculated the €260,000 payout. But the agreement stipulates that if he returns to his BOV job, Dr Falzon would have to pay back his retirement benefits pro-rata.

“He would also not be allowed to apply again for early retirement in future,” the spokesman said.

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