The article titled ‘National Bank shareholders to insist government must pay compensation’ (November 19) correctly said I was asked by the NBM shareholders to prepare a valuation on their behalf. However, it is odd that it refers to an “internal memo” saying that I “could not understand why the government was still trying to wriggle out of paying compensation”. I would have thought it more proper for any quotations to have been taken from an affidavit (that included eight appendices) which I swore in court in January 2015.
Moreover, prominence was given in the article to a report submitted in court last June on behalf of the government by three experts (Piero Ugolini, Richard Nun and Larry Chilton) in which every effort was made to discredit what I maintained in my first affidavit.
It is to be noted that, in response to the three experts’ report, I filed another sworn affidavit in court on October 27 but no reference was made in the article to even one of the salient points I raised therein. These included, inter alia, my contention that certain statements made in the report were not in line with what Dr Ugolini had stated in court in April 2007.
I was cross-examined in court by the Attorney General on November 3 and another session is scheduled for December 16.
At this stage, however, I wish to comment on certain statements made in the article because these need clarification. Moreover, there is a need for me to give some brief background information which I trust will enable readers to have a clearer understanding of the situation.
The shareholders are not “claiming €325 million in compensation”, as alleged in the article. That is the amount I proposed to the court, in my January 2015 affidavit, as being, in my view, fair compensation based on a number of factors.
The proposed compensation amount took into account factors that were ignored by the council of administration and its auditors in assessing the net asset value (NAV) of the NBM as at December 31, 1973.
My calculations were based on what I considered to be the NBM’s realistic NAV as at December 31, 1973 (that is, not a negative one of -Lm253,000, as alleged at the time).
Due regard was taken of the government’s equity injection in Bank of Valletta when it started operating on dissolution of the council of administration in March 1974 as against what I considered to have been a realistic NAV of the NBM (the value attributable to NBM’s shareholders as at December 31, 1973).
The court decision puts paid to the defendants’, and their experts’, contention that the NBM was a failed (insolvent) bank
Bringing into the equation the value derived by the government from its shareholding in BOV over the years (and not considering such undisclosed amounts as the profit it made on the sale of shares to the Banco di Sicilia in 1974) and accounting for the inflation factor over the years, I came to the conclusion that €325 million would constitute fair and reasonable compensation to the NBM shareholders.
I point out that this amount was based on a BOV quoted share price of €2.10 ruling last January and excluded all dividends received by the government during 2015 and the bonus share issue due to be made in January 2016 from profits for the year ending September 30, 2015. Moreover, the immovable property valuation quoted in your article was not yet available.
Thus, for all the above reasons, there is good reason to argue that the above-mentioned proposed compensation amount has risen since my calculations made at the beginning of 2015. This point was made in my affidavit submitted in court in October.
I trust that this gives a clearer picture to readers of the basis of the compensation figure proposed by me in my firstaffidavit, not, I repeat, in an “internal memo”.
Finally, it is as well for me to quote (this is my free translation from the Maltese text) what the Constitutional Court of Civil Appeal decreed in its judgment on October 14, 2014:
“As indicated above by this court, there exists in the court’s records sufficient proof on which the court of first instance could reasonably conclude that the NBM had a value.
“Therefore, notwithstanding the negative impression that may have been given by Deloitte’s report after the bank had been taken over, there is proof given by witnesses possessing a good knowledge not only of the banking sector but also persons directly involved in the management of the bank that could reasonably have led the court of first instance to the conclusion that, notwithstanding the problem of temporary liquidity that the bank was facing at the time, there was value that passed from the hands of the shareholders and for which they were not compensated and that such value was used to the advantage of both the council of administration as well as, eventually, by the Bank of Valletta.”
As stated in the article of November 19, I hold that the above-mentioned court decision puts paid to the defendants’, and their experts’, contention that the NBM was a failed (insolvent) bank. This quite apart from the arguments put forward by me in both the sworn affidavits submitted in court.
As the final decision regarding the amount of compensation rests with the court and is still sub judice, I have no intention of indulging in any further correspondence in the media pending the court judgment.
Anthony Curmi is a former bank executive and a financial consultant.