Five years ago retired army officer Alfred Falzon decided to invest part of his life savings into a Bank of Valletta property fund, sold to him as being “an incredible investment”, to have some extra cash apart from his pension.
But to his “immense disappointment”, the fund failed and he lost the bulk of his hard-earned cash, apart from confidence in the bank he had traded with for most of his adult life.
“The bank told me the (La Valette Multi-Manager Property) fund was the best option for me because it was protected capital. They told me to imagine the investment to be a prestigious apartment block and the profit was like collecting rent from tenants every six months and dividing it among the various owners... I believed them... I invested €18,000... I only received interest twice,” the 70-year-old said.
Mr Falzon, who was one of hundreds of people – mostly pensioners – who attended an investors’ meeting yesterday evening, confessed he did not understand much about investment when he bought shares in the fund. He decided to invest on the recommendation of the bank he trusted.
“In hindsight, it was strange how they accepted me immediately without too many questions asked,” he reflected.
Now that the fund had failed, Mr Falzon was disappointed he was being asked to decide whether to go for a settlement – and recuperate part of his money back –without having all the necessary information in hand to be able to consult with his lawyer.
BOV offered a one-off settlement of 75c per share to buy back shares and compensate investors who lost millions of euros in the La Valette Multi-Manager Property Fund. Investors have until Thursday to decide.
Two weeks ago, the Malta Financial Services Authority published the conclusions of one of three investigations into the fund and fined the bank €347,816 for breaching the investment restriction.
The full report, which investors had long wanted to see, was only sent to investors yesterday by the MFSA but they said they had not received it yet.
“Now it’s the weekend and Wednesday is a public holiday. We don’t have time to consult our lawyers by the June 30 deadline,” Mr Falzon said.
Like Mr Falzon, 57-year-old driver Robert Debono decided to invest in the fund because he was approaching retirement. “I made huge sacrifices to save money to be able to invest in preparation for my pension. Then, in 2007, I came across an advert about the fund... I invested €19,000,” he said.
Ray Chetcuti, 56, said: “We invested because we were stupid. Now we are learning that you cannot even trust those who are meant to be trusted with your money. As a Maltese citizen I felt that BOV was part of me.”
The investors’ meeting, organised by Finco Treasury Management, which says it represents about 500 investors in the La Valette Multi-Manager Property Fund, was the second to be held since the beginning of the month.
Finco managing director Paul Bonello pointed out that 75 per cent of investors were pensioners and 90 per cent financially illiterate. He stressed that while he believed the bank’s offer was unfair and “disgraceful to the country”, investors had to decide whether or not to take it according to their personal circumstances.
He said hope was last to die and called on BOV, the MFSA and the government to try and find a solution. He criticised the government for saying it would stay out of the issue because this had social, political and economic implications.
“There is still light at the end of the tunnel... I urge those who want to accept the offer to do so at the last minute,” he said.
“It could turn out that investors have the right to take legal action against MFSA but it is premature to say more at this stage,” he said, adding one could do so if they could prove that the regulatory authority had acted in bad faith.
He said the decision on whether to take legal action against the bank rested with each individual investor. He had referred the issue to Labour MEP Louis Grech who was to refer the matter to the European Economic and Finance Commissioner.
The MFSA yesterday released the full report 24 hours after its chairman, Joe Bannister, in an interview with The Times Business, defended the regulator’s decision to only publish the conclusions.
Prof. Bannister had urged the bank to consider delaying its deadline so investors could seek good advice. But the bank ignored the plea insisting investors had enough time to reflect and seek advice on the proposed settlement.
The MFSA has two other pending investigations related to the property fund: the first deals with the marketing techniques used by the bank to sell the property fund, which was intended for experienced investors only. The second deals with accusations that some investors had privileged information that enabled them to redeem their shares just before the bank froze the fund in 2008.