The Finance Ministry says Roderick Chalmers has no conflict of interest in his dual roles as Bank of Valletta chairman and Air Malta board member despite the bank having significant loan exposures with the airline.
Mr Chalmers was recently appointed to sit on the Air Malta board while retaining the chairmanship of BOV, a post in which he was also nominated by the government.
A leaked copy of the Ernst and Young restructuring plan revealed that the airline was unlikely to reap any dividends from the sale of Selmun Palace Hotel because, among others, the property was pledged as a security against bank loans. According to the report, BOV has a secured claim over the land and property of Selmun Palace Hotel Co. Ltd to the tune of €1.9 million and the property is also pledged as guarantee up to €8.4 million against Air Malta loans.
The report warned that BOV could end up “taking all the proceeds” from the sale of the hotel if the bank decided to enforce its security on the property.
“The ministry sees no conflict of interest in these roles,” a spokesman for the Finance Ministry said when asked about the apparent conflict of interest and whether Mr Chalmers’ directorship at the airline could put him in a privileged position to have access to information that could be used by the bank in deciding on whether to call in Air Malta’s loans.
Faced with the same question, Mr Chalmers insisted that “for reasons of confidentiality” the bank did not comment on “the affairs of individual customers”.
He explained that the appointment of non-executive directors on the bank’s board made it “inevitable” that from time to time potential conflicts of interest could arise. Mr Chalmers said BOV had clear rules, regulations and procedures “to manage such conflicts, actual or potential, in the best interests of the bank”.
Recommendations in the code of good corporate governance that form part of the listing rules include: a requirement that directors make a full and frank disclosure with respect to any matter where there is a potential and/or actual conflict; that the director recluses himself and is excused from the meeting; and is not involved in the board’s discussion and vote on the matter.
Selmun Palace Hotel Co. Ltd, which ran the 154-room, four-star hotel, is a wholly-owned Air Malta subsidiary. All 58 workers employed there have been made redundant and the government has said it wants to sell the property to be used as a hotel.