Controversial decisions made recently by Bank of Valletta were discussed at length in a meeting between chairman John Cassar White and the Malta Association of Small Shareholders, the Times of Malta is informed.
Association president Alfred Portelli, a former Labour Cabinet minister, would not give any details of what was discussed. Describing the July 10 meeting as “very informative”, he would only say it served as a good basis for more internal talks within the association.
This newspaper is informed that the meeting was held at Mr Cassar White’s request.
In a statement, the association said that during the meeting it asked about the recent loans given to Electrogas and Air Malta as well as the early retirement package granted to Parliamentary Secretary Michael Falzon, who served in the bank’s legal office.
One of the shareholders, economist Karmenu Farrugia, did not mince words when he spoke to the Times of Malta and said he felt Dr Falzon should have been given “long unpaid leave” and not a €260,000 early retirement payout with a special clause to return to the bank.
Mr Farrugia, who was not present for the meeting, insisted he had “absolute faith” in the bank’s board of directors, particularly its chairman.
In its statement issued a few days after the meeting, the association said: “The chairman’s replies were exhaustive, albeit within the limits of banking secrecy.”
When contacted, Mr Portelli refused to elaborate or say whether the association was satisfied with the replies, adding he could not say anything further than what was stated in the press release.
My personal opinion is that Michael Falzon should have been given long leave without pay
Mr Farrugia, who frequently comments in the media on the economy, said he was not preoccupied with the happenings at BOV. “I’m preoccupied only when these matters hit the headlines. However... I think the chairman and the board are doing a good job.”
On the various articles appearing in the press on the issues affecting the bank, Mr Farrugia said there was evidence that some things were not “an everyday occurrence” but he insisted he did not have enough information to comment further.
Asked whether the special early retirement package given to Dr Falzon was justified, he said this was very subjective.
“My personal opinion is that Dr Falzon should have been given long leave without pay and not a sum of money with a clause allowing him to return to his job. However, this is my personal opinion,” he emphasised.
Last December, the bank approved a loan of €101 million to Electrogas Malta Ltd, a private consortium entrusted with building a new power station. The loan was extended following a unique State guarantee of €88 million given to cover the bank’s exposure.
Questions on due diligence persisted following the recent departure of Gasol, the lead partner of the consortium, which won the original government bid. The hefty early retirement payout to Dr Falzon raised eyebrows when it emerged that he would be able to return to the bank once he left politics and pay the difference pro rata.
BOV admitted this was a unique arrangement but said it was justified because it was the first time that a bank employee had been given a Cabinet post. It also insisted Dr Falzon would have to pay back part of the grant if he returned by June 2018.
It has also resulted that Dr Falzon had taken part in negotiations with the bank to change an agreement over the chairman’s office at the House of Four Winds in Valletta to a 65-year temporary emphyteusis. Dr Falzon denied any conflict of interest.
It is still unknown whether Dr Falzon sought the Prime Minister’s guidance before the negotiations took place, as required by the ministerial code of ethics.