In 2008 the financial world was hit by a crisis of gigantic proportions. The collapse of the Lehman Brothers bank, till then considered to be an unassailable bulwark of the financial establishment, wrought havoc not only on financial institutions worldwide but also on myriads of people who were reduced to poverty, having lost all their life savings in a single swoop.

The world-renowned firm held more than $600 billion in assets at that time and its collapse remains the largest bankruptcy to date in US history. Some 25,000 employees lost their jobs.

The consequences of the coming apart of such a prestigious institution was to be felt even by top management. Erin Callan, the Lehman chief financial officer, lost her job, then worked briefly for Credit Suisse before going on leave and never returning to work. In her published 2016 memoir, Full Circle, Callan revealed she took an overdose of sleeping pills a few months after the bank collapse.

Fred Goodman, chief executive of the Royal Bank of Scotland, was stripped of his knighthood by the Queen, even though he managed to hold on to his £350,000 yearly pension, while Andy Hornby, the chief executive of Halifax Bank of Scotland, was – according to The Guardian – judged in 2013 by the Banking Standards Commission to have been, along with two other HBOS bosses, guilty of a “colossal failure of management”.

The Lehman Brothers crisis left its trail of victims in Malta too, with normal investors losing a considerable part of their savings. A major culprit here was Bank of Valletta that in the previous years had encouraged its customers to buy bonds issued by Lehman and by the Royal Bank of Scotland, by Lloyds, all institutions hard hit by the Lehman collapse.

Yet, while the local bank’s customers were left crying their misfortune, not one single BOV official carried any responsibility for the wrong advice given to clients.

I remember being furious at this attitude. So much so that, for the first time ever, I attended the subsequent BOV annual meeting and – seeing that the directors were still reserving for themselves a total sum of €350,000 in emoluments – I moved an amendment to decrease the sum by one euro.

This gesture was meant to signify, at least symbolically, that the directors recognised their responsibilities. I remember the chairman trying to overrule my amendment. But one intelligent bank director of the time – Lino Spiteri, the seasoned politician – realised that it would be counter-productive for the directors to refuse to shoulder their clear responsibilities. He, therefore, seconded my request and the global emoluments were symbolically reduced to €349,999. 

The principle of “director responsibility” was thus established.

Today, 10 years later, we find ourselves in a similar situation, with the negative protagonist again being the BOV. BOV directors have screwed up grandly in the past years, with their misjudged investments.

It is about time that bank directors understood that they also have to shoulder moral responsibility for any damage that they might have caused

The bank they “directed” has had to fork out millions in compensation to the investors in the La Vallette Multi Manager Property Fund, and the bank is still dishing out further payments, because of the way their customers were misled. 

Then, the bank entered a legal, but very risky, operation when it backed the operations of the Deiulemar shipping company in Italy.

As a result, BOV has had the royal sum of €363 million frozen as a precautionary warrant by the judicial authorities in Torre Del Greco, Naples, following a request of the liquidators of the Deiulemar shipping company, acting in conjunction with 13,000 shareholders, who in 2014 had lost all their life savings, after having been duped by Deiulemar.

In July this year, €75 million had to be put aside for litigation costs, and no interim dividend was issued to BOV shareholders. The share price of BOV plummeted to historic lows. 

The measures taken by the present BOV directors in this unfortunate case were the right precautionary ones. However, the burden should be shared jointly by the shareholders and the past directors, who should also assume responsibility for their possible lack of proper judgement.

Now, we get to learn that a number of Bank of Valletta employees have sued the bank for pension funds, which they say were arbitrarily and discriminatorily distributed to other employees in the past. The 90 appellants are claiming damages of up to €20 million.

So, here we are faced with another cock up of past directors, who were supposed to be well versed in the banking sector. 

Come next May, BOV will be holding its annual meeting. Let us see if it is going to be again the shareholders alone who are going to bear the brunt of the previous directors’ gross errors of judgement, thus being deprived of their annual dividend.

It seems that it is not legally possible to recoup part of the emoluments received by said past directors. However, it is about time that bank directors understood that they also have to shoulder moral responsibility for any damage that they might have caused to so many thousands of small shareholders.

“Burden sharing” should not be limited only to the migration context.

Finally, it is important that only competent people are appointed to such directorships. We simply cannot afford repeating the mistakes of the past.

Arnold Cassola is a candidate for MEP elections and a former Secretary General of the European Green Party.

This is a Times of Malta print opinion piece