The money generated from the sale of passports to wealthy foreigners, ring-fenced under a national development and social fund, was used to buy shares in Bank of Valletta, a spokesman has confirmed.
The fund, which by the end of last month contained €360 million, was established to contribute to major projects of “national importance” and to contribute to a raft of social initiatives.
Although Malta began selling passports in 2014, it took over two years for Identity Malta, the entity running the scheme, to transfer the money to a Central Bank account run by the national development and social fund.
The BOV share acquisition was the fund’s first investment, the fund spokesman said in reply to questions by the Times of Malta. A total of 2.91% of the bank’s shares, amounting to €21.8 million, were taken up by the fund.
This was done after one of the bank’s present shareholders, UniCredit SpA, passed on its rights to buy the shares during a recent share issue to existing shareholders.
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The government is the largest single shareholder in BOV and retains the right to appoint its chairman. Former Labour Party auditor Taddeo Scerri was appointed to chair the bank last December.
The acquisition of the shares was considered a long-term strategic investment
The spokesman for the national development and social fund denied there was any pressure from the government to buy the BOV shares.
The fund was established as an autonomous agency with a separate legal identity, the spokesman said. The organisational set up of the fund ensured there was separation of powers by entrusting the governance of the fund to a board of governors and the administration and operations of the agency to a CEO, he added.
The board of governors decided whether an investment proposal was appropriate for the fund after due consideration was given to the founding regulations and the investment policy of the fund.
The board is chaired by David Curmi, a former president of the Malta Chamber of Commerce, Enterprise and Industry, who, in 2013, was an early supporter of the controversial cash-for-passports scheme.
Asked how buying the BOV share’s aligned with the fund’s stated aims, the spokesman said the acquisition of the shares was considered a long-term strategic investment for the fund, which was obliged to undertake initiatives for the benefit of future generations.
The spokesman said more investments were planned for 2018 in line with the aims of the founding regulations.
Finance Minister Edward Scicluna told Parliament last year that while he did not exclude the fund being used as an investment vehicle, spending should be geared towards investing in areas that were not catered for by the public sector.