National Bank • December 14 2003

“Jiena nitnejjek mill-Kostituzzjoni" - Mintoff

The uncouth politician proclaimed by his party as the saviour of Malta and who hopes to be remembered as such was screaming. Dom Mintoff the man who ruined the lives and future of countless Maltese said: "I know this is against the Constitution, I don’t give a damn about the Constitution, not I wrote it, I don’t give a damn about the judges and anybody." (Naf li din hija kontra l-Kostituzzjoni, jiena nitnejjek mill-Kostituzzjoni, mhux jien ghamiltha, nitnejjek mill-Imhallfin u minn kullhadd.")
Socialist Prime Minister Dom Mintoff had clear plans for Maltese banking in 1973 – outright nationalisation would be carried out at all costs, and the costs would be shouldered by the affluent shareholders in the private Maltese banking sector. After the BICAL bank it was the turn of the National Bank.
Il-Perit’s style of Nasserian omnipotence, to elevate the role of the state by taking over private initiative, was one played out with open threats and uncontrolled coercion. His lackies from those in the Central Bank to those in the Ministry of Finance ensured that Mintoff’s diabolical dreams would come true. And yet, the Nationalist government who promised justice for all, has nothing to settle scores with the countless shareholders of the National Bank. Conveniently forgetting them as was the case with the Bical Bank saga. A trait that has dominated the Eddie Fenech Adami government’s lethargy and indifference to people’s suffering.
Yet this time, the National Bank could not in any way be accused of ‘fraudulent’ banking activities.
In Court evidence given by Dr Philip Attard Montalto, Mintoff’s ruthless measures designed to gain control of the National Bank of Malta (NBM) are revealed in full. Mintoff wanted the NBM shareholders to transfer their shares without compensation to the government.

Mintoff’s communist streak takes over

Matthew Vella and The MaltaToday team reporting
According to National Bank shareholder Attard Montalto’s evidence in court, he challenged Mintoff during a meeting held at the Office of the Prime Minister at the height of the run on the NBM, on Monday 10 December 1973, to nationalise the bank by compensating the shareholders. Mintoff told him: "What do you think I am? I’m no fool, this does not suit me."
Mintoff’s arrangement was fraught with threats. He did this by menacing shareholders that he would remove their limited liability, holding them personally responsible for any loss in the NBM accounts. The personal assets of shareholders would be taken to make for the losses of the bank – although the claims of bankruptcy are seriously put in doubt by reports and accounting records on the bank.
Mintoff was crystal clear in his actions. The evidence in Court given by Attard Montalto on October 17, 1980 reveals what was said by Mintoff that day:
(Mintoff) – "Tell all the shareholders that who doesn’t sign will be held personally responsible. Tonight I will go to Parliament the minute I leave here and I will pass either one law or the other." (Ghidu lix-shareholders kollha li min ma jiffirmax ser ikun responsabbli personalment. Il-lejla jiena kif nohrog minn hawn sejjer il-Parlament u nghaddi jew ligi jew ohra.)
"I’ll either pass a law to appoint a Council of Administration to take care of the banking group’s assets and liabilities, or else I will pass a law to remove the limited liability of all the shareholders." (… jew nghaddi ligi biex inqabbad Council of Administration biex jiehu hsieb l-assets and liabilities tal-banking group, inkella nghaddi ligi biex inehhi l-limited liability tax-shareholders kollha.)
Attard Montalto then said that Mintoff suddenly flared up said: "I know this is against the Constitution, I don’t give a damn about the Constitution, not I wrote it, I don’t give a damn about the judges and anybody." (Naf li din hija kontra l-Kostituzzjoni, jiena nitnejjek mill-Kostituzzjoni, mhux jien ghamiltha, nitnejjek mill-Imhallfin u minn kullhadd.")
He turned to his right hand man the late Dr Edgar Mizzi and said: "Edgar, is this true?’ Dr Mizzi said: ‘Yes it’s true. We have two laws ready, either one or the other.’ At that moment they had left us with no doubt what Government’s intentions were."
Early warning – RJA Earland sounds the alarm
Mintoff’s blueprint for nationalisation was gaining ground. Following the BICAL crisis in 1972, by mid-1973 he was already eyeing the National Bank of Malta (NBM). And Central Bank governor RJA Earland was privy to his plans. He would be the person to send early warnings to vice-chairman Frank Cassar Torreggiani that Mintoff was after the NBM.
The election of Labour in the seventies meets a lull in economic activity, but one which leaves the banking sector, as epitomised by the NBM, in yet prosperous and stable conditions. Between 1968 and 1972, the NBM had encountered several vicissitudes, not least due to the international economic slowdown with the seventies’ oil crisis. Since 1968 however, pre-tax profits for the NBM had shown general signs of successful progress, increasing from Lm465,662 in 1968 to Lm722,686 in 1972.
By the summer of 1973, Mintoff had set his eyes on the NBM. And the warning had come from an unlikely source – the Governor of the Central Bank, RJA Earland.
RJA Earland and NBM vice-chairman Colonel Frank Cassar Torreggiani were golfing partners on the course at the Marsa sports grounds. Only six months before the fatal run on the NBM, in which Lm2.5 million were withdrawn by clients following rumours of bankruptcy, RJA Earland informed Cassar Torreggiani of Mintoff’s plans.
Peter Cassar Torreggiani, son of Frank, says Earland had warned his father of an eventual take over well before the run on the bank:
"My father and RJA Earland used to be good friends. A month before he died, which was prior to the run on the bank, my father had told me that Earland had gave him stark warning. He had told my father that Mintoff wanted the bank. His advice to my father was that he ‘should have his house in order’ by the time of the takeover, meaning that the board of directors had better make sure it would be a smooth takeover."
Earland’s warning had to be taken seriously. Mintoff had already heeded to the eventual nationalisation of the banking sector in the summer in certain speeches. Finance Minister Guze Abela had also hinted that the bank should be taken in the hands of the employees to modernise it and that the Nationalists had been wrong in their industrial policy not to have nationalised private banks.
Additionally, in 1973 Mintoff had paid off the Malta Drydocks’ Lm3 million loan with the NBM. According to Peter Cassar Torreggiani, there were those who thought that putting pressure on the dockyard to recover the Lm3 million debt had been a wrong move at a time when Mintoff was feuding with the British forces over renting the army bases in Malta.
"My father died a week before the takeover of the bank," Cassar Torreggiani says, "after having returned from a game of golf. His death inspired popular rumours that he died following the takeover of the bank, but he died before the actual run. My father was under great strain. The day he died he had told his daughters not to let him go to the board meeting of the NBM."
Mintoff
threatens: I will remove your limited liability
The mysterious run on the NBM started on Thursday 6 December, 1973 and proceeded straight through Monday 10 December. That Monday, at 3.00 pm, as heavy withdrawals continued, Chairman Louis Vella, Major Austin Cassar Torreggiani and Baron Patrick Scicluna, met Prime Minister Dom Mintoff, Finance Minister Guze Abela, RJA Earland, and Attorney General Edgar Mizzi, Central Bank deputy governor Lino Spiteri The latter has always presented the case that he had nothing whatsoever to do with Mintoff’s nationalistion mania.
Dom Mintoff spelt out the situation: he wanted the bank by 5.30pm and demanded that the shares be transferred over to the government in order to stop the bank run and restore depositors’ confidence.
Through the ensuing days, efforts by the NBM directors to obtain bridging finance to meet the heavy demand proved futile. Mintoff refused to let the NBM borrow money from other banks such as the Midland Bank, the NatWest, or Barclays Bank. Neither the Central Bank, which should have done its utmost to ensure the safety of the banking sector, did not offer any finance to allay fears of bankruptcy. Mintoff refused the NBM’s offer to front its property and part of its loan portfolio as collateral.
Mintoff ordered Edgar Mizzi to draft an instrument for the transfer of the NBM shares to the government. The shareholders would get no compensation for their shares. The phoenix that would be given life out of the ashes of the NBM would spell disaster for the shareholders who had most of their life savings in the NBM.
Mintoff’s threats were clear: if shareholders would not transfer their share over immediately, he would remove their limited liability. Shareholders would be held personally liable beyond the bank’s capital base. Their personal assets would be seized. And this was a determining factor in shareholders signing off their shares without compensation.
Former NBM shareholder Adrian Busietta wrote in The Times of 22 January 1995 that the choices were clear:
"Either give Mintoff the shares for free (as he wanted) within two hours and lose everything we owned in the bank amounting jointly to about Lm 6 million in 1973; he would remove limited liability… and Mintoff would still acquire all the share of our banking group for free. And by legally or illegally removing limited liability he could then take their other personal possessions, to cover so-called deficits on the account."
Mintoff’s threats prompted a telephone campaign to all the NBM shareholders to collect their signatures for the share transfers, fearing that the government would take their personal belongings from their homes. Court marshals started knocking at the doors of the shareholders, right up to the early hours of the morning.
Since all sources of support from the government had been blocked, the directors had to either face bankruptcy or get the shares transferred to the government. They feared that if they decided to initiate liquidation proceedings, hundreds of thousands of depositors’ money would remain frozen for a long period of time, as well ending the employment of the 300 bank workers.