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Matthew Vella
Silence has characterised all parties in the informal discussions being held between the Minister of Investments Austin Gatt and the former shareholders of the National Bank of Malta, the precursor to the Bank of Valletta before its shareholders were forced to sign their shares under duress by a Labour government.
MaltaToday can reveal that minister Austin Gatt is having discussions with legal representatives of the National Bank shareholders in which an Lm8 million compensation package has been offered to the former shareholders who signed off most of their shares under duress thirty years ago.
But Gatt chose not to comment when earlier this week this newspaper asked him about the problems the National Bank of Malta saga poses for the bank’s future privatisation.
The offer would appear to be a final attempt at removing the Bank of Valletta’s most notorious skeleton in its closet, a major setback to further privatisation efforts for the bank, still haunted by the National Bank of Malta scandal take-over thirty years on.
The chairman of the Bank of Valletta, Roderick Chalmers, has also chosen not to comment on the current discussions.
“The Bank has always maintained that issues relating to the National Bank of Malta, its former shareholders and the government, are matters for the parties concerned, and has no comment to make thereon,” a spokesperson for Bank of Valletta told this newspaper.
It is certain that with pending court cases lodged by the shareholders against the government over the compensation for the shares signed off when the bank was nationalised, unless the issue is cleared up the privatisation of Bank of Valletta is likely to incur serious legal hurdles, possibly ending up in the European Court of Justice.
So far the Lm8 million offer represents a minor slice of the shares which back in 1974, following a run on the bank’s deposits, had been worth close to some Lm292 each over a nominal value of Lm100 per share. At the end of 1973, according to a report by Curmi and Mallia stockbrokers, the National Bank’s net asset value after the run was equivalent to Lm2,857,445, or Lm292 per share.
Bank of Valletta shares are presently valued at Lm300 million, this newspaper is informed.
Gatt has insisted upon complete secrecy throughout informal talks with the shareholders’ representatives. Government is willing to pay an amount of interest that will not accede double the value of the capital in accordance with duplo rules on interest.
Last week, shareholder Louis Apap Bologna, also the president of the Chamber of Commerce, would not confirm nor deny the offer of Lm8 million.
Around 350 shareholders, notably the larger part of Malta’s nobility, lost their shares after a run on the bank’s deposits in December 1973 forced them to sign off their shares under threats by former Labour Prime Minister Dom Mintoff.
Millions were allegedly withdrawn within days from the National Bank when its directors were summoned to meet the Prime Minister, who demanded they transfer the bank to the government to restore depositors’ confidence.
The shareholders are still in court today, 30 years after the events of 1973, in a bid to reclaim a just compensation.
According to the National Bank of Malta shareholders, Mintoff had refused to allow the Bank to borrow bridging finance from other banks such as the Midland Bank, the NatWest, or Barclay’s Bank during the run on the bank.
According to court testimonies, Mintoff said the share transfer would occur “naturally without compensation” and that if directors refused this offer, he would remove the limited liability of the banks’ shareholders, extending it beyond the bank’s capital to their personal assets, and that he would withdraw the four million pounds in parastatal funds which were deposited at the bank.
“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… 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.”)
Mintoff’s threats prompted a telephone campaign to all the NBM shareholders to collect their signatures for the share transfers, fearing 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.
matthew@newsworksltd.com
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