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Matthew Vella
Directors of the Price Club supermarket chain that went belly-up and left a string of creditors fighting for their money in court, had used a third party to appear in their name for the purchase of the Happy Saver supermarkets, after the Office of Fair Competition warned the purchase would result in a monopoly.
In the case brought by Valle del Miele against Price Club’s directors for gross negligence and fraudulent trading, witness Carmel Chircop stated under oath that Ferdinand Grech, a “friend” of the directors, finalised the deal for Price Club Operators and Price Club Holdings.
Chircop is owed Lm500,000 from Price Club directors Wallace Fino, Chris Gauci and Victor Zammit, as commission for the property deal he brokered, according to an agreement the two parties signed in March 1999.
At the time however, Price Club was told by the Office of Fair Competition that the purchase of the Happy Saver supermarkets from the companies Happy Saver Ltd and Four Square Properties Ltd, would lead to a monopoly.
When Price Club went under liquidation following its demise, Chircop realised his commission fee appeared nowhere in the creditor books: “Wallace had told me it was so because the properties could not appear in Price Club’s accounts, not even the amounts I was owed… I was worried since my payment according to our agreement was not on the creditors’ list.”
Price Club was led into failure despite Lm22 million in sales, leaving their suppliers short of Lm10 million, and 400 employees jobless.
In order to facilitate the purchase pending the Office of Fair Competition’s investigations, Chircop’s associate John Galea signed the promise-of-sale agreement with Happy Saver and Four Square in March 1999 for the purchase of the Happy Saver premises: “He was paid a Lm16,000 deposit… these he received from Price Club.”
When Price Club’s directors were warned by the OFC of the problems with the purchase, Ferdinand Grech – a “friend of Victor Zammit” – was introduced into the purchase: “the directors said Grech would take the properties upon his name for Price Club until the issue at the Office of Fair Competition was resolved.”
Chircop said that when the promise-of-sale agreement was transferred to Ferdinand Grech, he wanted to have an hypothec on the contract’s amount: “he said it was not possible since the properties would be in Ferdinand Grech’s name… I remember him telling me: ‘the banks trust us, aren’t you going to trust me?”
Ferdinand Grech later signed the final contract of sale for the purchase of the properties. Chircop stated his first cheque for his commission was issued by Price Club.
Asked by Valle del Miele’s lawyer Shazoo Ghaznavi for whom Grech was appearing, Chircop categorically stated he was acting in Price Club’s name: “The payments Grech issued for the final contract of sale had been paid beforehand to him by Price Club… Wallace Fino issued the payment to Grech who paid me,” he added on his commission payment.
“The cheques I received and the cheques received by John Galea were Price Club’s and when Ferdinand paid me Lm18,000 this was the first payment from Price Club.”
Chircop also claimed Ferdinand Grech had transferred the shares and directorship of Happy Saver onto the Price Club, since this was the company which had the creditors on its books: “Grech kept the shares of Four Square Ltd where the Happy Saver assets were listed on.”
According to auditor John Zarb, Price Club paid a Lm224,246 premium in 1999 for the purchase of two Happy Saver supermarkets. He noted in his audit that notwithstanding Price Club’s financial troubles, ending the year with a Lm1.4 million pre-tax loss, “the directors proceeded to pay this premium, and to take on other premises (Gozo in August 1999, a Luqa warehouse in January 2000) without, in my opinion, adequate consideration being given to the added capital requirement being created.
“In all cases, the burden and the risk of an expanded enterprise were being passed on to the creditors, unwitting financiers of the Price Club group.
mvella@mediatoday.com.mt
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