Former CEO demands explanation on daily €100,000 fine against Go subsidiary

A former chief executive officer of Maltacom plc, the forerunner to telecoms company Go plc, yesterday demanded to know why a subsidiary of the company was retaining a gaming client at the risk of incurring a €100,000 daily fine from a French court.

Stephen Muscat raised the question during an otherwise uneventful annual general meeting held on Tuesday 5 May, at the Hilton in St Julian’s, when the shareholder asked for an explanation on a contingent liability.

Muscat said shareholders needed more information on why Go was retaining a gaming client when a French court had threatened its subsidiary with a daily fine of €100,000 for hosting its severs. “Is this client providing the equivalent in daily income to Go plc, to continue to be given a service?” Muscat asked, calling on the directors to explain what measures were being taken by the board to mitigate such risks.

In its annual report, Go said the court judgement required that the subsidiary “implements measures to prevent a specific client from providing certain services” and pay €100,000 per day unless and until the company complies with it.

Go has said that on the basis of its legal advice, it has not been yet been correctly served with the judgement and that the judgement can only be enforced in Malta only in the event that it is declared so by the courts in Malta.

Go said its legal advice was that there were “serious doubts on the enforceability of the overseas court judgement in Malta and accordingly no provision has been recognised as the directors are of the opinion that an outflow is not probable.”

In 2014, a similar case was instituted against the same subsidiary  but no judgement has yet been delivered by the court.

In replying to Muscat, company secretary and head of legal services Francis Galea Salamone elaborated further that the French decision was against a Malta-licensed gaming company that uses a Go subsidiary to host its servers.

He confirmed a second court case, on the same merits, and that the situation is being closely monitored by the company. Galea Salamone said the board had relied on the legal advice given.

There was a brief moment of hesitation at the question, with directors and senior officials at the top table slow in taking the lead to answer the question before Galea Salamone stepped in.

Apart from a handful of questions on Go’s shareholder loyalty scheme and its property portfolio, little came out of the question on the potential €100,000 daily cost to company revenues from the plc’s directors.

The meeting also approved a dividend of €0.07 per share, after the company announced pre-tax profits of €20.3 million, up 30% over 2013.

“We are transforming our core telecommunications business [and] we are pursuing a number of initiatives which allow us to focus on areas with growth potential,” Go chairman Deepak Padmanabhan said on the company’s strategy for growth.

Go’s immediate parent company, at 60% ownership, is Emirates International Telecommunications (Malta), which is ultimately controlled by Dubai Holding LLC, owned by Dubai ruler Sheikh Mohammed Bin Rashid Al Makhtoum.

Go controls 50% of Cypriot company Forgendo, which subsidiary, together with Massar Investments has a 50% stake in Cypriot company Giradena. Forgendo and Giradena hold investments in Forthnet (Hellenic Company for Telecommunications and Telematic Applications S.A), a Greek company listed on the Athens Stock Exchange.

Go plc also owns a €50 million property portfolio of 11 immovable properties, owned by subsidiary Malta Properties Company Limited.