‘We offered National Bank shareholders €25 million’ - Tonio Fenech

The Nationalist government had offered representatives of the National Bank of Malta’s shareholders, €25 million in compensation for the shares they signed over under duress to the Mintoff government in 1973.

Former finance minister Tonio Fenech told MaltaToday yesterday that in the second attempt to close a 40-year saga with the NBM shareholders, the Nationalist government’s offer had been turned down by the shareholders’ representatives.

“Any government should see what the fair value of these shares are,” Fenech said when asked whether the Labour government should reach an out-of-court settlement with the NBM shareholders, who are now a step closer to compensation after a decision by the Constitutional Court was confirmed by a Constitutional Court of Appeal.

“Any government should see what the fair value of the shares are before a court gets to decide how much compensation the National Bank shareholders will get.”

NBM shareholders have however told MaltaToday that no approach has so far been made by the government following this week’s court decisions.

National Bank of Malta shareholders are expecting good news on October 28, when the Constitutional Court is expected to deliberate on the value of compensation they are owed after signing over their shares to the Labour government in 1973, in a forced nationalisation of the bank.

Yesterday, a government source told MaltaToday that Labour will not entertain any sort of “delaying tactics” when it comes to litigation in the courts.

Joseph Muscat’s government can be expected to score yet more political points if shareholders are awarded compensation without any delay, after having spent decades locked in protracted court proceedings.

“We have not yet decided whether we will be going for an out-of-court settlement,” a government source said.

On her part, one of the representatives of the National Bank shareholders’ committee, Milica Micovic, told MaltaToday on Friday that shareholders have always been willing to settle for an out-of-court settlement that is fair.

“There has never been a formal meeting so far – only informal talks with Owen Bonnici, who appreciated the unacceptable duration of our cases. He said that he would refer the matter to higher powers.

“In view of the fact that the judgments were positive in regard to the shareholders’ claims, it might make sense that an out-of-court settlement acceptable to both parties be reached. We are willing to listen.”

On Thursday the Constitutional Court rejected an appeal by the Maltese government, on a decision by a civil court in its constitutional jurisdiction, that found that the rights of National Bank of Malta shareholders had been breached when they were forced to surrender their stakes without any compensation.

A second decision also rejected another appeal on a court decision that decreed that shareholders’ constitutional rights had been breached and that compensation was due.

The judgment by Mr Justice Joseph Micallef, originally in January 2014, arrived over 40 years after the government led by the late Dom Mintoff nationalised the National Bank, which became Bank of Valletta in 1974, after a run on the National Bank’s reserves.

The case was instituted by 49 shareholders and their heirs in 1992 against the prime minister, the finance minister and the Council of Administration that ran the bank shortly before its nationalisation.

The courts will now have to determine the level of compensation due to the shareholders.

In 2005, informal discussions between Investments Minister Austin Gatt and the National Bank shareholders were held over a reported Lm8 million compensation package to the shareholders.

“In respect of the offer made by then Minister Austin Gatt through our lawyers, of Lm8 million, this was a verbal offer,” Micovic told MaltaToday.

“This offer was put to the shareholders at a general meeting and rejected by the overwhelming majority. It was considered a risible amount by many.”

Micovic however said that the offer made in early 2013 by finance minister Tonio Fenech, did not give the shareholders enough time to consider the proposal. “It was a rather complex document [and] our legal and financial teams did not have enough time to consider the implications. By then there was a change of government.”

“Today many Maltese do not remember the National Bank saga, indeed many of the original shareholders are now dead and the current shareholders are first- and second-generation shareholders – heirs of the original ones. Many of them remember the cruel, vindictive and unjust way in which the then government forcibly appropriated their shares and the National Bank of Malta. Many of them lost their businesses and their livelihood. Many watched their parents and grandparents being broken,” Micovic said.

“It is surely now time – and it will be to this government's credit – to settle this longstanding injustice perpetrated against its own citizens. The shareholders have never expected any favours from any government. They have always been reasonable in their demands and only expect what is justly due to them after a 40-year wait.”

The National Bank of Malta was hit by a run on its reserves back in December 1972, but its original shareholders claim the Central Bank of Malta had refused to act as lender of last resort, and even blocked attempts by Barclays Bank to loan money to the NBM.

In four days, the run on the bank saw enormous withdrawals totalling at least Lm2.5 million.

Around 350 shareholders lost their shares after they were forced to sign them over to the government, without compensation.

Prime Minister Dom Mintoff had threatened in parliament that if the bank’s directors refused, he would remove the limited liability of the bank’s shareholders, extend it beyond the bank’s capital to their personal assets, and withdraw the four million pounds in parastatal funds which were deposited at the bank.