Upholding human rights… always

The National Bank saga started in December 1973 when the private bank was forcibly taken over by the government. The bank was facing a run on deposits that intensified after then Prime Minister Dom Mintoff addressed parliament about the matter.

Shareholders were forced to sign off their shares to the government and those who refused saw their holdings terminated by law. Eventually, in March 1974, Bank of Valletta was born on the ashes of the National Bank. It was part of a wider nationalisation process initiated by Mintoff’s government in a bid to centrally steer the economy towards industrialisation.

Almost 20 years after the forced takeover, in 1992, NBM shareholders opened two court cases to seek compensation. One of the cases was by a group of shareholders who claimed they were made to sign off their shares under duress in December 1973; another was by shareholders who refused to hand over their shares but which were subsequently rendered worthless.

The two cases ran in parallel and last year, the court awarded the shareholders €111 million in compensation, ruling that the government’s 1973 intervention imposed an excessive and disproportionate burden on the shareholders. All sides appealed and the final verdict was delivered last week by the Constitutional Court.

In its ruling, the court reduced the compensation to €72 million and ordered that the sum be apportioned according to the original shareholding held by the claimants.

The Constitutional Court held that while the economic circumstances of the time justified government’s urgent intervention to protect depositors and the financial system, the complete absence of compensation to the shareholders amounted to a violation of their constitutional rights.

Of note was the court’s decision to refuse the shareholders’ principal demand to receive compensation equivalent to the present-day value of Bank of Valletta, a figure exceeding €1.4 billion. It described the claim as not feasible and noted that it would have significant repercussions for Malta’s financial sector and third-party shareholders who were not involved in the original dispute.

The Constitutional Court’s ruling brought to an end one of the longest running financial and human rights disputes in the Maltese courts.

But this leader is not about the 1973 takeover and whether the rationale that underpinned the actions of Dom Mintoff’s government was justified or not. Reams have already been written about that historical fact with each side giving its interpretation of the events. At the end of the day, the court has ruled: The takeover may have been justified but compensation was still due.

Instead, this leader is about the importance of upholding the rule of law and safeguarding human rights as enshrined in the Constitution and the European Convention of Human Rights.

The NBM story is just one other lesson from history that shows how the breach of human rights can have lasting consequences on the rest of society and not just the individuals involved. It is the rest of society—today’s taxpayer—who have to shoulder the financial compensation awarded by the court in the NBM case.

Similarly, last week, the government concluded the purchase of the building that houses the King’s Own Band Club in Valletta to prevent the eviction of the cultural entity. The purchase cost taxpayers €9.2 million. It was one of several other similar purchases made by the government to save band clubs from being evicted as a result of pre-1995 rent laws that have been deemed in breach of the property owners’ human rights time and time again by the courts in Malta and Strasbourg.

The rent laws were finally amended three years ago with a fair regime and the introduction of a government-support mechanism for tenants, including band clubs.

The well-intentioned pre-1995 rent regime, which was introduced after World War II to prevent a housing crisis, had long outgrown its need and yet subsequent governments failed to change it until the current administration decided to take the bull by the horns.

Subsequently, to avoid the eviction of band clubs that occupied premises controlled by the pre-1995 regime, the government came up with a scheme by which it buys off the properties from the owners and rents them back to the clubs at a fair price. The price tag for this scheme has gone up to €30 million so far.

The scheme is more than welcome because it saves the cultural entities that define our communities; that bring people together and are an intrinsic part of this country’s history. But it also serves as a stark reminder that breaching human rights comes at a cost to everyone else—either by way of compensation or as a mitigating factor to avoid societal disorder.

And while many will claim it is unfair on taxpayers—ultimately when governments are guilty of breaching human rights and compensation is awarded it is public funds that are at stake—to shoulder the burden of compensation, it is only fair that a breach of human rights is quantified in financial terms and the State is made to bear the costs. After all, the State exists to promote and protect everyone’s human rights.

In this respect, cases like those of the NBM and the pre-1995 rents are the reason why we must remain vigilant all the time to ensure that our governments uphold the rule of law, dispense justice fairly and respect human rights… always.