The second slaughter of the innocents

The top people who run Bank of Valletta (BoV) feel deeply offended and accuse me of making inflammatory and untrue statements when I defend those who have lost hard earned money in the La Valette Multi Manager Property Fund.

The way this fund was run, the way naïve and vulnerable investors were enticed to put their money into this fund, the way well connected individuals in the bank got out of this fund unscathed before it collapsed, the way BoV is now trying to give hard hit investors meager compensation and the way the Malta Financial Services Authority (MFSA) is allowing all this to go on, is totally unacceptable. For saying all this, those who run BoV accuse me of potentially causing damage to Malta’s largest financial institution. Those who run BoV seem quite capable of damaging the bank without any help from me.

A former top bank executive, Anthony Curmi, while distancing himself from my remarks, had this to say on BoV in The Times a few days ago: “Independently of all this, I have to say that, based on my familiarity with a totally different case of alleged mis-selling by the BoV Wealth Management, not all is rosy in BoV’s garden. This particular case has been under investigation by MFSA for over one year but, so far, BoV has refused to see reason. This particular case, in my opinion, is clear-cut. It is certainly uncomplicated compared to the property fund saga. Yet, the complainant (a widow, to add insult to injury) is still waiting for justice to be done, with BoV seemingly opting for the possibility of inducing the person concerned to institute costly and protracted court proceedings. A David and Goliath scenario can never do well to BoV’s image apart from the fact that this demonstrates question-able business ethics and morality.”

Since I spoke out on the BoV’s mishandling of the La Valette Multi Manager Property Fund, other people have contacted me and told me how shabbily they have been treated by this bank. I have been invited to go to the BoV “to be properly informed on this matter.” I look forward to being briefed by BoV but first I want them to treat their investors decently and give them back all the money they made them lose by getting them to invest in this fund.

In the last few days BoV’s army of salespeople have been contacting the investors and making extreme pressure on them to accept immediately their meagre offer of compensation. BoV people know that MFSA’s decision is imminent so they are making desperate attempts to get signatures from clients before. In the meantime, MFSA take their time to give BoV all the time in the world to get out of this mess as cheaply as possible.  

Government and MFSA must assume their political, social and legal responsibilities and protect the investors. Government (as main shareholder appointing BoV chairman) and MFSA as regulatory body with all powers to direct and instruct) must tell BoV that it is in the wrong and stop causing further damage to the financial services industry, to Malta, to clients and indeed to its shareholders. See how its share price has fallen about 33% in the last few months. There are strong rumours that MFSA’s first investigation report should be out tomorrow or the day after.

This might party explain why BoV’s army of salespeople is making immense and desperate pressure once more (the first time was when they sold this professional fund to retail public, mostly vulnerable elderly pensioners) to accept immediately their compensation, even before the first report is out. We are witnessing an attempt at a second slaughter of the innocents.

Ten days ago the Partit Laburista (PL) appealed to the BoV to respect its clients and withdraw its meagre compensation offer till MFSA completes its three investigation reports so that the investors would be able to take an informed decision. BoV has ignored this appeal. MFSA is also abdicating its responsibility and betraying its mission by failing to protect the investors. The PL has always worked in the national interest and has worked hand in hand with the PN government to build the financial services sector in Malta. But the PL is right not to allow this national consensus to turn into omertà and a conspiracy to let down many vulnerable people who have lost hard earned money by being made to invest in a shady fund through dubious and unethical practices.