Falzon has until 2018 to decide on BOV re-employment

This article was clarified with respect to the time-window in which Michael Falzon has to decide on his re-employment with Bank of Valletta. A previous version of this article incorrectly reported the possibility that Falzon could return to the bank after 2018.

An early retirement scheme for Labour parliamentary secretary Michael Falzon was an “ad hoc, tailor-made” decision by Bank of Valletta’s remuneration committee “because of the very particular nature of the case”, chairman John Cassar White has told BOV shareholders at its AGM.

Cassar White, who is appointed to the board by the Maltese government as the largest institutional shareholder in the bank, was taking questions from shareholders.

Falzon was paid a handsome early retirement package of €260,000 by Bank of Valletta in 2014, having served as the executive head of the bank’s legal office, but retained the right to return to his or her employment upon termination of the appointment. In such case he was obliged to return retirement benefits received on a pro rata basis.

Cassar White said that Falzon could not be seconded to the government upon his appointment to the executive, because that would have left him tied as an employee of the bank. The Remuneration Committee chose to create a new scheme.

“I understand that some don’t see the logic behind it, but this was a very particular situation,” he said, saying it was the first time that a bank employee was asked to serve in Parliament. 

He also explained that, as according to the agreement, the retired employee would have to pay back a percentage of the retirement should he be re-employed with the bank. However, Cassar White said that this agreement only covers the term of this legislature and that Falzon has to refund a major part of his retirement benefits if he decides to return to the bank before the end of this legislature.

Falzon has only up to the end of this legislature to decide whether or not to return to the bank.

Back in July 2015, Falzon said that he “cannot go back to the bank” after 2018.

The Chairman explained that the early retirement at BOV started in 2001. In 2005, this became a right included in the collective agreement. A new collective agreement allowed for the bank to keep the prerogative if it intends to give early retirement or not.

Falzon was appointed parliamentary secretary for lands under Prime Minister Joseph Muscat in April 2014, when his predecessor Michael Farrugia was made social policy minister.

Falzon has IAID and NAO inquiries hanging over his head after having rubber-stamped a controversial €1.65 million expropration for the 50% ownership of government offices housed in an Old Mint Street building in Valletta, to company owner Mark Gaffarena. Falzon has denied claims that the property was over-valued by architects or that he interfered in the amount payable to Gaffarena, whom he personally knows.

The government is the largest shareholder in Bank of Valletta, with 25.2% ownership and the right to appoint its chairman. UniCredit S.p.A. is the other major shareholder with a 14.45% stake in BOV.