Issue link: https://maltatoday.uberflip.com/i/1195815
12 maltatoday | SUNDAY • 22 DECEMBER 2019 NEWS MATTHEW VELLA A financial services firm em- broiled in a lawsuit filed by the Vatican bank in Malta has hit back at accusations of profiting at the expense of the Holy See, over a multi-million property transaction. With millions of euros in Vatican bank cash at stake in a Maltese court case, lawyers for the Holy See are attempting to prevent Futura Investment Management from disposing of its share in a Hungarian prop- erty company. The Istituto per le Opere di Religion (IOR) claims a com- mittee it set up in 2013 to invest €30 million of its cash, was mis- led by Futura directors Alberto Matta and Girolamo Stabile, when it invested the money in a company to buy Budapest's Exchange Building. The IOR says the decision was to have Futura buy out a non-performing loan of €32 million from the owner of the Exchange Palace, and then con- vert that loan into a 90% share in the Hungarian company re- developing the property. However, both the IOR and Futura have radically different views of what went down in the deal. The IOR insists that Futura made an undeclared profit of €11.6 million by duping it on the price of the deal, and also by planning to sell the 90% stake in the Exchange Palace's holding company, to Cougar Real Estate of Luxembourg, which is, in turn, owned by a Dubai firm. IOR's last court ac- tion in Malta was a bid to stop Futura from selling the shares to Cougar. The IOR claims Cougar Real Estate was set up by a Dubai firm, Holdabco, to acquire the non-performing loan for €20.4 million, with the result- ing €11.6 million going to Holdabco and another minor- ity shareholder, a Panamanian firm called Alpininvestisse- ments. "It is clear that the IOR has been abusively caught up in a menacing web of intrigue and suspicious transactions," the IOR's lawyers said, accus- ing Futura and its directors of inflating the price for the Hun- garian loan. But Futura is insisting on a very different version of events. Futura says it offered the IOR committee the opportunity to buy the non-performing loan for €20.4 million directly, to eventually convert into the majority share owning the Bu- dapest Exchange Building; or alternatively wait for the liqui- dation of the loan's borrower, who had filed for bankrupcty. IOR did not want to invest in the non-performing loan while bankruptcy proceedings were ongoing, deeming it a repu- tationally problematic instru- ment. Instead it preferred to acquire the shares only once the loan was "de-risked". Futura says that third-party investors were found to ac- quire the non-performing loan and assume the related risks, to eventually convert the loan into shares once the liquidation is complete – or, in the words of its lawyers, to "clean" the property from its financial, le- gal and administrative burdens. "Naturally, the price of the unencumbered asset was much higher than the price of the non-performing loan with its inherent risks," the lawyers for Futura said, saying valuation experts Jones Lang Lasalle val- ued the Exchange Building at higher than €32 million. Although they say IOR com- mitted to invest this sum, only €17 million were ultimately invested. "IOR has, in fact, defaulted on its undisputable contractual obligations and has been trying in every possible way to find legal ground in or- der to avoid the inevitable and severe consequences of this," Futura's lawyers said. "What is indeed 'suspicious' is the fact that our clients are be- ing attacked for an investment decision which was openly dis- cussed with and, ultimately, decided upon by IOR's invest- ment committee and external advisors." Futura also brings into ques- tion the timing of the invest- ment itself, taking place just weeks before the unexpected resignation of Pope Benedict XVI. The election of Pope Francis led to major changes with IOR, among them the replacement of three chairmen, two direc- tors-general, most of the inter- nal senior functions, and even many members of the Cardi- nals Commission. New management had launched a scathing critique of IOR's previous management, particularly former director- general Paolo Cipriani and his deputy Massimo Tulli, against whom the IOR has brought le- gal proceedings before the Vat- ican Tribunal and in Italy. "The Institute's real goal is not to protect its investment," Futura's lawyers said. "On the contrary… IOR is consciously putting the Hungarian invest- ment at risk, to strengthen its allegations of mismanagement against Cipriani and Tulli." The latest court action by IOR is related to attempts by Futura to sell Cougar to another com- pany, Indotek Group Hungary. "Futura clearly intends to sell and dispose of its share in the development project by assign- ing its 90% share in the project via a sale of its shares in Cougar itself," IOR's lawyers in Mal- ta said. "Neither Cougar nor Futura have provided IOR with any disclosure of the transac- tion leading to the sale of the investment." Futura has also sued the IOR, claiming the Vatican entered into contractual commitments to invest €41 million but only invested €17 million, and was therefore in default on the re- maining €24 million. Vatican's million-euro default case: financiers hit back at 'intrigue' claims The IOR is accused of having defaulted on its obligations and is now trying to find legal ground to aovid the inevitable consequences of this MATTHEW VELLA AN absolute majority of small business- es – 95% - have claimed to be satisfied with the overall quality of Malta's postal services, of which 76% were either ex- tremely or very satisfied with the service provided. A Malta Communications Authority (MCA) survey among 390 small enter- prises, however, found that 28% of re- spondents were not aware of their ex- penditure on postal services, whilst 10% claimed to have spent more than €500 during 2018. However, there was a decrease in par- ticipants (51%) who found next-day de- livery acceptable over 2017 (58%), but a 15-point increase (from 31% in 2017 to 46% in 2019) in the number of respond- ents who claimed that they would accept a two-day delivery. Respondents were also asked if they would find a 5-day delivery week accept- able. 10% of the respondents claimed that a 5-day delivery would be a major inconven- ience. For the remaining 90% of the respondents, a 5-day delivery was either acceptable (47%), inconvenient but workable (33%) or just a minor incon- venience (9%). The majority claimed that over 2018, the volume of letters re- ceived remained the same (68%) and had sent the same volume (47%). 55% of respondents also said they had increased the number of letters sent be- cause of marketing campaigns, whilst 30% said sending more printed bills had contributed for such an increase. The majority of micro-enterprises (72%) claimed that the use of email was the main reason for send- ing fewer letters, fol- lowed by the use of voice communica- tions (fixed and/or mobile telephony – 62%), messaging servic- es (28%), online payments (22%) and use of social me- dia (16%). The changing demand behaviour in the letter post segment has had a negative impact on the financial situation of postal operators, a report for the European Parliament pub- lished earlier this month finds. The unweighted EBIT margin (the ra- tio of Earnings Before Interest and Taxes, over total revenues) in the EU has de- clined by an average 7% between 2013 and 2017. Malta's postal operator saw profitability increase from 9.2% in 2013 to 12.5% in 2015, and then decline to 6.1% in 2018 – an average decline of 3.1% over five years. "Declining volumes in letter post urge some postal operators to pursue… diver- sification strategies in order to sustain the economic viability of their dense postal networks… The most popular diversi- fication strategies of USPs are express services, retail services, printing and mail preparation, hybrid mail, freight and lo- gistics services, and financial services." Five-day mail delivery? Survey finds little resistance