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13 NEWS maltatoday | SUNDAY • 15 MAY 2022 battle to recognise the breach of their rights and obtain compen- sation, the bank's sins extend far back in history. Calls by share- holders demanding responsibil- ity on Deiulemar to be shoul- dered by the bank's directors, fail to scratch the surface of the injustice that BOV represents for these former shareholders – many of them also members of the Maltese nobility and the island's first bankers (the Sci- cluna, Cassar Torregiani and Tagliaferro families) who were wrested from the bank's control by a run on its deposits, suspi- ciously engineered by the State. The run had culminated at the end of a week of withdraw- als with Lm500,000 withdrawn in a single day on 10 December 1973, leaving the bank with only 30% of liquid assets out of its to- tal deposits – 5% more than the minimum required by law. The bank's owners were effec- tively forced to capitulate to the Labour administration of the time, when the Central Bank of Malta refused to extend liquidi- ty from the bank's own reserves of Lm8 million, to cover the or- chestrated run. They were made to sign off their shares, without compensation, before other banks like Barclays or Midlands could step in to extend finance. It was an arbitrary decision by the Central Bank that was later compounded by the new, gov- ernment-owned Bank of Val- letta's annual figures in March 1974: its loan book with major Maltese companies was reval- ued, to make it look as if the debt would have been unrecov- erable. "Suffice to say that one of these adjustments was to put the Corinthia loans, which were the largest the Bank had given out to kick-start the tourist indus- try, were presented as bad and doubtful advances that could never be recovered," Cassar Torregiani says of the Maltese hotel chain that today has ex- panded internationally. "As such they had to be paid for by the predecessor shareholder. If Corinthia were presented as a bad debt, how and why were the personal guarantees never called in so as to make good for the losses? If reversing this one transaction alone could have put the very bank that funded the enterprise, back into pos- itive equity... how is it possible that the government was able to justify the transfer of this busi- ness to Bank of Valletta for no consideration?" Cassar Torregiani is prickly about the most intimate details of the National Bank's unravel- ling, expecting that criticism of BOV be extended to the bene- ficiaries of the loans that were never called in – the Corinthia's included. "The usual omertà from all concerned, including the Pisani family who benefit- ted, continues with the press and everyone else happily ignor- ing these facts in perpetuity." He insists that merely taking BOV to task over the Deiulemar fiasco, cannot be divorced from the bank's roots in its forced na- tionalisation of 1973. "By normalising corruption in the theft of the Bank of Valletta, people who think of themselves as legitimate champions for truth and justice are not. You cannot fight the mafia state and ignore the corrupt roots of the Bank of Valletta concurrently. Those who do will soon realise that they are just as much a part of it, and as happened to the PN, will also become helpless and hopeless to fight against it." Cassar Torregiani says there are limits to Malta's cavalier at- titude towards property rights and the National Bank of Malta case. Just like requisitioned bank properties which the sharehold- ers managed to retake control of after successful European Court of Human Rights cases, Cassar Torregiani thinks Bank of Val- letta and the government are delaying the inevitable on the 1973 nationalisation. "The settlement of half the claim in Deiulemar shows that the BOV knows this, and settled out of court. The fact that BOV in its entirety is at stake by the claims made by the defrauded shareholders in the Nation- al Bank of Malta, should now awake even the most obstinate and powerful of criminals into a call for justice, lest they are met with a similar situation when BOV is no longer covered by the 50-year-long protection offered by the failed Maltese justice sys- tem." Dom Mintoff: the Labour prime minister made full use of a run on a private bank owned by the Maltese nobility, to turn it into a nationalised bank and finance Malta's economic development throughout the 1970s and 1980s.But his administration's ham-fisted approach left the NBM shareholders without any compensation for their shares The Natonal Bank compensation saga THE shareholders of the National Bank of Malta said they are owed €325 million in compensation for the shares taken away from them by the Mintoff- led government at the time. The financial apprais- al, carried out by banker Anthony R. Curmi (also a former board member of Corinthia Finance plc, and brother to Vincent Curmi, a director of Sciclunas Es- tates, the landholding com- pany for the heirs of Mar- quis John Scicluna, whose bank was one of the pre- cursors of the NBM), was met with a disparaging re- ception by the government. Its own financial consult- ants insist the National Bank shares had no value when the bank was nation- alized. In October 2014 a Consti- tutional Court confirmed a court decision that found that shareholders' rights had been breached when they were forced to surren- der their shares, overnight, without any compensa- tion. Another decision up- held by the Constitutional Court recognised that the shareholders were entitled to compensation. The compensation claim will have even more se- rious implications if the 49 shareholders and their heirs take the matter to the European Court of Human Rights, to force the govern- ment's hand in paying out compensation. Curmi's appraisal is that the €325 million claim "constitutes a fair and rea- sonable compensation" for the Lm7 million he says was the net asset value of the bank in 1973. The government's con- sultants – former IMF consultants Piero Ugolini, Richard Nun, and Larry Chilton – say Curmi's as- sessment is based on "unre- alistic and invalid assump- tions". "This fails to recognise the success of BOV was due primarily to the ownership of GOM which restored public confidence in the bank by fully guaranteeing all deposits which NBOM would have been unable to do." They also blamed the National Bank of Mal- ta of having a "history of self-serving and imprudent management practices", which endangered the bank through non-performing loans that increased bad debts. "Government had no choice except to intervene in order to protect the de- positors and creditors and to preserve stability of the broader financial system." Inflated bad debts Upon takeover, the Coun- cil of Administration pro- duced a balance sheet claiming a negative equity of Lm253,000, which the NBOM shareholders claim was achieved by excessively inflating the bank's doubt- ful debts. Curmi says the bank's own properties were signif- icantly undervalued by the Council, no provision was made for the goodwill from its 27 branches across Mal- ta and Gozo, and that pro- visions for bad debts were raised by 151% from Lm2.3 million to Lm5.9 million. This was based on a prop- erty index created by the bank's staff on the collat- eral held on the loans is- sued by the Council, which claimed that villas, houses and apartments had fallen in price by 36.6% and the price of undeveloped land by 84%. This allowed the Council to raise the provi- sion for bad debts. But by 1978, Bank of Val- letta managed to reduce the bad debts by Lm4.3 million over a period of just five years, and debts that had previously been classi- fied as 'unrecoverable' were nearly all recovered in full. On its part, the govern- ment's consultants are insisting that 1971 was the tail-end of a boom- and-bust period in which a sharp drop in prices was still evident in 1972, ac- cording to sample surveys carried out by the Central Bank.

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