Issue link: https://maltatoday.uberflip.com/i/507285
maltatoday, WEDNESDAY, 6 MAY 2015 11 Business Today www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way Deiulemar case being investigated internally by Bank of Valletta Matthew Vella An internal investigation is underway into what sort of due diligence was carried out by Bank of Valletta in of- fering trust services in connection with the Deiulemar shipping giant of Italy, whose fraudulent bankruptcy is the source of renewed legal trouble for, among others, BOV. A €363 million claim was brought against Bank of Valletta in an Italian court, after liquidators of the Deiulemar group and representatives of 13,000 Italian bondholders, filed a civil claim against trusts held by BOV and another company registered at BOV's Valletta address on Zachary Street – Banco Svizzero d'Italia Trust Corporation Limited Malta – whose parent company is the Swiss bank BSI, of Lugano. The bank has told MaltaToday it is conducting an investigation into the kind of due diligence carried out when it became a trustee for Trust Capital Trust, Trust Gaino, and Trust Gilda – which are being called on to answer for the €363 million claim. "The bank as usual investigates on a regular basis all incidents that affect its operations. The Deiulemar case is no exception," a spokesperson for BOV told this newspaper. Bank of Valletta only recently issued a statement concerning legal action from Italy, which was filed by the Deiulemar liquidator as early as February 2014. Asked why it took the bank over a year to formally announce the proceedings, the bank said it was only in November 2014 that a quantifiable claim was first made against BOV. "Immediately we received the notification we took the following steps: we appointed an Italian legal firm to represent us in court in Italy. We also asked them to review thoroughly the documents presented in the Court of Torre Annunziata and the internal documents of the bank on this case. "We also immediately informed our regulators, the MFSA and the Joint Supervisory Team that includes ECB officials. A number of board meetings were held to discuss this case and to hear the advice of our auditors as well as of our legal consultants." The bank said that on 2 April, 2015 it received the final advice from its lawyers stating that the bank had a strong legal position and that no provision was felt necessary at this stage. "This advice was sent to our auditors and our regulators, including the ECB. They all agreed with the board's decision to issue a company announcement that was published on 2 April, 2015. "We are keeping in touch with our lawyers, auditors, and regulators to monitor the situation constantly and when the need is felt the bank will keep the market informed of developments." But the bank would not give any details as to whether a reduction from €603 million in trust assets in 2013, to €337 million in 2014 was related to the trusts held in connection with the Deiulemar group. "We cannot give details on a particular trust unless we have a legal obligation to do so. So I cannot reveal the information requested in your question," the bank said. Italian town wants money back The €363 million claim is the tip of the iceberg of a story of massive fraud that took place in southern Italy, where over 13,000 bondholders had their savings wiped out. Investors in the Neapolitan province of Torre del Greco have protested the loss of their investments following the €800 million fraudulent bankruptcy of Deiulemar. In July 2014, seven members of the three founding families of ship-owner Deiulemar were jailed for up to 17 years for illegal financial transactions as the company collapsed. It was declared bankrupt in 2012, owing more than €800 million. The family members were found guilty of fraudulent bankruptcy, having transferred their assets to Maltese, Swiss, and British Virgin Islands trusts to avoid their exposure to creditors and the 13,000 retail investors from Torre del Greco who subscribed to their bonds. GO AGM reviews positive 2014 results, approves dividend of €0.07 GO pls reported an "impressive" performance for last year, with profi t before tax rising 30 per cent to €20.3 million. The company's 17th annual general meeting provided sharehold- ers with a detailed review of the company's positive performance and approved all resolutions presented, including a dividend of €0.07 per share. Opening the meeting, GO chairman Deepak Padmanabhan said the company's performance "has been impressive, with profit before tax increasing 30 per cent to €20.3 million. As a result, we have an even stronger balance sheet, healthy cash flows and a more resilient brand. "How are we achieving all this? Two main strategic thrusts continue to drive this business forward. Firstly, we are transforming our core telecommunications business. Secondly, we are pursuing a number of initiatives which allow us to focus on areas with growth potential." GO CEO Yiannos Michaelides also updated shareholders with a detailed review of GO's operations and the results achieved. These show that operating profit increased by 21.0% to €21.8 million while normalised operating group profit for the year amounted to €24.4 million, an increase of over 17%. "Group revenues in 2014 remained stable at €122.3 million, thanks to growth in retail activities which compensated for the decline in revenues from fixed voice and wholesale activities, which occurred as a direct result of regulatory intervention. Normalised EBITDA increased to €49.2 million in 2014, and cash generation from operations amounted to €48.8 million, an increase of €1.7 million over 2013. "This strong performance clearly demonstrates GO's ability to out- perform the sector, and is in stark contrast to the challenged profitability levels being registered by many European operators," said Michaelides, who also discussed a number of factors which have contributed to this success. These include investment in infrastructure, where a number of exciting developments in wi- fi, 4G, and particularly fibre are under way; TV content, particularly premium sports; product development particularly bundles, IPTV and TV Anywhere; customer service; and human resources. GO CFO Edmond Brincat also briefed shareholders on the group's financial performance and provided an update on GO's investment through Forgendo Limited in the Greek operator Forthnet, and in the more recent investment, Cyprus-based cable operator Cablenet. Shareholders were also updated about efforts, now in an advanced stage, to unencumber and develop the main properties in the group's portfolio which is valued at some €50 million. Padmanabhan stated: "For you as investors in GO, the combined effect of our two-pronged strategy means that your company is stronger, more valuable, and better able to take the decisions required to make GO's future prospects even more exciting. It is a future we can, most certainly, all look forward to." The presentations were followed by a question and answer session during which shareholders put forward queries and suggestions to GO's senior management team. The AGM elected the board of directors for the next financial year, approved various resolutions which included the approval of the financial results for the year ended 31 December, 2014 and the payment of a net dividend of €0.07 per share (net of taxation). From left: GO CEO, Yiannos Michaelides, GO chairman Deepak Padmanabhan, GO company secretary Francis Galea Salamone and GO chief fi nancial offi cer Ed- mond Brincat Eurozone economic growth picking up, EU report says Eurozone economic growth will be slightly stronger this year than previ- ously forecast, according to the Eu- ropean Commission's latest forecast. It predicts 1.5% growth this year, up 0.2 percentage points from its forecast in February, thanks to cheaper oil, a weak euro and stimulus measures. The improvement was despite a much gloomier outlook for Greece, which saw forecast growth cut to 0.5% from 2.5%. The report said faster growth would see inflation rise and unemployment fall. For 2016, the Commission kept its forecast of 1.9% for the eurozone. "The European economy is enjoying its brightest spring in several years, with the upturn supported by both external factors and policy measures that are beginning to bear fruit," said Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs. "But more needs to be done to ensure this recovery is more than a seasonal phenomenon," he added. The falling price of crude oil has helped to reduce business costs, while the weak euro helps exporters. And the European Central Bank has injected money into the 19-nation eurozone. The recovery is being powered by Germany, Europe's biggest economy, which is forecast to see growth of 1.9%, followed by 2% next year. Spain's recovery is predicted to continue, with growth of 2.8% in 2015 and 2.6% the following year. The sharp cut in the forecast for Greece comes as a new round of debt talks between Greece and its creditors gets under way this week. "In light of the persistent uncertainty, a downward revision [for Greece] has been unavoidable," Moscovici said.