Issue link: https://maltatoday.uberflip.com/i/550022
maltatoday, SUNDAY, 2 AUGUST 2015 4 News TIM DIACONO LABOUR'S promise of full compen- sation to 2,300 investors who lost their money in Bank of Valletta's La Valette property fund could come to fruition through a new law that will establish a financial services arbiter. The investors' claims had hit a brick wall after BoV's board of di- rectors decided that granting full compensation of around €16 million – over and above some €40 million it has already paid out – would have exposed the bank to legal action by its shareholders, who would have felt that their money was being used to settle claims that are not legally due. But the financial services arbiter, a new office which is being discussed in Parliament, will make legally-binding decisions on consumer complaints of financial service products. Finco managing director Paul Bonello, currently representing the 2,300 investors, advised the govern- ment in the drafting of the law that was promised as a financial services ombudsman in Labour's electoral manifesto. When asked by MaltaToday, the stockbroker said that it was "prema- ture" to tell whether the La Valette investors would make use of the ar- biter's office as a fresh battleground on which to fight their compensa- tion claims. "When and if the legislation is en- acted, any aggrieved investor – and that includes La Valette property fund investors – will be entitled to consider the legislation to assess their rights and options in terms thereof," he said. However, Bonello expressed confi- dence that his long-running fight for the investors would bear fruit "in the not too distant future". "There can and will be no closure of this matter until full and adequate compensation is paid and the mat- ter resolved in a substantively moral and legitimate manner," he said. "We shall not give up until our efforts bear fruit to the full." His efforts had hit a snag when BoV chose not to grant further compen- sation to investors who had accepted the bank's conditional offer of 75c per share in 2011. This prompted Bonello to person- ally accuse BoV chairman John Cas- sar White of completely changing his pre-election assessment of the mat- ter "faster than a chameleon changes its colours" upon his appointment as chairman. Yet Cassar White explained to MaltaToday that BoV's board of di- rectors had unanimously decided against granting further compensa- tion as it would have set the bank on a legal collision course with its share- holders. "We will be exposed under the Companies' Act to legal action by shareholders who may feel that we are unjustly using their money to settle claims that are not legally due," he admitted to MaltaToday. "I am sure you appreciate that no director is prepared to take this risk. "As a director of the bank, I am le- gally primarily responsible to ensure that customers' rights are safeguard- ed within the parameters of the law. The implementation of alleged po- litical commitments is not the BoV board's responsibility. "However much I may sympathise with investors who feel that the bank short-changed them in the past, nei- ther I nor the other bank directors are above the law." An end in sight to a long-running saga? The Malta Financial Services Au- thority fined BoV six times between 2011 and 2012 after finding it guilty of misselling the supposedly low-risk La Valette fund to inexperienced investors and of breaching its own investment restrictions – particu- larly when it invested €17 million in the now-defunct Belgravia European Property Fund. Around 2,300 investors accepted the bank's subsequent compensation offer of 75c per share, on condition that they waive legal action against the bank should the MFSA find it had preached property fund condi- tions. Others, represented by Finco, argued that it was far too low and based on the present market value of the shares, rather than their value at the time of investment. BoV com- pensated these in an out of court set- tlement, which still stands. After concluding its investigations in 2012, the MFSA ordered the bank to bring the compensation up to €1 per unit for the investors who had accepted the bank's conditional of- fer. The bank retorted that the finan- cial services regulator does not have the power to "unilaterally" order the payment of compensation without a court order. This prompted Finco to file a judicial protest on behalf of the investors on the grounds that BoV had "abusively forced" them to accept the compensation while the MFSA's investigations were still on- going. On a political level, the then-La- bour Opposition pledged that a PL government would use its power to elect BoV's chairman to ensure that "serious negotiations" take place be- tween the bank and the La Valette investors. But at the time, the Nationalist government had warned that such a political decision could place the position of the bank's other share- holders at risk. When asked last year to comment on the bank's refusal to fully refund the investors, Prime Minister Joseph Muscat said that the government "will keep its word with the investors" but that the investors will not be refunded from the public purse. Question marks over arbiter's independence Finance minister Edward Scicluna has hailed the arbiter proposal as one that will provide a cheaper and faster option than the courts for investors seeking redress against unscrupu- lous financial service operators. Yet, as the Bill stands, the minister himself will have the power to ap- point the arbiter for a five-year ten- ure and to choose whether or not to re-appoint him for a second five-year term. He will also be able to fire him on the grounds of "inability of body or mind or any other cause" or of "proven misbehaviour". Opposition MP Kristy Debono has warned that the arbiter will be con- ditioned to behave in a manner that ensures his keeping his job, rather than doing all he can to work inde- pendently. Yet, Scicluna has claimed that the arbiter's autonomy will be ensured through the setting up of an admin- istration board composed of three members – two of whom will be ap- pointed by the finance minister and one who will be appointed by the consumer affairs minister. tdiacono@mediatoday.com.mt The Parliamentary Secretariat for EU Presidency 2017 and EU Funds, within the Ministry for European Affairs and Implementation of the Electoral Manifesto, notifies that the following calls have been published: t Expression of Interest for the Provision of Conference Facilities for Malta's Presidency of the Council of the European Union in 2017. t Expression of Interest for the Provision of Accommodation Services during Malta's Presidency of the Council of the European Union in 2017. Interested parties are invited to obtain a copy of these documents by contacting Ms. Lucia Gauci, Operations Manager, Presidency Unit on telephone number 22957405 or through email on lucia.gauci@gov.mt. REQUEST FOR PARTICIPATION FOR THE PROVISION OF CONFERENCE FACILITIES FOR MALTA'S PRESIDENCY OF THE COUNCIL OF THE EU IN 2017 EXPRESSION OF INTEREST FOR THE PROVISION OF ACCOMMODATION SERVICES DURING MALTA'S PRESIDENCY OF THE COUNCIL OF THE EU IN 2017 PARLIAMENTARY SECRETARIAT FOR THE EU PRESIDENCY 2017 AND EU FUNDS of the Council of the 2017 Maltese Presidency European Union Financial arbiter could bypass BoV in compensating La Valette investors Paul Bonello, advised the government John Cassar White addressing a BoV meeting