Issue link: https://maltatoday.uberflip.com/i/841483
maltatoday, SUNDAY, 25 JUNE 2017 24 Opinion Jeremy Cassar Torregiani Surplus and Deceit "SURPLUS and Reward", regarding the National Bank of Malta takeover by act of parlia- ment XLV 1973 on the 12th of December 1973, is a lie put forward by the government to justify the bank's illegal expro- priation without compensation. As most would be unaware, the government recruited the same experts to defend its position and the role played by the Central Bank during court proceedings following the favourable judgements given by Judge JR Micallef and as confirmed in the court of appeal. Ugolini was already recruited to do some work for the government before, so rather than being independent they are to some extent compromised by already having received money from the people they were now being asked to defend. The argument put forward by the government is simple and is as follows – "We took over the bank to save the economy. When we did we found it was worthless and so no compensation is therefore due". While this is a convenient spin for the government and the public that benefitted, it is a complete lie and as such deserves to be defended. Liquidity Ugolini and co. support the claim of the government that the National Bank of Malta was illiquid. Suffice to say that the liquidity parameters were set by the Central Bank. At the time, the legal liquidity requirement was 25% of deposits. The NBM figures show the following liquidity ratios: December 1971 – 36.62%; December 1972 – 34.72%; December 1973 – 28.91% (after the unexplained run). Documentation shows that the overall liquidity ratio was consistently above the statutory minimum of 25% of current liabilities. From the letter in the Times of 8 June, 2017, Ugolini, Nunn and Chilton simply endorse what was conveniently stated by the government in 1973, while the documented facts as illustrated above show otherwise. At no point did the bank withhold deposits and even at the height of the government-aided run, never did the NBM default on payments to its depositors nor did its liquidity level ever fall below the requirement of 25%. In fact, specific CBM reports in October of 1970, March of 1972 and July 1973 did not f lag liquidity ratios of any concern. Moreover NBM held substantial local and foreign reserves with varying maturity dates that could have been sold to add liquidity. These were in fact sold between December of 1973 and March of 1974 by the government of Malta right after the takeover so there is no reason to think that these could not have been used as a guarantee for the Central Bank of Malta to forward the cash as defined in its statute and to act as lender of last resort. Solvency Ugolini and co. support the claim of the government that the National Bank of Malta was insolvent. The accounts posted and accepted by the Central Bank of Malta in 1972 show that the NBM was solvent to the tune of Lm2.9 million as audited by the bank 's auditors, Turquand Young. Note that these auditors had been appointed many years previous to the takeover and continued to be accepted as such by the same Central Bank right up until the government passed into law Act XLV 1973 to take over the NBM group on 12 December 1973. For all intents and purposes the government had no reason to change these auditors, yet as soon as the takeover was effected, the government proceeded to change these auditors and appoint "new ones" of their own so that the accounts could be drawn up to suit the government without any contradictions that would have followed should the same auditors that approved the books earlier be forced to change their view under The accounts posted and accepted by the Central Bank of Malta in 1972 show that the NBM was solvent to the tune of Lm2.9 million as audited by the bank's auditors Dom Mintoff personally demanded that National Bank shareholders sign off their shares to the government