Top News • 28 September 2003

THE BICAL SCANDAL

Cash-rich companies given away for a pittance by Dom's blind servant

In 1962, BICAL Bank bought its main headquarters, off Zachary Street, for the princely sum of Lm35,000. More than a decade later these premises were given to Mintoff's people’s bank - Bank of Valletta - for nothing. In 1972 the Mintoff government suspended the BICAL licence and initiated legal procedures against the Pace brothers. Cecil Pace, owner of the BICAL empire would spend 14 years of his life behind bars in prison, accused of forgery, misappropriation and fraud.
In this second part on the dissipation of the BICAL associated companies' assets, MaltaToday reveals how properties and companies were passed on for nothing to fledgling businessmen and companies that would later grow by feeding off the decimated BICAL empire.
As Cecil Pace recalls: "This very programme to remove all the BICAL associated companies' assets vindicates the accusations that BICAL had no assets to pay off its creditors and liabilities. Removing assets for nothing at all enabled the controllers to broadcast the message that BICAL had nothing."
A case in point was Skylim, a property development company of which MIDC, a BICAL company, had a 50 percent shareholding. Sklyim owned property in Kappara, Naxxar, Lija and 12 apartments in a block of 24 in Marina Street Pieta. The block also housed Carways Ltd, the holding company of Cecil Pace's automobile agencies, which included Mazda, Lotus, Honda and BMW amongst others.
The controllers progress reports for 1972 until 1988 confirm that when Skylim was seized in 1972 as part of the BICAL associated company holdings, there was no overdraft or loan from BICAL or other banks, but a substantial credit in its current account with BICAL.
In 1975 however, Karmenu Mifsud Bonnici, the Mintoff-appointed controller and later his chosen replacement to lead the Labour government, literally got rid of Cecil Pace's 50 percent shareholding in Skylim for the paltry sum of Lm30,000.
The amount barely covered two loans Skylim had with two other BICAL companies (Universal Investment Ltd and Maltese Properties Ltd) and personal loans from Henry and Cecil Pace.
He gave the two other shareholders in the company – Architect Eric Mamo and Grech & Co Ltd (each holding a 25 percent share) - a Kappara Villa and the Pieta apartments, as well as Lm15,000 in the current account.
As for MIDC’s 4,999 shares, each worth Lm1, Mifsud Bonnici got rid of them for the nominal sum of Lm2. Cecil Pace was delivered blow after blow of wanton destructive treatment of his assets: "This quality of administration on the part of the controllers was typical of every sale of assets and debt collection," Cecil Pace insists.
"The potential of this property was so big and, as Mamo and Grech said in their testimony, one of the apartments was worth Lm32,000 some years ago. We had 12 of those apartments. Instead of obtaining the value of the apartments, the controller collected only part of the loan to Skylim. The controllers never took any interest on the sale of the assets except so as to remove the BICAL group's assets, even by transferring property to third parties for nothing, or for little at all."
Ridding Pace of his hotels
Cecil Pace owned a number of prestigious hotels, ranging from the Castille Hotel adjacent to the office of the Prime Minister and the Grand Hotel Excelsior. Both were favourites with the business community of the time.
Other smaller hotels included the Patricia and Capua Court hotel in Sliema, the Olympic hotel in Paceville and the President hotel in Ta’Xbiex, still unfinished when Pace was taken into custody in 1973. The latter hotel, today the site of the Les Lapins hotel in Ta’ Xbiex, a footprint of which covered sizeable ground, was sold for only Lm115,000 to Golden Bay Hotels Ltd in 1981. However, Lm16,200 of this money was paid to the Commissioner of Lands for ground rent arrears.
MaltaToday can reveal that a special arrangement allowed the purchasers to start payment for the remaining Lm98,000 in 1985 over a period of two years, without interest.
Four other hotels - the Comino hotel, the Patricia hotel, Capua Court and the Castille hotel - had been purchased by President Hotels Ltd for a combined value of Lm825,000. At least Lm149,000 had been additionally spent on improvements within the Castille and Comino hotels upon purchase.
The Castille hotel, scene of Pace's lunch with Justice Minister Anton Buttigieg, who had first asked Pace whether he would consider transferring part of BICAL to Prime Minister Dom Mintoff, was sold for Lm115,000 in 1979. Its movable fixtures and furniture were sold separately for the measly sum of Lm15,000. According to controller Emanuel Bonello’s progress reports on the BICAL associated companies, the hotel had been valued at Lm330,000 in 1970.
The Capua Court hotel had been valued at over Lm400,000 in 1970 when the hotel was transferred from Hugo Pace and Sons Ltd to BICAL’s President Hotels Ltd. Capua Court was consequently sold to the Zammit Tabona business group for Lm205,000, payable over ten years without interest.

BICAL saga – Dramatis Personae

Cecil Pace, 73 – Owner of the Bank of Industry, Commerce and Agriculture Bank and its associated companies. In 1972 BICAL was seized by the Labour government of the day and closed down. Cecil Pace was jailed for 14 years, along with brother and BICAL shareholder Henry Pace, accused of forgery, misappropriation and fraud, and allegedly making a gain of Lm3,741,635.
Karmenu Mifsud Bonnici, 70 – Prime Minister of Malta (1984-1987) and Central Bank controller of the BICAL empire from 1972 to 1984. Mifsud Bonnici was Dom Mintoff’s foremost acolyte and remains his sidekick to this day.
Dom Mintoff, 87 – Prime Minister of Malta during the BICAL scandal. According to Cecil Pace, Karmenu Mifsud Bonnici had asked him to transfer part of BICAL to Mintoff’s nominees. Mintoff has so far not reacted to MaltaToday’s reports.
Emanuel Bonello – Bonello took over as Central Bank controller to take care of BICAL and associated companies in 1984, following Mifsud Bonnici’s appointment as Prime Minister.
Anton Buttigieg, d.1983 – President of the Republic (1976-1982) and Minister of Justice and Deputy Prime Minister during the BICAL saga. According to Cecil Pace, the gentle poet had met him for lunch at the Castille Hotel to ask if he was interested in transferring part of BICAL to Mintoff’s nominees.
Lawrence Cachia Zammit – treasurer of the Nationalist Party during the BICAL saga, he was appointed as joint-general manager of BICAL prior to 1972, and authored unrecorded foreign transactions of Lm360,000 which financed the setting-up of Nationalist Party printing equipment.
Alexander Cachia Zammit, 79 – Health Minister for the PN government until 1971, his brother Lawrence was accused of having concealed government documents for him at the Rabat BICAL branch in a much-publicised Court case.
Guze Abela, d.1995 – Minister of Finance and Customs (1971-1979), Abela ordered the closure of BICAL on 25 November, 1972.
RJA Earland – deputy-governor of the Central Bank at the time of the BICAL closure, Earland was controller of the bank for a few days before Karmenu Mifsud Bonnici took over.