Bical Scandal • 05 October 2003

Mintoff finally reacts but fails to convince

Prime Minister, messenger and at long last a postman; Dr Karmenu Mifsud Bonnici, the man who denies having ever been former fiery PM Dom Mintoff’s harbinger, last Thursday delivered a letter from the octogenarian to this newspaper.
It came after a disclosure by BICAL shareholder Cecil Pace during Toni Abela’s programme Obelisk on Super One, who stated that Mifsud Bonnici had approached him to accept a Dom Mintoff proposal.
The proposal had been communicated to Cecil Pace in 1972 by then Justice Minister Anton Buttigieg, who specified that Mintoff wished him to transfer half the shares of the Pace empire to Dom’s nominees.
In his reply, Dom Mintoff denies this saying: "throughout this saga there was no occasion on which I instructed someone to procure me the BICAL shares for nothing. It would have been madness to me to procure shares which were in such a bad state, even for nothing."
This suggestion has led Cecil Pace to exclaim that Mintoff does not know what he was saying. "Dom did not know the state of the bank, but he did know that we had made no losses over the years and he very well knew the assets we had as a family."
Dom Mintoff’s reaction comes five weeks after the publication of the first news report that claimed his ‘messengers’ had made moves to encourage Cecil Pace, who would later spend 14 years behind bars, to pass on shares of the BICAL bank owned by Pace and his family.
The decision by Mintoff to react to the MaltaToday stories came after the airing of Obelisk last Wedneday which carried repeated comments in the programme that Mintoff had failed to react.

Little is known of the relationship between Dom Mintoff and Cecil Pace. Dom Mintoff had in fact asked Pace to stand in as deputy leader of the Labour party before the 1971 election.
This proposal could have been one of Mintoff’s most ingenious. The suggestion was evidently made to take full advantage of Cecil Pace’s popularity and success and the fact that he employed over 3,000 people on the island. After all, Cecil Pace had been Malta’s foremost entrepreneur since the late fifties, accompanying Dom Mintoff abroad on official visits, who would always introduce Cecil as a "successful industrialist."
Cecil Pace has very vivid memories of these events, as he recalls:
"On one occasion, I was introduced to Duncan Sandys. As was typical for Mintoff, he would introduce his entourage with comical and vulgar Maltese phrases, knowing that Sandys would have no idea what Mintoff would be saying. In my case it was ‘Dan jibilghu f’sormu,’ the vulgar exclamation for someone who takes the mickey."
There were other instances of catering to Mintoff’s impromptu demands. During the fifties, Cecil Pace would accept a request by Dom Mintoff to take up the Pace’s temporary residence at St James’ Park in London, for his urgent and personal needs. Said and done, Mintoff was a man whose needs would have to be entertained.
But Dom Mintoff will certainly be remembered as the man who rendered his own style of Nasserian politics on Malta by closing the BICAL Bank and effectively condemning another private bank, the National Bank of Malta, to a disappearing act by forcing its shareholders to transfer their shares to government.
In his letter to MaltaToday, Mintoff insists that up until now his ‘memory has not left’ him, despite the fact that whenever contacted and confronted by journalists, Mintoff always scuppers away lamenting that he is ‘too old to remember.’
Now Mintoff claims he does not recall a face-to-face encounter in the late fifties with Cecil Pace, who at the time was interested in developing the site which would later host the present Malta Shipbuilding, for his very own docks and fleet repairs. Mintoff was ready to give Pace the go-ahead, but he strictly underlined the following with Pace: "Now look, let’s not play games here…you know that for the machinery for the docks you can ask my brother, for he is the agent for Krupp."
("Issa ma noqghodux nilghabu… l-ingenji tad-docks ordnawhom minghand hija ghax hu l-agent ta’ Krupp.")
Typically, Mintoff blames the Nationalists for not having taken any earlier action about BICAL: "I remember it as well as if it was yesterday when so many people in Malta, the majority of them workers and others, had lost their jobs because the Nationalist government had not taken the necessary steps to safeguard their monies and jobs."
Cecil Pace insists there was nothing to take action about.
In his typical tangential way of looking at things, Mintoff argues: "There have been three cases of companies who had been given permission by the government to operate in Malta. One of these was the case of the Bank of Alderney, whose fate was exactly like that of the BICAL bank – it could not pay back the deposits of the Maltese. There was the case of the pig-breeding company, and the famous case of the airline company, Air Melita, which was backed by the Nationalist government as well as the American Ambassador."
Countering, Cecil Pace argues this is a very unreasonable comment from Mintoff: "Unlike the Bank of Alderney, BICAL had assets...substantial assets to back our operations. These assets were later decimated by the controllers, in the most absurd of ways. Monies that were supposedly collected from their liquidation in many cases were never collected by the controllers."
Cecil Pace cites one example – Tigullio, in St Julians - "At the time, we spent over a quarter of a million pounds. It was sold for the unbelievable sum of 22,000 pounds, at 1,000 pounds a month in repayment. But only 11,000 pounds were collected and the rest was never paid. And the 11,000 pounds have never been traced."
Certainly, Mintoff’s most unreasonable utterance is that in 1972 the BICAL chairman had informed the Labour government as well as the Central Bank that BICAL was not in a position to pay back the deposits to their depositors, who had in large quantities withdrawn all their monies from the bank earlier on: "If the government and the Central Bank had not intervened, the BICAL bank, which used to give higher interest rates than other banks and which dealt in fraudulent activity as was shown in Court later, would have lost everything, as had happened in previous cases."
Cecil Pace vehemently denies this: "I never told the Central Bank any such thing. I had no problem in paying depositors and a day before the closure of the bank, BICAL was still receiving deposits and effecting withdrawals."
One particular withdrawal was that of Guze Abela, Labour Finance Minister in 1972, who obviously knew what was to happen to BICAL and withdrew all his 5,000-pound deposit from the bank twenty four hours before the closure.
Work sheets indicating withdrawals and deposits in the weeks before the closure do not support Mintoff’s claims that there had been a run on the bank.
The autocrat who ruled his party with an iron fist, and who would later bring down Alfred Sant’s Labour government in 1998 to prop his Nationalist archenemies back into power says that he and his colleagues "had tried very hard to see what necessary steps were being taken for the first time in Malta."
But the former BICAL chairman replies that this is untrue: "The factories I owned were broken up and the employees dispersed. The whole working force was downsized."
Mintoff obviously praises the three controllers, and needless to say, has special words for his acolyte and faithful servant - Karmenu Mifsud Bonnici – the man whose appointment as his successor as Labour leader Mintoff would later admit had been the only mistake he ever committed in his life.
But Mintoff fails to react to why and how Karmenu Mifsud Bonnici, described by Cecil Pace as his ‘persecutor’ on Obelisk, succeeded in mismanaging in such a regal manner the break-up of the Pace empire, leaving hundreds of Maltese workers without jobs.
Cecil Pace told MaltaToday that one crucial point must be emphasised: "There was never any reason to close the bank. There had always been enough assets to pay for all the depositors there and then. What is certain is that the liquidation procedures organised by the controllers were haphazard, abusive, ruthless, irresponsible, lengthy, against the norm and a great disservice to the depositors and our family."