BICAL • October 19 2003

The Grand Hotel Excelsior – the vultures come to feast

Trail of Shame Part 2 Download in Acrobat PDF format

In the long run of the BICAL saga, MaltaToday’s coverage has revealed the extent of an indiscriminate and systematic dissipation of the former BICAL bank assets. MaltaToday illustrated how the mishandling of the assets and those of the Pace group of companies, under the control of Karmenu Mifsud Bonnici (KMB), the government-appointed controller of the bank, paved the way for so many fledgling businessmen and companies to feast on the same assets.
Over the past few weeks, MaltaToday revealed how so many of Pace’s ‘crown jewels’ were disposed of for little, or nothing at all: KMB treated the liquidation of BICAL assets with both naïveté and mercilessness.
In some cases KMB gave away assets for ‘nothing,’ as was the case with the Comino Hotel: a Lm1.5 million investment with a Lm12,000 yearly rent given for free to landlord John Gaul after KMB gave up looking for buyers; the BICAL main headquarters in Zachary Street, Valletta, the ideal HQ for a more adept, socialist endeavour: the peoples’ bank, the Bank of Valletta, one of the many recipients of Pace’s assets.
In other cases, KMB would do little to recover the monies owed to Pace’s companies. His only record-keeping technique would be the sole notebook and school copybook where he would scribble down little notes and reminders, a quick addition of figures and a calculation of interest. In the case of the Tigullio hotspot in St Julians, KMB sold the restaurant for a measly Lm22,000, recuperating only Lm11,000 of the total sum, and even managed to mislay the account number where he had deposited the Lm11,000.
Pace’s unfinished hotel – the President Hotel in Ta’ Xbiex, today Hotel Les Lapins – was sold to Golden Bay Hotels Ltd for just Lm98,000 in 1981, with a special arrangement allowing the purchasers to start payment in 1985 over a period of two years, without interest. When, in 1984, KMB would succeed Dom Mintoff as Prime Minister, BICAL’s new controller Emanuel Bonello would take the opportunity to reportedly rake in an estimated Lm1.8 million.
Vanquished and locked up at Corradino prison, Pace could only watch on as the systematic dissipation of his assets as employed by KMB would befall all his companies, formerly an empire employing over 3,000 workers. In the sidelines waited the businessmen who would make their fortunes on the give-away prices KMB sold the Pace empire for.
Fighting for justice – the Excelsior Hotel
The Malta and Europe Hotels Ltd (M&E) was formed in 1964 by Antonio Ghidoli and his wife Nada. In 1969, the Italian couple was searching for finance for a new development on the edge of the Valletta waterfront, the Grand Hotel Excelsior (GHE). The partnership asked BICAL bank to finance the development, but Cecil Pace directed them to the National Bank of Malta and Barclay’s Bank, since the amount required was far too large for BICAL to cater for. "Eventually, both banks stopped financing the Ghidolis, and they turned to me to offer them the finance they needed," Cecil Pace says.
The Ghidolis had originally instructed the firm Scaramella del Salernitano to build the Excelsior. The firm went bankrupt and the building stopped, so another agreement was sought, this time with a firm called CEFAT. Development proceeded at a slow rate and debts amassed daily in Malta and Italy.
So Antonio Ghidoli met Sir Charles Forte, the owner of the Phoenicia Hotel, with a view to sell him some of his shares. But Forte was not satisfied with the state of the company’s accounts. Soon enough, one of the creditors to the firm – a certain Avvocato Martone – who had supplied materials for the construction of the Excelsior, came to Malta to demand payment from Ghidoli. Soon enough, Martone would start acting as legal representative to the Ghidolis, in the process trying to get Charles Forte to reconsider buying shares in the hotel. When the deal fell through, M&E turned, once again, to Cecil Pace.
The problem escalated when Grand Universal Stores (GUSEX) in London, a main financier of M&E’s development, wanted to take the company to court for monies owed to them by M&E. "I went up to London with a delegation of ten," Cecil Pace says. "When I went in to speak to the director of GUSEX, he said he did not want to speak to anyone inside his office because he had had enough of dealing with these people. Soon enough I emerged from the office as the main creditor of M&E. GUSEX had sold me the debt M&E had with the company."
The Excelsior hotel was soon completed and Cecil Pace, a main creditor with the Ghidolis, would proceed to convert this debt into shares. By the time Cecil and Henry Pace were taken into custody on 25 October 1972, the share transfer between Pace and the Ghidolis had not yet been registered by the authorities. The Paces had not registered the share transfer although they were in possession of the share certificates.
As soon as the Paces were arrested, Martone stepped in, claiming the Ghidolis had transferred their shares to him on 20 September 1972. According to a 1988 Finance Ministry report, Martone had no interest in showing KMB the share transfers he claimed were in his favour from the Ghidolis, due to certain money transfers executed from Italy to Malta. The 1988 report shows that Martone was liable to prosecution in Italy and for that reason he did not want to expose his share certificates to KMB.
However, Martone would eventually seal the fate of the Grand Hotel Excelsior in his own favour, when as early as February 15 1973, KMB would commit to Dr Giovanni Bonello, Martone’s own lawyer, that when the GHE would be taken into his responsibility as BICAL controller, the hotel would be given to its rightful owner. Naturally, Martone had plans of his own to hatch as Pace lay in jail, unable to exercise his rights over the suspended properties of the BICAL associated companies.
On that February day, writing in his fine calligraphic style on a piece of note paper carrying Forte’s Phoenicia Hotel stamp, KMB committed himself to Dr Bonello with the following words, as seen by MaltaToday:
"Dear Dr G. Bonello, with reference to our discussions in connection with the handing over of the Grand Hotel Excelsior, I wish to confirm to you that after our amicable agreement on the sums due to BICAL and to the Pace Group of Companies, I will be able to hand over the said hotel to the Malta and Europe Hotels Co Ltd."
KMB’s commitment might have given Martone enough reason to commence plans to get hold of the GHE. As legal representative to the Ghidoli shareholders, the directors of the Malta and Europe Hotels Co Ltd, Martone wanted to make his claims on the GHE, especially since he had access to the share certificates.
He presented the share certificates and documents to KMB, who signed an acknowledgement for the share transfer presented to him by Martone with the following words: "Non ho oggezione al trasferimento" (I have no objections to the transfer), on the 12 November 1974. According to the Finance Ministry report, KMB never registered anything regarding the share transfer since "he did not want to add anything to the existing records" assuring Martone the share transfer was in order.
On the 8 May 1974, Martone was appointed director of M&E, when he returned from Italy with share certificates and documents claiming that the Ghidolis had transferred their shares over to him. Certainly, the 1988 report confirms that Martone was not in possession of the circular which according to the company’s Articles had to be sent to the other shareholders informing them of a share transfer from a member to a non-member.
But the widow of Antonio Ghidoli, Nada delle Piane and her son, have signed a Court declaration to the contrary, confirming that they had never transferred their shares to Martone, but instead had done so to Cecil Pace. As Pace had his fate sealed in Corradino prison, Martone had been quick on the draw to secure the GHE at all costs. Today, the battle for the ownership of the GHE continues.