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News February 22 2004
Priceclub directors persuaded man to take Lm200,000 loan on their behalf
Evidence given in court by interior designer David Anastasi indicates that the owners of Priceclub, persuaded him to take a loan of Lm200,000 and hypothecate his family house as security, MaltaToday can reveal. According to Anastasi, Victor Zammit, Christopher Gauci and Wallace Fino, the directors and owners of the Priceclub persuaded him to take the loan to buy some freezers from Italy, because Wallace Fino told him the Priceclub had already taken several loans.
Through a stroke of luck Anastasi ended up taking a loan of Lm50,000 for the Priceclub and his wife persuaded him not to offer their house, even if he had been willing to do so. According to Anastasi HSBC bank refused the loan, because his business had nothing to do with importing freezers, but Bank of Valletta went ahead.
David Anastasi was going to take loan of Lm200,000 and offer his family house for Priceclub
An interior designer who trusted the Priceclub directors, Wallace Fino, Victor Zammit and Christopher Gauci, was willing to offer his house as security, after being asked to take a loan to assist the Priceclub supermarkets, and was only persuaded not to by his wife, MaltaToday has learned.
The interior designer’s wife’s suspicions proved correct, but even if the Lm200,000 loan was avoided, her company ended up paying a debt of Lm28,500 to the bank.
The interior designer, David Anastasi, told the court how he was encouraged to take the Lm200,000 loan by the Priceclub directors who, according to Anastasi, led him to believe he stood much to gain from agreeing to the loan.
Testifying in court Anastasi explained how he was on good terms with Fino, Zammit and Gauci and how these had showed interest to buy shares in his interior design company ‘Forsite Design and Project Management Services Ltd.’
Anastasi told the court the directors of Priceclub were planning refurbishment and new supermarkets “even abroad, with the intention of following the example of the Corinthia Group of Companies.”
Anastasi provided his services of interior design and project management to the Priceclub and he told the court: “at the beginning I was paid for my work… and my prospects looked good. But after some time the payments no longer remained regular and it became problematic to collect money from them.”
In his affidavit, Anastasi said “Obviously I could have started legal proceedings against the Priceclub, but I always took one step back because of the fear that my work for them would be terminated. Besides this, they had promised me more work in Malta and also in Libya and I felt it would be better to wait, so as not to lose the opportunities that I saw in front of me.”
From Anastasi’s testimony it appears that the Priceclub directors took their involvement with him one step further. Anastasi recounts: “In about August of 1999, a event that was to have negative repercussions on my business took place. Wallace Fino, in the name of Priceclub Operators Ltd, approached me so that my company would borrow Lm200,000 from Mid-Med plc (today HSBC Bank Malta plc), so that freezers could be purchased from Italy for the Day to Day supermarket in Valley Road Birkirkara.
“When I asked him why, he told me they had already asked for, and obtained, enough loans from the bank for Priceclub Operators Ltd, and he was afraid the banks would not lend any more if he went with a similar proposal. Because of our friendship, the work that was in progress and what I was promised, I, in the most naïve of manners, accepted without realising what the consequences of my acceptance could be.”
Anastasi was lucky that HSBC did not accept to loan him the money: “Fortunately for me, it so happened that the HSBC Bank Malta plc did not accept the proposal.“The reasons for the refusal are not known to me, but now I suspect that the bank noticed something. It so happened, however, that on the insistence of Wallace Fino, the Bank of Valletta was approached and accepted to loan Lm200,000 to my company to buy the freezers.”
Anastasi explained: “Before that date I never had an account with the Bank of Valletta. They did not know me as David Anastasi, and still less as ‘Forsite Design and Project Management Services Ltd.’ From the Memorandum and Articles of Association of my company and the projections that were presented, the bank was aware that in fact my company had nothing to do with ‘freezers,’ or any similar business. Nevertheless the bank accepted to grant the loan requested.”
Anastasi’s wife was not enthusiastic about the deal and he told the court: “I was asked to offer a general and special hypothec on my house and if it was not for my wife, I would have granted the hypothec.”
According to Anastasi, as things turned out, the bank accepted personal guarantees from himself and his wife and the Priceclub directors and their wives instead of the house, as security. Anastasi had another stoke of luck: “because of the delays, and the fact that the freezers had arrived and the Priceclub directors wanted them as quickly as possible, I was informed that one of the directors of Priceclub, who I understand to be Victor Zammit, had obtained the difference that Priceclub Operators needed, and the initial request for a loan of Lm200,000 was reduced to Lm50,000.”
Anastasi trusted the Priceclub directors, but was given even greater assurance that he had nothing to worry about with the loan: “If I had any fear that there would be problems with the loan these disappeared from my mind when I knew that the request was reduced to Lm50,000 and the directors of Priceclub and their wives gave personal guarantees to the bank. However, beyond that, I was given a paper by Wallace Fino wherein it was stated that, should the Company Priceclub Operators Ltd not pay for the debt of my company to the bank, the debt would be covered by another company Priceclub Holdings Limited. I was informed that this company owned property and that I could therefore put my mind at rest.”
At the time, the Priceclub’s financial difficulties started becoming public, but David Anastasi remained in the dark about his position: “at that time I was very close to the directors of Priceclub Operators Ltd, because I used to work privately for them as well. I was never informed that the Priceclub was doing badly, although I must admit that when I was doing some work for Biochemicals, a company of Victor Zammit, the same Zammit told me in confidence that he was not happy with the leadership of Wallace Fino and Chris Gauci and that he was going to see what he could do in that regard.”
Anastasi told the court how Zammit told him that HSBC’s former chief executive officer Tom Robson had told him how he could not understand “how a company like Priceclub could be run by two children.
“I had my suspicion that he told me this so that I would get the message through to Wallace Fino because I used to see him often. When I informed Fino, his reply was that Zammit should take more interest in the Priceclub and not have his mind only on football, but in the same breath he told me that it was better this way, as he did not want interference from Victor. He told me that Victor Zammit was financially very sound and very close to the son of Colonel Gaddafi, and that the situation would improve because of Victor Zammit’s contacts.”
Anastasi realised he had made a mistake only too late and shortly after the fall from grace of the Priceclub in April 2001 he became aware that “the Priceclub directors had tricked me and I was blind enough to fall into their trap. When I confronted Wallace Fino with this, in the light of the news that was spreading around Malta, he told me that these were merely rumours and this was only a temporary situation that would soon pass. According to him the auditors Deloitte and Touche said that Priceclub had good prospects for the future.”
Anastasi’s plight came to a head when Priceclub crashed: “Wallace Fino immediately stopped the payments with the result that the Bank of Valletta turned to my company for payment. I tried many a time to speak to Wallace Fino, so that he would honour his agreement with me, but it was useless. The balance owed to Bank of Valletta had been reduced from the original Lm50,000 to about Lm28,500 by March 2003. Several meetings were held with the bank so as to arrive at some sort of a compromise, but they proved useless as the bank informed me it would take action against my company, and if not, against my wife and I personally.
“Fortunately, through her company Barb Holdings Ltd, my wife, paid the debt of Forsite Design and Project Management Services Limited through a notarial deed in the acts of Notary Margaret Heywood on 12 March 2003. “Barb Holdings took over the debts due to the Bank of Valletta instead of my company and those that made the guarantees, Wallace Fino and his wife, Chris Gauci and his wife and Victor Zammit and his wife, and me and my wife.”
Anastasi’s woes were not over by any means, however, as, according to his evidence in court, Priceclub Operators Ltd still owes his company the sum of Lm14,000 for services rendered.