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National Bank • March 28 2004

Trading freedom for greed – the case for the National Bank of Malta

Former banker Anthony R Curmi FCIB (MaltaToday, 21 March 2004) has written to show the shareholders in the National Bank of Malta solidarity. It is comforting for us I am sure to feel that a third party, not a shareholder, expert as his credentials suggest and from the Malta banking industry of the time, has of his own initiative, come forward to add weight to the arguments made in my last article.
Yet, while the shareholders are comforted by Mr Curmi’s remarks we are bewildered by the silence of so many others that should speak. My last article highlighted the hypocrisy of some in the Nationalist party. Others simply keep quiet knowing much about the injustices being suffered by the National Bank shareholders for the last 30 years and while silence may not be hypocrisy, surely with persons with the responsibility of office we have dereliction of duty. We were brought up to think that office and power bring with it greater responsibilities, and I ask - what’s the nature of office and power with our Nationalist Party politicians when they regularly disregard their duty in this important case? I brought forward the unconstitutionality of act XLV of 1973 that placed the National Bank of Malta in suspended animation. I attacked the government of the time for orchestrating a massive theft and accused the Nationalist Party, then in opposition, for almost being an aiding and abetting accomplice. That 30 years have passed and all the Nationalist party can do is refer to the pending court cases which it very well knows can be protracted ad infinitum almost confirms this.
Rather than the expected avalanche of criticism and irrefutable evidence to show our error, these accusations have been replied to only by the thunderous sound of silence.
Initially I felt proud. Proud of the fact that when taken to task nobody had the nerve, ability or logical ammunition to take us on and to prove to me and the rest of the victimised shareholders the fallacy of our arguments. Yet while I felt initially proud for having silenced the entire Cabinet and Opposition, I realised that rather than silence it was indifference that we the shareholders of National Bank of Malta Ltd are dealing with.
The Nationalist Party is indifferent towards this case because it is not a principled party. The Labour party is indifferent towards this case because it was its principle to expropriate, to seize control of all domestic credit and control the population through their finances, helping ‘friends’ and destroying ‘enemies’ (and there are a few of these cases documented in the litigation pending in Court), and pass discriminating legislation that targeted a small proportion of our Island population even if it meant – and continues to mean – that doing so would violate the rights of the Maltese people as supposedly crystallised by our Constitution.
And I wonder how can this be? How and why do people accept to live in such a morbid state? Who are our leaders and how don’t they speak out to defend our republic when its essence has been challenged? Is it possible that human rights in Malta only mean something if the Labour Party or the Nationalist party think that the issue is politically relevant? Is this the substance of our political parties’ belief in democracy?
Bear in mind that the National Bank of Malta financed up to 50 percent of the economy at the time. Anyone knowing the recent history of the National Bank would tell you about the constant pressure by the Nationalist Party leaders on the Bank to extend credit under favourable terms to Maltese entrepreneurs so that Malta could stand a fighting chance at survival in the 1960s as a new independent state.
They would also tell you about the constant assurances that the Central Bank would assist in cases of lack of liquidity arising from extending credit to grow Malta. And then, only a few years later that very olive branch was so cruelly used to make sure that all the support the National Bank gave to Malta would be used against it in a vicious effort to turn Malta into a socialist state, without the rule of law or democracy at the basis of our nationhood, where friends of the Government continued to get credit and the enemies of the people had their credit called in overnight and ruined.
Bear in mind also that the National Bank was not some foreign-owned bank which, as Mintoff used to like to rabble-rouse the people who could not know better, had taken advantage of the colonial control of the economy. The National Bank grew from Maltese enterprise under the colonial era to father many facets of the republic that we enjoy today.
Bear in mind also, that it has been ignored simply because its solution has not been encouraged by an electoral compromise and since both sides of the political fence have agreed to remaining indifferent. Its solution carries no weight in the political arena. All governments have profited from this theft and if the news is correct the Nationalist party is preparing for a final dip to take out the last remaining profit the Government can gain from this tragedy.
And wouldn’t you think that the Nationalist Party would first sort out the issues, pay back the shareholders their value plus interest to date and then take the final profit? Of course not! We are in Malta here and we speak justice but don’t do it. Already several times, capital in Bank of Valletta was sold by the government at a profit and we have also heard of how the Bank of Valletta, after having for many years made reserves for the calculated amount of compensation payable to the National Bank shareholders for the assets received for free in 1973, then decided to reverse the reserve and distribute it as profit to its shareholders – the Government at the time being the main shareholder! And guess which party was in Government – you guessed it, the Nationalist Party.
So the little bit of sense that justice must eventually be done and paid for from the Bank of Valletta funds (as Bank of Valletta was the recipient for free of what we estimate to be between five to six million Maltese Liri of assets completely disregarding goodwill) was again wiped away so that Government could take the cash. We take peoples’ property for nothing and then happily receive millions in dividends and sell the property for millions again, year after year, and year after year, until the stunning difference between the zero paid for it and the millions received becomes quite unimaginable…conscience numbing.
And our Minister of Finance will yet again, maybe this year, proudly state to the Nation that he has made money from the sale of the remaining shares… in Bank of Valletta.
As pointed out by Anthony R Curmi FCIB (former banker Barclays Bank 1973) the Deloitte report commissioned by the government-appointed Council of Administration did conclude that the equity balance of the National Bank of Malta Ltd stood at Lm250,000 at the end of their exercise. As rightly pointed out by him this figure was reached after the provision for Bad and Doubtful debts was increased by close to 450 percent on the assumption that certain loans as given out would never be repaid. Most of the loans were obviously repayable and were in fact repaid and there is much to be said about the administration of the debts in the following years, but that is another story of ‘justice’ and friends and enemies of socialist Malta for another time.
Persons who were supported by the National Bank and whose debts were later written off at the expense of the shareholders and who were then and are now booming entrepreneurs will have a chance to give their evidence to show how farcical the calculation of asset value of the National Bank was at the time.
So now what? The National Bank of Malta Ltd was nationalised without compensation in 1973, the politicians that orchestrated its takeover remain silent, the Bank of Valletta makes Lm20,000,000 a year in profits and life in Malta must go on.
Yet “what we do in life lives on in eternity.” Our country is today in a serious financial mess. Our bid to compete in Europe is a dream that we must struggle to make a reality if we are to progress. Yet where are our leaders? And where is their leadership? Where is their idealism and integrity? These are not ‘switch-on’ ‘switch-off’ virtues, for virtues are constant. If they will ignore an expropriatory takeover that had 50 percent of the economy under its belt how will they treat other smaller issues which will hit our island as our economy grows bigger and negative values, theft, fraud and greed start to dominate more and more.
How do our leaders show us the people the difference between selfish interest and objective decisions so that we can move forward towards sustainable growth for the common good? If our Nationalist Party believes in values what about these values when the decision making process is not under the direct influence of a vote grabbing exercise that challenges its objectivity? How do our leaders give us hope if all they can do is remain silent and where are all the others who believe in truth and justice if and when put to the test will say nothing? Is this what we want our citizens to be – short-sighted, self interested, of no virtue, conspiring, dishonest, inconsistent…that is what comes out of the National Bank story and the fact that no one in leadership does or says anything means that they condone.
Malta needs her very best to survive in the changing paradigm of the European Union. The time has come for our leaders to lead. The time has come for our country to act yet by ignoring these issues we are fostering an economy that is based on totalitarian inefficiencies that will make Malta poor. The emptiness in our pockets will be matched only by the emptiness in our values and then we will turn around and blame each other when the fault will be that we all remained silent when we had a duty to act in the name of truth and justice, for injustice tolerated provides a greater example than empty speeches to the masses.
What is the next thief who wants to steal our property going to argue: the Government does it why not me! Do it in a way that looks technically legal, and deny, deny, deny and don’t forget to share it with some others so that you buy their support come what may, and make it difficult for a solution to be found according to law…Even if I am sued I can keep all the profits of my theft for at least 30 years! I can sell the assets I stole to someone in good faith and I can enjoy all the sale proceeds. And then maybe, one day, when I am no longer around, a humble judge may decide against me, but by then the value of what I stole will be so small compared to all the profits I made that it would be worth it!
That is what the successive Governments have been teaching our people for the last 30 years by refusing to deal with the National Bank of Malta situation.
By ignoring this case, Malta is trading the value of freedom to all for greed. We have many clear examples that making this choice is hampering our economic growth and future sustainability. If we do not get our values right we will have many more.




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