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Former Prime Minister and Labour Party leader Karmenu Mifsud Bonnici has denied having insisted with Cecil Pace, the owner of the defunct Bank of Industry, Commerce and Agriculture (BICAL), to accept a proposal to transfer 50 per cent of his shareholding to Dom Mintoff’s nominees, Prime Minister during the prosecution of Cecil Pace for charges of fraud and misappropriation of funds, in 1971.
Mifsud Bonnici’s denial is part of his court deposition in libel proceedings against MaltaToday for its investigation into the external circumstances which had forced Cecil Pace’s BICAL bank into the hands of Central Bank controller Karmenu Mifsud Bonnici.
The libel proceedings were initiated by former Prime Minister Dom Mintoff.
Mifsud Bonnici has denied having been Mintoff’s messenger, to offer Cecil Pace a chance to escape charges of fraud in return for the transfer of 50 per cent of BICAL’s shares to Mintoff’s nominees.
KMB was appointed Central Bank controller to take charge of the assets of the BICAL bank and its associated companies in order to sell as many assets as was needed to repay BICAL depositors their monies and other creditors. Previously however, he had been the lawyer to several of his employees and clients. He was the General Workers’ Union lawyer, and he had also been appointed as government representative on the BICAL board of directors instead of Salvino Mizzi, who had passed away. According to Mifsud Bonnici, he only spoke to Cecil Pace once as government representative on the BICAL board of directors, and said he never reported to Dom Mintoff any discussion he had with Pace.
“When I was controller I had found that certain bank accounts had indeed been falsified,” Mifsud Bonnici said with reference to the criminal charges brought against Pace back in 1973. “There were a number of persons who deposited their money with Cecil Pace, in the sense that they were given cheques from his personal account, in the form of exchange notes bound by these cheque. These banking guarantees, or to be more precise, bills of exchange, were never deposited in the bank. There were also fixed deposits which had never been registered with the bank, amongst which was a Lm50,000 deposit from the Maltese archdiocese.
“This is why the police felt necessary to take criminal steps against Pace, and not for the reasons that were reported in this article…”
In his counter-examination, Mifsud Bonnici was asked whether he ever met Pace in the days preceding his arrest.
“Yes. For reasons which had the Central Bank controller (Mifsud Bonnici) communicating with foreign banks which BICAL had balances with, to verify the amounts that had appeared in BICAL accounts, and to see whether these really existed with the foreign banks… In the case of Hambros Bank, it resulted that whilst the BICAL accounts had shown deposits of around Lm100,000 in Hambros Bank, this same bank informed us that none of this money had in fact been deposited in their accounts.”
This was the principal reason that had seen Cecil Pace face arrest, according to Mifsud Bonnici since, according to him, the Hambros bank sheets at the BICAL bank had in fact been falsified. According to Mifsud Bonnici, one of the BICAL associated companies, Tudor Press, had printed a falsified letterhead of Hambros Bank to use for the insertion of credit and debit bills. “This had resulted following investigations from Central Bank inspectors as well as when the manager running Tudor Press, a certain Mr Perigin, had said it was Cecil Pace personally who ordered the printing of these sheets,” Mifsud Bonnici claimed.
According to Mifsud Bonnici, he never personally wanted to see criminal steps taken against Pace because, as Controller, he wanted Pace to transfer his shareholding to the Central Bank before anything else. Many families depended on overdrafts with the bank, amongst them employees, according to Mifsud Bonnici. The companies were controlled by Cecil Pace and his brother Henry or by their nominees and he wished to see them up and running in order to safeguard workers’ jobs.
“So I needed Pace’s co-operation in this regard, and Cecil and Henry Pace accepted as shareholders to see that BICAL would own one share in every company, valid to 51 per cent control of the companies in question… This preference share enabled me as controller to keep these companies as viable as possible, sell the assets without liquidating the associated companies at one go… There were 15 companies in all.”
Mifsud Bonnici said the police had been informed that Pace was offering higher rates of interest than other banks; giving clients personal cheques from his personal account with a higher rate of interest than permissible by law, and these would be post-dated by three to twelve months, according to agreement.
“When BICAL was closed down, Cecil Pace’s personal account could not satisfy these payments, ending up in millions of unpaid cheques and bills of exchange. People came to me with cheques signed by Pace himself and I had to tell them there was no money to cover those cheques, and they reported the matter to the police. I say this for everyone to understand the bankruptcy of BICAL was not a fictional one.”
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