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In local parlance we talk of the scolded dog becoming scared of any water no matter how refreshing. As a result of my past experience working closely with Cabinet ministers of all hues, I tend to become ultra-cautious when consultants from the business sector ‘gratuitously’ proffer their advice on matters of high finance. In no way am I imputing impropriety of any sort or to any degree. Unless, of course, what follows could conceivably be so described by moralists.
In this tiny country a businessman’s most valued asset is close friendship with people in high places, be they ministers or top-notch administrators. Even business acumen of the highest calibre vitally needs first to learn how to stroll along the corridors of power and ensure smiling faces greeting it at every door that is opened.
People in power, chiefly those enjoying it without deserving it, loath being told that their subjective judgment on a controversial economic/financial matter may not be the correct one, particularly if it has already been intimated or leaked out to the media. The last thing the consultant from the world of business would want to do is to displease or irritate the incumbent power.
The conclusion becomes inevitable: advise precisely what the guy would like to hear. It becomes wholesome and satisfying to his self-esteem and, moreover, it hands him a weapon to fend off political criticism from opposing factions. It shields him against any possible future mishap.
I have found myself privy to suchlike situations on several occasions during the public sector part of my career. Veritably, an antithesis to my current involvement in the private sector where it seems I am now more often in disagreement with entrepreneurial zest than in support. Sometimes I am told age has to do with it; I believe it is better if described as experience combined and keeping fully abreast with what is happening around us in Malta, in Europe, aye even in global business.
Pity the government failed in this aspect of governance when selling Mid-Med Bank shares. So much justified flak could have been avoided. After five years living with HSBC, we can now weigh the advantages (sic) of being on the international banking map against the meanness engendered in Malta’s banking sector, manifesting itself in multifarious charges imposed on services (again, sic) previously rendered free, employment of expatriates at almost any level even in branches, near-dehydration of the business sector when over-liquidity has become an economic irritant and, as a result, posting an annualised Lm 40 million net profit, of which at least Lm 34 million (less Lm 12 million tax) skips our GDP, as is also the high remuneration paid to the expatriate staff.
I am relieved to read that Lehman Bros. (US) have recently been appointed consultants on the sale of the remaining majority chunk of shares in Maltacom. At least this time it is not simply a couple of local businessmen in the mould described earlier or, worse, no consultation at all with anyone because “we know best.”
Which brings me to my feelings on the ‘Dar Malta’ saga. Now that everyone who had something to say has done so in profusion, I can state that, were it not for the snake-bitten or scalded-dog syndrome, I would have no hesitation to vote ‘yes’ if a referendum was held today as to whether to buy or not to buy. In principle, of course, and only on balance of probabilities. Same as I did last year when voting ‘yes’ on the EU membership issue.
Reading all sorts of newspaper articles these last weeks, one would probably be justified in believing that the arguments against buying were overwhelmingly stronger than for buying. In number, yes. In business sense, definitely not. Save for whether the buying price could possibly have been lower on further negotiations, particularly after it became known that Latvia’s rejection was only on grounds of excessive pricing. In other words, value for money as of TODAY, not tomorrow.
My competence on this is no more than that on whether Manchester United Football Club spent wisely circa Lm 16 million on an 18-year old football player on a five-year contract, furthermore entailing paying him around Lm 2 million in wages for each of these years. Time will tell. Same as with our premier when he churned out so many figures of costs and probable revenues during a recent interview with a ‘The Times’ journalist.
I admired his resoluteness as supported by, prima facie, acceptable calculations. Except, sadly, when he emphatically answered ‘no’ to a question regarding interest on the resultant increase in this year’s budgetary deficit forecast. I say ‘sadly’ because it shows the dearth of even basic business sense in some (most ?) of our politicians. As if it is not the annual budget deficits that increase the national debt! And as if this debt is not financed through borrowing! And as if the rate of such borrowing is not higher than even the rate at which our Central Bank lends to the banking sector if needed. Which has been rare since the onset of HSBC on the scene.
‘Lapsus’ exclaimed the PM’s predecessor once in parliament on a member’s outrageous gaffe. ‘Lapsus’ I feel like repeating now. If only the PM, a lawyer and not an accountant, would at least admit his ignorance on terms like present-day ‘opportunity cost’ and ‘discounted future cash flows’ or ‘present-day value analysis’ on future transactions. The rest of the interview was admirable and, to me, hopefully even credible enough on balance after reading MIMCOL’s report which he promised to publish. Soon, I trust.
Talk of a government not being in the real estate business is facetious. Irresponsible. So is the treatment of productive capital outlays as a burden on the economy, almost on the same level as recurrent expenditure. Moreover, being apolitical, I refrain from commenting on any alleged irregularities in the manner in which the whole operation was undertaken. That is for parliament’s Public Accounts committee to investigate. Or the public audit office.
My ‘yes’ vote, therefore, does carry reservations.
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