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Matthew Vella
At an hourly rate of Lm35, BICAL controller Raymond Gatt is just another handsomely paid appointee with the added bonus of handling one of the most contentious of liquidation procedures – the Bank of Industry, Commerce and Agriculture, the cornerstone of the business empire headed by brothers Cecil and Henry Pace.
For thirty years, the Paces have tried in vain to rectify the atrocities committed by BICAL controllers appointed back in 1972 to pay off all existing liabilities and debt the Bank and its other associated companies had.
The saga would turn out to be a nightmare for the Pace family – million lira investments, successful companies, extensive plants and hotels would be sold for a pittance or even regaled to favoured ‘buyers’ for free, in the apparent bid to pay off the BICAL liabilities.
Despite millions in funds having been appropriated by the BICAL controllers, and millions in investments practically given away in the form of ‘gifts’, yet 20 per cent of BICAL depositors and creditors are still waiting to be paid.
Controllers’ gold
Earlier this week, Prime Minister and Finance Minister Lawrence Gonzi revealed in Parliament that total BICAL assets, including those of its associated companies, total Lm914,932. The figure excludes the value of the Grand Hotel Excelsior, a Pace investment which is locked in a complex Court action.
In Parliament Gonzi also said the complete liquidation of the BICAL assets should be finalised in “not too long a time”. He also revealed that the BICAL controller was paid a rate of Lm35 an hour for his services.
But owner Cecil Pace is irked by the injustice carried out in his regards: “BICAL was taken under administrative control to pay off the Lm2 million in liabilities back in 1972. However, despite the millions in assets which have been sold or given away, there are still Lm300,000 in depositors’ and creditors’ money that has to be paid. Why?”
Pace points the finger at decades of maladministration by BICAL controllers: “I would bless Raymond Gatt’s Lm35 an hour for an honest day’s work. But I have been plagued by dishonesty for all these years. Why are all the assets being sold off? Is this to leave me with nothing, or for administrators to milk the BICAL cow?”
In comments to MaltaToday, Gatt said he worked a maximum of seven hours a week, a total of Lm980 a month for his services, excluding other administrative and legal expenses which are paid directly out of the BICAL funds.
Asked what justification served for the total sale of assets far beyond that required to pay off the Lm2 million in liabilities which BICAL owed in 1972, Gatt said that upon his appointment in 2004, he had “found a state of affairs from which he had to proceed upon”, and one which is hoped will achieve finalisation in the near future.
But there is still no form of justification for the actions of those controllers who sold off more BICAL assets than was required, ultimately keeping them in the lucrative role of controllers, which as Gatt’s fee confirms, is one which pays.
Since 1972, fragments of the BICAL empire rested under the responsibility of controllers Karmenu Mifsud Bonnici and Grant Thornton’s Emanuel Bonello.
Mifsud Bonnici and Bonello organised the sale of BICAL assets. Mifsud Bonnici effectively gave away the Pace’s Comino Hotel to its landlord John Gaul, for free – Lm400,000 had been invested in the hotel by Pace, which carried an 150-year emphytheusis at Lm12,000 a year. At a value of over Lm1.5 million, Mifsud Bonnici claimed he had given the hotel to Gaul in order not to pay the yearly rent.
Pace’s hotels, factories, car companies and yachts were sold off at ridiculous low prices and it led Emanuel Bonello to be paid thousands from the BICAL funds in administrative fees.
With sundry fees for answering parliamentary questions costing anything between Lm700 to Lm1,000 a year, and the payment for staff seconded from Grant Thornton at Lm30,000 a year, Emanuel Bonello, who captained the Pace assets between December 1984 and December 2002, paid himself over Lm1.8 million in administrative fees, a figure that was confirmed in 1997 when Magistrate Noel Cuschieri was appointed to look into the serious allegations of fraud allegedly committed by Bonello – that Lm1.8 million was equivalent to the sum paid to the BICAL depositors so far.
Immune from prosecution
Despite the accusations of fraudulent and negligent actions, both sides of the House of Parliament had resolved in 1995 to grant the BICAL controllers immunity from prosecution in 1995, a rare absolution which is usually granted to criminals that agree to turn State evidence.
The law was passed on 8 November, 1995, to grant immunity to all government-appointed Controllers of companies in liquidation. The bill had been presented by former Minister of Economic Services Josef Bonnici, who explained in Parliament that the bill had in fact been motivated by the BICAL saga.
According to Cecil Pace, one of the lawyers involved in the drawing up of the Act was Prof Ian Refalo, who is also legal counsel to the BICAL controller. Contacted by MaltaToday, Refalo declined to comment.
The law was meant to speed up the liquidation process up and set procedures for how controllers were to publish the list of creditors with valid claims against controlled assets, as well as the amount due by the controlled asset on such a claim.
Article 16 of the Act however was the nail in the coffin for the Pace family, a clause that would exonerate all controllers, since their very first day of appointment, from any court action – both Karmenu Mifsud Bonnici and Emanuel Bonello had been taken off the hook.
In Parliament the bill was barely debated and the question of immunity was never raised except at the committee stage. Then Finance Minister John Dalli explained the law was needed to speed up the process of paying the BICAL creditors.
The committee for the consideration of bills was then chaired by Nationalist MP Joe Fenech, and included Josef Bonnici, Nationalist MPs George Hyzler and Louis Cuschieri, and Labour MPs John Attard Montalto, Wistin Abela and Lino Spiteri.
It was in fact John Attard Montalto who suggested that immunity be retroactive, meaning all controllers before and since Bonello would be immune from prosecution, explaining that controllers had to be protected:
“It seems that several cases have been brought against the controller and these have been made so as to make him personally responsible for his actions as controller. I even know that an impediment of departure was levelled against him and a garnishee order on his assets including his home and furniture when he was acting as a controller. I believe one needs to protect these officials.”
The rest of the discussion centred around how the law could be best worded to protect the interests of the controller, and to ensure protection was retroactive. Not one MP contemplated whether the controller could act in ways that were detrimental to the owners of the liquidated company and the BICAL depositors.
Winding up the short parliamentary debate following the committee stage, Finance Minister Dalli declared it was important to have the controller to decide and remove the fear that at some time in the future somebody would make a claim on BICAL after all the assets would have been distributed. “What are the depositors waiting for? They are waiting for the day when they can wake up and know how much they will be getting from BICAL. The Law is designed to create a procedure to bring this story to an end, so that, at last the country will be rid of it.”
That was nine years ago. The depositors are still waiting for their money.
matthew@newsworksltd.com
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