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Julian Manduca
Businessman Ferdinand Grech refused to answer a question put to him by attorney Shazoo Ghaznavi Friday when giving evidence in the court case brought by Valle del Miele Ltd against the directors of Priceclub for wrongful and fraudulent trading. The case is in front of Judge Tonio Mallia, but is being heard by his assistant Claudine Galea.
Asked by Ghaznavi whether money was paid to him by the Priceclub directors in respect of a company he said he owns, Grech replied in the affirmative, but asked to say how much he had received Grech said: “I am not going to say what the figures were because my agreement with them dates back to over five years ago and is now time-barred by law.”
Ghaznavi then told Grech he will ask judge Tonio Mallia to make sure he answers the question. The Valle del Miele lawyer started last Friday’s session by asking Grech what his involvement in the companies Four Square Ltd and Happy Saver Chain Store Ltd was. Grech replied that he was the sole owner of both.
Grech said he purchased the companies on 28 July 1999. Asked by the lawyer whether when he bought the Happy Saver company he had signed a sales agreement or contract, Grech said he believed he had. Asked to produce it, Grech said: “I will ask my accountant and, if it is in my possession, I will bring it to court next time.”
Asked how much he paid for the companies Grech told the court: “I do not remember how much and will have to do some research and find out how much I paid.” Ghaznavi then told Grech to bring evidence of his payments to purchase the companies when he next appears in court.
Quizzed as to whether the former Priceclub supermarkets in Naxxar and Attard were owned by Four Square Ltd, Grech confirmed that only the one in Naxxar was.
Ghaznavi asked what Grech’s connection was with the directors of Priceclub Operators Ltd, Victor Zammit, Wallace Fino and Christopher Gauci. Grech said the three were directors of Happy Saver Chain Stores Ltd. Asked why this was the case, Grech said they had had an agreement that Zammit, Fino and Gauci would take over the company.
Asked for the agreement, Grech said it was “only a verbal one… a written one was never signed.”
Asked whether the plan was to take over the company as the Priceclub company or as individuals, Grech said: “I cannot answer… I was dealing with them personally but when they took over the supermarket they operated as Priceclub.”
It was at this point that Ghaznavi asked how much was paid by Zammit, Fino and Gauci, and Grech refused to reply.
Asked whether he was a creditor of Priceclub, Grech said ‘yes’ and told the court that in the name of Mirachem Marketing he was owed Lm92,000.
“Personally I am owed money by the directors of Priceclub,” Grech added, but when asked to say how much, replied: “I am owed money because of diverse obligations that I went in for personally and the debts amount to between Lm150,000 and Lm200,000.”
Grech said as an example he paid Lm137,000 to Lombard Bank when he took over a bank guarantee and had to pay it himself as it was due by Happy Saver to the bank.
Shazoo Ghaznavi wanted to know why the Priceclub owners were still directors in Grech’s company and Ferdinand Grech replied: “Because their actions led to the state of affairs where the company had no value and they have to explain their responsibilities.”
Grech was asked when the company was brought to the situation that it had no value, and replied “in March/April of 2001.”
Ghaznavi: Can you explain better, did the company go under because of debts?
Grech: Small amounts.
Ghaznavi: What are you waiting for to liquidate?
Grech: I do not know.
Ghaznavi: Do you know that as time passes the expenses of the company will accumulate? Why did you not appoint yourself as director or someone to represent yourself on the Board of Directors after Zammit, Fino and Gauci brought it to the situation where it was ‘without value’?
Grech: For no reason.
Ghaznavi: Are you aware of the consequences to anybody who is either a shareholder or director of a company that is declared bankrupt?
Grech: I do. If you are a director you are responsible for your actions and as a shareholder you suffer the loss of your share capital.
Ghaznavi: Do you know that such a person would find obstacles to form new companies or occupy posts of importance that have to be confirmed by State authorities?
Grech: I do not know.
Ghaznavi: Are you telling me that one can easily move from having a bankrupt company to starting another?
Grech: I did not say that.
Ghaznavi: Will someone who has a connection with a bankrupt company be able to continue without obstacles?
Grech: I cannot say, that depends on the involvement.
Ghaznavi: If one’s share is 100 per cent ownership one has the responsibility to appoint the appropriate directors.
Grech: In this case the directors were trusted with millions. Was it appropriate to appoint them? We only came to know afterwards that it was not a good decision because the facts show otherwise.
Ghaznavi: Given all this, why did you keep the directors in office to date? Why did you not nominate someone else to take responsibility for your interests?
Grech: I left them as directors because of dues payable to the MFSA that they are responsible for.
Ghaznavi: Is your company Happy Saver Chain Stores Ltd receiving rental income from Scotts supermarket?
Grech: No.
At this point the case could not continue as the sessions are of one hour. The next session is set for 22 October, but Grech will next be appearing on 25 November. Grech was giving evidence in the court case brought by Valle del Miele against the directors of Priceclub for wrongful and fraudulent trading.
Malta’s court facilities
In order to assist with the backlog of cases Malta’s judges have assistants to gather evidence from contesting parties in civil cases, but these judicial assistants do not use computers to take evidence nor do they have stenographers.
The judge’s assistant is forced to take notes herself. Since the sittings are one hour’s long it is possible that at an important point in the trial the judicial assistant is forced to stop proceedings as another sitting can start a mere three metres away, making it impossible to follow what is being said.
julian@newsworksltd.com
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