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Matthew Vella
A letter written to Cecil Pace, the former president of the Bank of Industry, Commerce and Agriculture (BICAL), by one of his joint managers, Lawrence Cachia Zammit, also a former treasurer of the Nationalist Party, has confirmed the extent of political intrigue in the downfall of Cecil Pace and his BICAL empire, offering a suggestive motive for the Bical collapse.
The undated letter, which Cecil Pace says he received from Cachia Zammit in November 1972, just weeks before the suspension of the BICAL banking licence, was presented in his six-month trial by jury in 1977 in the form of a pink paper signed ‘Lawrence’. During the trial, Judge Giovanni Refalo had told jurors to ignore the document which Pace’s defence had exhibited.
The letter confirms Lawrence Cachia Zammit as a crucial personage in the string of events leading to the end of the BICAL empire. Brother to Alexander Cachia Zammit, a Minister of Health in the Gorg Borg Olivier government, Cachia Zammit and his PN connections may have proved fatal for Pace’s BICAL bank.
In the letter, Cachia Zammit admits his guilt to a misdemeanour which catalysed the investigations into BICAL, after having told Pace he had taken GBP 360,000 from BICAL’s account with Hambros Bank to fund the PN’s printing press, without the approval of the BICAL directors.
“Dear Cecil, although I realise that your main motive in helping me to cover the enormous discrepancies has been with the sole intention for you to save your bank, depositors, clients and the large army of employees with your various companies, I can nevertheless never thank you sufficiently for helping me to cover up my mistakes, despite their magnitude.
“I can promise however to do all I can to help in the small way that I can, because you have saved my life with your generous action. It is not easy for me to explain that I am a victim of circumstances as I have been taken advantage of by political people.”
MaltaToday’s efforts to acquire the letter from the records of Criminal Court found objection from then Attorney General Anthony Borg Barthet, who opposed the newspaper’s application to access the trial documents. Chief Justice Vincent Degaetano subsequently ruled in MaltaToday’s favour, citing that it was in the public interest that the media had access to such documents.
Cachia Zammit and the Hambros Affair
The enduring saga of the Bank of Industry, Commerce and Agriculture (BICAL) has finally forged a clear chronicle of the personal vendetta at the heart of the suspension of BICAL’s banking licence and the systematic squandering of the bank’s and its associated companies’ assets under the administration of government-appointed controllers.
Cecil Pace’s testimony in a libel case instituted by former Prime Minister Dom Mintoff against MaltaToday editor Saviour Balzan over articles in which was stated that Pace was caught in a “personal vendetta, a web of deceit and Mintoff’s nationalisation frenzy,” has shed more light on the events which led to the closure of BICAL.
Hundreds of depositors had their monies frozen back in 1972 when Cecil Pace and his brother Henry Pace were charged with misappropriation of funds and forgery. Thirty-two years later, around 20 per cent of BICAL depositors and creditors are still waiting for their dues in a long drawn-out liquidation.
Financing l-Istamperija
For the past two years before BICAL’s closure in 1972, the bank had been regularly monitored by two in-house Central Bank inspectors, who had access to all banking records and transactions. Private banking was under scrutiny by the central authorities, and BICAL’s own unorthodox banking practices had been brought to the knowledge of then Finance Minister Guze Abela.
Everything would come to a head in November 1972.
The Central Bank was already probing into BICAL’s accounting records, monitoring a series of transactions which it deemed suspicious: the bank had been loaning out more and more money to Pace’s associated companies, too much for its level of deposits, a situation considered to be dangerous for its liquidity. In the eyes of the new Labour government, BICAL was serving as a cash cow for the financing of the Pace group of companies through the ‘money of the people.’
One of the more questionable transactions however would strike interest at Castille. Lawrence Cachia Zammit, the PN treasurer, had withdrawn close to GBP 360,000 from BICAL’s account with Hambros Bank. The entry would never be backed up in BICAL’s own books.
It is in fact the withdrawal which Karmenu Mifsud Bonnici, appointed BICAL controller when the bank’s licence was suspended, would question Cecil Pace about on 30 November 1972, in a meeting at Pace’s residence, five days following the closure of the bank, in the presence of Dr George Schembri, Henry Pace, and other representatives. Mifsud Bonnici questioned Pace about the discrepancy, about how the balance with Hambros bank had dwindled to GBP 274, whilst according to BICAL’s trial balance sheet for 18 November 1972, the account stood at GBP 353,000. Although Pace said he did not have an explanation for the discrepancy, he knew that Mifsud Bonnici is referring to an illicit withdrawal by Lawrence Cachia Zammit.
Cecil Pace in fact already had Cachia Zammit come aboard his yacht, the Kihna, sometime in November, to ask him about the discrepancy. Earlier on, Pace had received a phone call from Hambros Bank, warning him that BICAL’s account with the bank had been overdrawn by some GBP 360,000. Pace, baffled, saw that none of BICAL’s records had indicated any such withdrawal.
Cachia Zammit admitted to effecting the withdrawal without the approval of BICAL’s directors - part of the money would have gone to financing the PN’s fledgling printing press, another part going for the upkeep of his wife Angele’s expensive racehorses. The daughter of the late Count Bernard Manduca, Cachia Zammit promised Pace that his wife’s father’s inheritance settlement would soon sort out matters, and that he would repay the bank – a fact confirmed by Cecil Pace’s testimony in the libel case against MaltaToday.
Although following the closure of the bank Minister Guze Abela would say that action to close the bank had already been considered the 24 November, Cecil Pace claims, again reiterated to Magistrate Silvio Meli in his recent Court testimony, that on the 25 November, he had been in conference with none other than premier Dom Mintoff, Guze Abela himself, and deputy Central Bank governor RJA Earland, to discuss the deposit of GBP 1 million from a British financier, CG Winchester. New legislation introduced by the Mintoff government had barred any deposit over Lm25,000 without the approval of the Central Bank.
The payoff
The Hambros withdrawal would be presented in Court as evidence against Cecil Pace and Henry Pace by the police, as an example of the bare accounting records which the bank had kept. Although Pace kept the contents of the Lawrence Cachia Zammit letter secret until the start of his trial by jury in 1977, questions abound as to whether Karmenu Mifsud Bonnici, or Mintoff for that matter, had known that Cachia Zammit had been funding the PN through the BICAL reserves. What is sure is that the Central Bank’s inspectors must have known all the movements at BICAL and certainly the ones by Cachia Zammit.
Cachia Zammit himself, seeking forgiveness, wrote to Cecil Pace to thank him for covering up for him, saying he was “taken advantage of by political people” in the appropriation of the Hambros funds.In Court, Pace said he was formally proposed by Karmenu Mifsud Bonnici and Dr George Schembri in 1973, just a day prior to Pace’s arrest, when he was asked whether he would transfer half of his equities to nominees. In Pace’s Court testimony, he claimed that the nominees were Mintoff’s, “because Mifsud Bonnici and Schembri had been sent by him”.
“His proposal offers you advantages,” Mifsud Bonnici allegedly told Pace, referring to exclusive government contracts and permits to open branches all over the island. Pace refused to sign the share transfer, threatened by Mifsud Bonnici that he would be arrested.
It was a reverberation of a previous proposal first made to him allegedly by Anton Buttigieg, who had been dining with Pace at the Excelsior Hotel when it is alleged he asked BICAL’s president whether he would entertain the possibility of having Mintoff as a partner, attempting to entice Pace by claiming that Mintoff was “quite the businessman.”
The next day following the alleged Mifsud Bonnici proposal, on 6 January 1973, Pace was arrested, and subsequently placed under house arrest for four years before being sentenced to imprisonment.
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