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Matthew Vella
BICAL controller Raymond Gatt has told MaltaToday that the value of the assets of the Bank of Industry, Agriculture and Commerce (BICAL) were “not sufficient to cover all the debts” of the bank when it was taken under administration in 1972 following criminal charges of misappropriation of funds brought against owners Cecil and Henry Pace.
In one of the first comments ever given to a newspaper by an administrator of the controversial BICAL bank, Gatt’s words have shown that little has changed in the justifications brought forward by the government administration for the long overdue liquidation of the BICAL assets.
The BICAL bank and its associated companies was taken under administration in 1972 and since then, 20 per cent of all the bank’s depositors and creditors are still waiting to be repaid.
There are as yet unanswered questions as to why the payment of less than Lm3 million in debt has taken over 30 years to materialise, but answers by Raymond Gatt, who took over as controller in 2003, have not proved to be substantial.
Gatt’s assertion that the BICAL assets were not sufficient to cover all debt is set against a backdrop of a wealth of commercial activity which owner Cecil Pace claims extended well over the value of Lm12 million. According to Gatt however, even in today’s prices, the assets which remain would not be sufficient to cover all the bank’s debts.
That statement may as well be very true: for the past 30 years, the BICAL assets and those of its associated companies were systematically squandered through neglect and maladministration by its previous controllers, namely Karmenu Mifsud Bonnici and Grant Thornton Malta founding partner Emanuel Bonello.
Mifsud Bonnici himself removed one of Pace’s most prized assets, the Comino Hotel, for exactly nothing. Valued at Lm1.5 million in 1972, the hotel had been purchased for Lm400,000 with a 150-year emphytheusis of Lm12,000 a year. Mifsud Bonnici gave the hotel back to Comino landlord John Gaul for free, justifying the action because of the annual rent which had to be paid to him.
Commenting on the prolonged liquidation of the bank, Gatt said that the process was considered to be normal: “It is true that the liquidation of BICAL has taken long. It is normal that such a complicated process takes years to be finalised. It is also true that the Pace brothers have instituted numerous cases which did not help matters move faster… There are certain legal cases instituted by the Pace brothers which have taken between 15 to 20 years, and in which they haven’t yet presented all their proof.”
“We had no alternative,” Cecil Pace comments. “When we saw things were not being done properly, when we weren’t being given information on the state of our assets by the controllers, we had to take legal action, and that’s so nobody could say we never complained about the state of affairs in the entire 32 years of administration.
“To top it all, in 1995 the Fenech Adami administration exonerated the controller from all prosecution,” Pace says, referring to the law which had found support from both sides of the house, rendering the controller, including Karmenu Mifsud Bonnici, immune from prosecution.
“If the controllers were honest, they would have answered our questions. If they were honest there would have been no need for the legislation which absolved them from all wrongdoings. After all, they were given a responsible job with an adequate compensation.
“I’d like to know why a supposedly bankrupt bank should take 32 years to be liquidated. If creditors are being paid up till this day, then the assets do exist, that’s for sure.”
As far as controllers are concerned, the previous administrators – Karmenu Mifsud Bonnici and Emanuel Bonello – presided over a questionable strategy to ensure that they freed the Bank of Industry, Commerce, and Agriculture (BICAL) from all its debt, when it was first taken under administration when owners Cecil and Henry Pace were charged with misappropriation of funds back in 1972.
Gatt did not comment on Mifsud Bonnici’s and Bonnello’s ethics when it came to handling the BICAL bank and its myriad of associated companies – property development, yachts, shipping, hotels, car dealerships, and factories.
He told MaltaToday however that he is looking forward to a finalised solution for the remaining 20 per cent of depositors and creditors of the BICAL bank.
“Today 80 per cent of BICAL depositors have received their capital investments back. The controller is working to ensure a liquidation of the bank and its companies in the shortest time possible so everyone can get what they deserve. There are ongoing discussions with the Pace brothers, although they expect their depositors not to be paid any interest. The controller is in the process of obtaining legal advice on the matter. Naturally any decision taken by the controller is subject to appeal from the depositors – the law specifically contemplates the possibility of having such appeals forwarded to an Appeals Board which can definitively regulate the liquidation of the bank.”
Gatt said the question of paying interest to BICAL’s depositors was not a simple matter: “Normally, bank deposits carry with them interest. The Pace brothers however are presenting legal arguments so that interest is not payable to the depositors. Naturally, it would not be wise for the controller to express himself on such a question at this stage.”
“The problem are the controllers’ fees,” Pace responds. “Even more aggravating is the fact that assets were sold for nothing or given away for free; payments for properties were never chased, only a deposit was collected. Like depositors, we as shareholders in the BICAL associated companies are owed Lm2.2 million in advances we forwarded from the bank to our companies. Much of the administration fees taken by controllers have squandered all the interest that our clients would have been owed, and have now eaten into the money we are due. Interests are payable only when a bank is functioning. How can one pay interests from the capital itself.”
matthew@newsworksltd.com
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