It must be summer. The echoes of the resignation of Sea Malta chairman, Marlene Mizzi has unleashed an extraordinary amount of vituperation and bad feelings.

The country, any country, relishes the situation when somebody takes on a whole government, whether that person is the Ombudsman, or the Sea Malta chairman announcing her resignation and handbagging the government at one and the same time.

It is equally obvious that any government, or rather any shareholder, would react with fury at public declarations made by a chairman of a company explaining the reason for his/her resignation. Having said that, the Prime Minister is no ordinary shareholder and his reaction to Mrs Mizzi’s declarations on Monday was intemperate and unbefitting of his office.

One could argue that Mrs Mizzi should have offered her resignation in July last year when the government issued a call for expressions of interest rather than wait for the announcement of a pending privatisation sale. On the other hand, the shareholder who must have sussed out that Mrs Mizzi was in total disagreement with the overall strategy should not have allowed her to stay during such crucial times.

Apart from this extraordinary scene of public slagging, the whole issue of Sea Malta’s privatisation brings up very serious and crucial issues.

There is the first issue – the reason for the existence of the national shipping line in itself.

Let us look around us: does any country we know of have its own shipping line? Does Italy? Does the UK (which is an island)? Does any other country, except Iran and possibly China?

Most of the comments made over the past days expressed anguish and despair that the country needs a shipping line that can focus on the national interest, as other shipping lines will surely have commercial interests at heart and not the national interest. This, as this paper sees it, is a blinkered vision which goes back to the times when we thought that the national interest meant we had to have all kinds of national companies with =Malta at the end: Telemalta, Enemalta, Sea Malta, Air Malta, and so on. This is the kind of island mentality that thinks everyone else is out to get us and we must have national companies in place to plug the national interest.

Dating to the era (now long over) when the world thought of itself as a collection of nation States, and that the nation’s best interest was best ensured by a national (or nationalised) company, this has now changed to a very different scenario where globalisation reigns, where there are no national shipping lines any more but big private companies who employ Croatian masters and Philippine crewmen, and who have the economies of scale to make profits.

Can Sea Malta be turned around? Of course it could. But can it be turned around to take the kind of decisions it needs to take in this globalised world, even to the idea of employing Croatian masters and Philippine crewmen? Imagine the reactions.

Despite the efforts of its well-meaning board and management, the company was incurring losses. One of its ships is 36 years old, too old as the chairman herself told The Times. The company operates just a few routes, has very few ships and has far more people onshore than it has manning the ships.

The chairman herself was very aware of the situation. In fact, in her July 2002 report, the chairman put forward two scenarios:

A. It assumed that revenue and costs would increase by three per cent per annum, proposed that sea-borne employees work two months on and one month off, suggested that the shore-bound employees be cut from 70 to 40 and would still lose a further Lm1.9 million in addition to the losses already made. Dr Sant called this “a plan for salvation”.

B. That government puts in a Lm3 million injection (assuming this is allowed by EU regulations), jobs are lost, Lm1.3 million are lost over three years and at the end, in 2008, a Lm165 profit is made.

There is more. The company’s present net asset value, which as the story on Page 1 says, is now a negative Lm1.2 million, is only hypothetical. One has to actually see what would be the real selling value of the ships, how the creditors will be paid, and the bank loans paid back.

Mrs Mizzi has argued that the shareholder never invested more money in the company (while almost discounting the government’s bank guarantee as if this did not count) and claimed that she and her board struggled on despite not having received more than the Lm150,000 public service guarantee once for the Reggio Calabria route.

At the same time, however, her board adopted a rather cavalier attitude to government finances. “Our major creditors are government entities like the Malta Maritime Authority, which were patient with us,” she told The Times. Yes, MMA was undoubtedly very patient with Sea Malta: it allowed it to run up debts of around Lm180,000 (plus Malta Drydocks: Lm300,000, Port Work Scheme Lm400,000; MOBC: Lm350,000). OK, ordinary transaction business, one would say, but would any private company be allowed to run up those kind of debts and still find MMA ‘patient’?

One must not forget, too, that 32 per cent of Sea Malta belongs to private investors. So MMA, in being patient, was actually favouring those private shareholders at the expense of all other private companies, and of the Maltese taxpayers at the end. Where is the free market in all this, the level playing field?

Let’s put it this way: had Sea Malta been in the private sector, it would long have gone under the knife. For a private sector company does not look at the cash flow situation only but at the financial overall situation. A private sector company does not claim it has no injection of shareholder funds and at the same time survives because of ‘patient’ and complacent government bodies.

Had Sea Malta been anywhere near profitable, it would be very good to have a Maltese company in such a strategic role. All those wringing their hands over Sea Malta’s untimely demise should first ask themselves whether it is government’s role to replace the private sector, whether the government should get involved in commercial business or whether the Sea Malta experience is just another example of the distortions such government interference creates in a small economy such as ours.