The IT and Investments Ministry yesterday issued an angry statement in connection with the latest incident in what has now become the Sea Malta saga, claiming that the surprise profits for the year ending March 2005 are nothing other than the result of creative accounting.
Ministry sources told The Sunday Times that an inquiry will be carried out into, what Minister Austin Gatt described as the “monkey business” that led to the posting of a tidy Lm276,633 profit. This translated into an Lm2.72 million turnaround from the company’s negative balance of the previous year.
The accounts were approved by the board of directors on 13 July.
The results show an operational loss on part of Sea Malta of Lm876,535, during the financial year ending March 2004 and Lm412,668 in that ending March 2005, the statement said. These are related to the company’s operations and exclude what are known as impairment losses.
However, these last accounts were turned into positive ones. What “the person” did was to revalue one of the company’s ships, the Maltese Falcon – more than ten weeks after the closing of the financial year on 15 June 2005. The French company entrusted with this revaluation has raised the value of the vessel by Lm666,647, which in turn – in accordance with the way books are kept – were absorbed as cash funds. Therefore, from a real loss of over Lm400,000, the company ended up making a virtual profit of over a quarter of a million liri.
“Whoever interprets this as some sort of recovery on part of the company, would be doing nothing other than twisting facts.” The company has really registered a loss in both 2004 and 2005, so much so that that the accumulated profit and loss account shows a loss of over Lm4 million in tandem with a deficiency in the net assets, even after the new evaluation is taken into account.
The statement said the revaluation was carried out by a company in which the Ministry has little faith, primarily because ships usually depreciate and do not increase in value. Furthermore, the same company had decreased the value of the same ship by Lm800,000 in 2004.
The Ministry also commented on what was described as worrying circumstances. To this effect, the statement mentioned the fact that the revaluation was done 10 weeks after the financial year had ended, which changed the results dramatically.
In addition, the Ministry said that a revaluation was ordered again when the ship had been valued the previous year and that the whole matter took place shortly after the privatisation unit had signed a preliminary agreement for the sale of the same company based on the value known at the time, that is, that of 2004 and the Opposition leader had recently said in a speech that the company (Sea Malta) was doing well.
Moreover, the statement made reference to comments made by chairman Marlene Mizzi on the matter, saying that she knew of the whole matter but did not want to breach confidentiality.
“While the Ministry disagrees with this statement, it so far has no proof that Mrs Mizzi breached confidentiality and therefore has to conclude once again that it is a simple coincidence that her arguments and those of the Opposition leader are the same.”