The Maltese public should be reminded of the injustices inflicted upon the shareholders of the Malta & Europe Hotels Limited (MEH), owners of the former Grand Hotel Excelsior in Floriana.

This 35-year saga traces its origins to the notorious crack of the BICAL Bank in 1972 and the appointment of a Controller (first in a series of Controllers) to administer the bank.

As a precautionary step, the Controller assumed the control of all BICAL’s associated companies indebted to the bank, as well as control of MEH (not an associated company of the BICAL Group) due to its indebtedness with BICAL of about Lm500,000. Fair enough, one would think. According to the terms of his nomination the sole duty of the Controller was to administer the Excelsior Hotel, generate enough revenue, repay the BICAL loan in full with interest, and at that point return MEH to its shareholders and directors to resume the exercise of their constitutional rights.

Magari – as the Italians would say.

The hotel’s audited accounts show that in 1978 cash in hand stood at Lm1.8 million. At that point the Controller should have settled the BICAL loan and relinquished his controllership, as he did with various other BICAL associated companies. Instead, the Controller completely disregarded the protests of the shareholders / directors and retained control of the hotel. He used up all the hotel’s cash reserves and finally sold the hotel, by then in a dilapidated state, to a foreign buyer for Lm2.5 million in 1991.

As a first step, the Controller settled the company’s tax arrears of Lm219,000. He then started a long debate between himself as MEH Controller and himself as BICAL Controller (incredibly the Controller also had been appointed Controller of the BICAL Bank). Finally on 4 December 1998, seven years after the sale of the hotel, the Controller of the BICAL Bank issued, in favour of MEH, a receipt in full and final settlement of the existing bank loan with interest. This receipt was for the sum of Lm1.5 million. Originally, in 1972, the loan had stood at Lm0.5 million. The law states that interest on a bank loan cannot exceed 100 per cent of the loan. Therefore, at best, the loan should have been repaid at Lm1 million, i.e. Lm0.5 million x 2. But in the Excelsior case, there was no legal way to contest the Controller’s arbitrary and unethical decision that was to the detriment of the MEH shareholders. He was a creditor on one side and a debtor on the other.

The Italian majority shareholders, the highly respected Martone family represented by 83-year-old Dr Michele Martone, have waged a constant battle against the Maltese authorities denouncing these scandalous acts. High-level meetings were held with the Prime Minister (Minister of Finance), the Central Bank, the Malta Financial Services Authority, the various Controllers (Dr K. Mifsud Bonnici, Emanuel Bonello, Raymond Gatt) and the liquidators (Dr Michael Frendo, Dr Robert Tufigno). And yet this sordid saga drags on, 35 years after the BICAL crack.

In a democratic European country, under normal circumstances, Parliament would have set up a Commission of Inquiry to investigate why the BICAL depositors are still waiting for their final payment of deposit accounts 35 years later, and why a foreign owned company (MEH) is still in the hands of a Controller and Liquidator when it has had no outstanding debt with BICAL since 4 December 1998, when the Controller of BICAL issued a receipt to MEH in full and final settlement. To this very day, seven years later, the Controller anomalously retains his controllership of MEH. Where is the logic of his controllership?

Parliament did not set up a Parliamentary Commission. Instead it enacted a law that gave blanket immunity to the Controller for all his deeds and actions with retroactive effect. Therefore if gross mismanagement were to result, the Controller cannot be sued and held liable. As the saying goes: Yes but not in Malta.

Does anyone recall the artificial crisis that hit the former National Bank of Malta? The government stepped in and set up the present Bank of Valletta. Let us consider a different scenario. The government steps in and appoints a Controller for the National Bank. The Controller takes over all major hotels, industrial and commercial entities indebted to the bank. Today, after over 30 years, the Controller is still in command. This could never happen, you would say. Think again – this is exactly what happened to BICAL Bank and to Malta and Europe Hotels.

The time is long overdue for a showdown. Parliament should intervene and review the controversial Immunity Act. A Commission should be set up to investigate allegations of mismanagement, written agreements which have not been honoured – in particular where a former Minister of Finance guaranteed in writing on behalf of the Maltese government.

The Martone family have decided that enough is enough. They are petitioning the European Parliament, the Council of Europe and the Italian authorities to seek redress. The negative publicity and irreparable damage to Malta’s image, as a safe country for foreign investment can be devastating. Thirty-five years is far too long to wait for justice to be done.

I have purposely refrained from commenting on:

a) the running court battle between the Pace Brothers and the Martone family regarding title of ownership of the majority shareholding in MEH, even though the courts have consistently confirmed the Martone family as rightful owners;

b) the role played by Prof. Ian Refalo LL.D. in the management of the funds, derived from the sale of the hotel, which were held at the Central Bank in an account commonly referred to as the “Ian Refalo Account”. A detailed and documented statement of this account’s management over the years would be welcome.

Indeed, the literary epic Forsythe Saga is a non-starter compared to the Excelsior Saga.

Prof. Baldacchino is an ex Member of Parliament.