Parliament approves dockyard and Manoel Island yard privatisation

The government laid out a three-line defence of the dockyard privatisation deal in the last hours of the eight-hour debate in the House which led to four consecutive votes that sanctioned the deal at midday yesterday.

On Tuesday, Minister Austin Gatt took what one might call the partisan approach, claiming the dockyard was Malta’s school of militancy.

The Prime Minister took the over-arching road when he spoke yesterday, claiming the dockyard had to be closed after the last restructuring plan, which cost Lm300 million, failed to work.

And Finance Minister Tonio Fenech, speaking last, took a rather technical road, replying to issues and questions raised during the debate.

Yesterday morning’s sitting also saw the participation of Marie Louise Coleiro Preca, Gino Cauchi and Stefan Buontempo from the Opposition benches.

Dr Gonzi remarked on a surreal atmosphere in the House, as if the Opposition lived in a different world, as if nothing was happening in Greece, as if so many countries were not battling to cut public expenditure and taking hard and unpopular decisions in the national interest.

The Opposition is inciting the workers and their families by claiming that the government should not have tackled the dockyard. While many dockyard workers worked hard, the yard’s fundamental problem was that it was overstaffed. This is acknowledged even in the Appledore Report and part of the overstaffing is certainly the result of the MLP administration in 1987 which employed 10,000 people with the yards in the weeks before the election. This added a burden to the yard’s problems from which the yard could never recover.

Had the present government really wanted to wreak vengeance on the workers (as the preceding speaker Gino Cauchi had implied) it would have simply closed the dockyard. Instead, it spent €50 million on an early retirement scheme in agreement with the GWU.

Looking back, Dr Gonzi said that with hindsight some decisions should have been taken earlier. In 2002-2003, (former) Prime Minister Eddie Fenech Adami had charged him to lead a task force with wide political membership to tackle the dockyard’s problems and prepare it for EU membership.

Many even then were sceptical. This task force included Joe Zammit as the representative of the Labour Party, Tony Zarb and the Metal Section secretary from the GWU, and John Cassar White, who had been appointed chairman of the dockyard council and had been retained there by the PN administration. Today, Mr Cassar White is a consultant for the PL (Dr Gonzi added he had expected that Mr Cassar White should have been at the PAC meetings on the Fairmount issue).

The task force proposed a seven-year restructuring of the dockyard and this plan was accepted by the EU. It approved that for the seven years the government could continue to subsidise the dockyard on condition that big reforms were introduced.

That was a good blueprint, Dr Gonzi said, which aimed to lose just Lm2 million in the last of the seven years, in other words, be near breakeven.

This is what the PN government offered, and no one from the Opposition benches had mentioned it. The mask is down, Dr Gonzi said, the workers were used and abused by the Opposition.

The plan recognised there was overstaffing at the yards and offered early retirement schemes in agreement with the GWU, to get the workforce down to 1,700 (not the 700 the Appledore Report wanted to bring it down to). This was a credible and acceptable plan.

But when restructuring was supposed to have been undertaken, obstacles were encountered. At first, it looked as if the right direction had been taken and the losses were cut down.

The government paid a huge price for this. It absorbed all the dockyard’s dues as otherwise the dockyard would have been declared bankrupt. The government took upon itself the dockyard’s dues, Lm300 million, and thus pushed up the country’s deficit from seven per cent to 10 per cent, on the same levels as Greece, Spain and Portugal.

Dr Coleiro Preca had mentioned the La Salle. But she did not add that it had to be Eddie Fenech Adami who spoke to the nation and told the workers that they either do the job or the dockyard loses money. The workers accepted and went to work.

Everyone knew they had seven years to get it right. But instead of more productivity, the workers raised hell on ‘walking time’, that is the hour and a half of every eight-hour working day they take to get to and from their place of work. There were also some 200 to 300 allowances, according to whether they work at a height of seven feet, 10 feet or 30 feet.

The dockyard tried to do conversion jobs and some such jobs gave a good contribution. But then the Fairmount contract came around and the PAC has investigated what happened.

When it became clear that breakeven would not be reached, and as another election approached, pressure was put on the government to go back to the EU and renegotiate the agreement.

But the government realised this would only be postponing the problem. So it decided to bite the bullet and meanwhile take care of the workers and offer them alternative employment. The government refused to renegotiate with the EU.

Had the EU rules been followed at that time, the yard would have been declared bankrupt and the workers would have got only what their collective agreement said.

But the government spent another sum of money to enable the workers to get an early retirement so that they could meanwhile find another job. Some have found employment with Lufthansa Technik Malta, others at SRT. Others did not do so well: the jobs they found paid less than what they used to get from the dockyard where they got as much in overtime as they got in wages.

The last 50 workers left were not sacked but offered jobs with IPSL hoping they could find a better job later on.

When the government issued a call for expression of interest for the ship-repair part of the dockyard, it was stopped by the EU which forced it to re-issue the call and reword it as a call for expression of interest ‘marine-related’ rather than restrict it to ship-repair. This shows how the whole process was closely monitored by the EU.

In the final part of his speech, Dr Gonzi referred to the questions raised by Dr Joseph Muscat on Monday.

He categorically denied that he or any member of his staff were at any time informed that someone was asking for money with regard to this deal.

But if Dr Muscat was referring to privatisation in general, yes, last September a person involved in a tender offer had claimed that someone had asked for money. These were not the two tenders under examination by the House (later on, Minister Tonio Fenech would reveal the tender in question regarded the superyachts facility).

Minister Fenech, who had been informed of the allegation, investigated but nothing was found. The privatisation process was stopped and all offers refused.

As soon as he returned to Malta from the Madrid summit on Tuesday, Dr Gonzi added, he called the Commissioner of Police and told him to investigate this claim. The investigations, he was informed, have already begun.

As stated earlier, Minister Tonio Fenech gave mainly technical details.

Many Opposition speakers had spoken of the dockyard’s price, saying it was sold cheaply for being a national strategic asset. But this ‘asset’ had always registered losses, Mr Fenech said.

Abroad, similar dockyards were all sold at very low prices, sometimes even going for nothing.

In his presentation to the committee, Mr Fenech had listed the sale price of each item: in many cases the price at which they were sold was larger than the price the government expected to get.

As regards the ship repair business, the government got three offers:

• Cantieri del Mediterraneo which offered upfront €100,000, a ground rent of €1.65 million a year and a 10 per cent share of the profits made.

• Palumbo offered €5 million, €1.66 million ground rent a year and also a 10 per cent share in the profits.

• CMA-CGM offered deferred payment of €32.5 million over 30 years, averaging €1 million a year, plus they added some conditions, such as that the government upgrades the site, and purchases state-of-the-art equipment.

The government considered these offers to be lower than expected, so it wrote to the bidders and gave them the opportunity to up their offer to a minimum €18 million upfront. The two bidders, Cantieri and CMA decided to come up with one joint offer. Palumbo remained on its own.

Palumbo offered €18 million upfront, and a rent just a little bit higher than the government was expecting, adding up to a net present value of €52 million.

CMA-Cantieri offered €19 million upfront but only after the third year and that it would not pay rent for the first two years. Its net present value was estimated at €23.5 million, or half that of Palumbo.

As for the Manoel Island Yacht Yard, there were three offers. The proposed bidder had the best offer. According to EU rules, the offer that must be accepted in similar circumstances was that which offered the best money. The winning bidder offered €13 million, against the €11.6 million of one and the €9.8 million of the other bidder.

In reply to what Dr Muscat said, Mr Fenech clarified that the former CEO of Malta Shipyards, Chris Bell, never had any role in the negotiations: he was not a member of the Privatisation Unit, nor was he ever involved in the negotiations. The only role he had was that, until 15 July, 2009, the date when he terminated his engagement at the dockyard, he supplied data on the dockyard to the Data Room and he took people round the facilities.

With regard to Dr Muscat’s second question, Mr Fenech said that last September an official reported that a person involved in the negotiations had approached a bidder and asked for money. This regarded the bidding on the superyachts facility.

Mr Fenech said he sent for all members of the Privatisation Unit and all categorically denied such an allegation. They also signed a declaration. The four people involved were Manuel Ellul from the Privatisation Unit and his secretary, and the two MIMCOL officials who were added ‘ad hoc’ to the team for the dockyard privatisation process.

Anyway, the bidders did not reach the expected money target and the bid was annulled, Mr Fenech said.

Contrary to what the Opposition was alleging, not only is the government not closing down the dockyard – it is giving it a new lease of life.

The first speaker in the morning session was Marie Louise Coleiro Preca who claimed that Palumbo has limited experience. Now that the government will not be subsidising the dockyard, how about some of the money it will not spend being given out in relief from the electricity rates?

The Nationalist Party was always against the dockyard. The government has been in office for 22 years, but it did not do enough to save the dockyard. First it let it wallow in neglect, now it is selling it for a song. The government is now blaming the dockyard for being a hotbed of militancy but it was at the dockyard that workers’ rights started to be esteemed even before that happened in Europe. This government even took six years to try and implement the Appledore Report drawn up on the orders of the Labour administration.

Dr Coleiro Preca ended by quoting words of praise by two US Navy officials for the splendid work done on the La Salle.

Gino Cauchi defended the dockyard workers as being hardworking in very difficult circumstances, as was shown in the Um el-Faroud tragedy and in the personal tragedies of those workers afflicted by asbestos.

It was at a similar dockyard in Gdansk that Solidarnosc was born: in Malta we praise that dockyard but heap abuse on ours.

He referred to letters sent by Eddie Fenech Adami and Lawrence Gonzi before elections, telling the dockyard workers there were no plans to close it down. After the election, they brought in cheap foreign labour and now kicked everybody out, sending them to work with IPSL.

In 2008, Forbes quoted the Prime Minister as saying that business interests from northern Europe, the US, China and Japan were interested in the dockyard. Now it is being given to Palumbo, which hails from Naples, said Mr Cauchi in barely repressed references to what Naples is notorious for. They only have two docks.

However, they must be good negotiators, seeing they took the dockyard for what amounts to €4,800 or Lm2,000 a day. When they took over the Messina dock, they did a lot of work through subcontracting and deaths even occurred.

Concluding, he asked if there was any link between the Fairmount job and the privatisation process.

Stefan Buontempo rounded up the discussion. He asked why the government did not follow the example of the Singapore government in the way it treated its dockyard. The government of Malta may act bullishly with the Maltese but then becomes a sheep when it deals with foreigners. Anybody could strike the deal which is being signed with Palumbo.

The present government incited the people against the dockyard workers, calling them lazy, while it was the Labour governments of the past that had solved the problems regarding the dockyard it was left with by the British colonial government.