I have noted Alfred Mifsud’s comprehensive arguments, in his opinion piece of 15 July, against any form of compensation being given by government to ex-National Bank of Malta (NBM) shareholders. His presentation in tabulated form exposing his thoughts on 12 different aspects is highly professional, evidencing an analytical mind which I myself admired at close quarters when he worked in a department I headed way back in the early seventies when we were both Barclays Bank employees.

So as not to prejudice in any way the ongoing discussions between the government and the NBM Shareholders’ Association, I will refrain from commenting on his ‘against’ arguments except in one case. This is his counter-argument to the comment made over the years by various people that the run on the NBM was engineered by ‘who knows who’ with malicious intentions. Mr Mifsud rightly asks, “where is the evidence?” This, I feel, is the smokescreen that nobody, over the past 40 years or so, has been able to see through.

Only those who were around in December 1973 − and especially whoever, like myself, was close to developments in the local banking scene at the time – can attempt to hazard a guess as to what were the real circumstances that led to the run on the NBM group. Prime Minister Dom Mintoff himself appeared on prime time MTV referring to a ‘stampede’, which, if not stemmed, could well have brought the downfall of the NBM Group. At the same time, he exhorted depositors to hold back as he contended that the run was uncalled for. The fact that this did not stop the run probably proves that it would probably have been better had the Prime Minister kept quiet, more so after he himself had said that he had prevented parastatal bodies from withdrawing their funds.

Such a statement was prone to be interpreted as a veritable government held sword of Damocles hanging over the NBM as the sudden withdrawal of +Lm4 million in deposits of parastatal bodies would certainly have created serious liquidity problems for the bank and doubtless would have accelerated the run. More so when it was common knowledge that, in certain quarters, the word was going round urging NBM depositors to withdraw their funds from the bank rather than the contrary impression given in the course of the Prime Minister’s statement on MTV! Thus, whether or not there was any malicious intent behind the run on the NBM remains a very debatable point.

Having said that, I wish to comment on the heading of Mr Mifsud’s article entitled “Who will protect the taxpayer?” as also on his argument that “an out of court amicable settlement will be unjust to ex shareholders or the taxpayers”. The shareholders have nothing to fear from this, as the value of their shares in BOV should not be affected. In a letter I wrote some weeks ago published in another section of the print media, I suggested that this could be financed by the government either partially disposing of its +25 per cent shareholding in BOV or even transferring part of this holding to ex NBM shareholders in compensation on simultaneous withdrawal of the three long outstanding court cases. I do not see how a simple transfer of BOV shares should affect the intrinsic (market) value of holdings of all other shareholders.

As regards the cost to taxpayers (with whom I include myself) the effect would be no different to what would happen were the Courts eventually to decide in favour of plaintiffs. Did not the taxpayer pay for the compensation paid to Dom Mintoff on winning his damages claim in regard to his Delimara summer villa? In any case, what should be borne in mind is the fact that government – i.e. the taxpayer - as (initially 100%; later whittled down to +25%) shareholder in BOV has reaped no less than over €185 million by way of dividends and proceeds of share disposals. This figure has been calculated by me and can be substantiated from records available to the public. It even excludes the premium derived by the Malta Development Corporation upon the disposal in 1975 of approximately 20% of its holding in BOV. Moreover, the current market value (@ €2.05 per share) of government’s BOV shareholding exceeds €142 million. So, in all, the taxpayer has reaped €327 million on an initial government investment of €7 million (Lm3 million).

It is public knowledge that some years ago the government made an initial offer of Lm7/8 million (€16.2/18.6 million) to ex NMB shareholders. I understand that this was refused as it was considered that justice would not have been done. It remains to be seen whether good sense will prevail this time round now that ex NMB Shareholders have appointed a negotiating team to endeavour to find an amicable solution with the government in the hope that justice will finally be done.

There must be a reason why endless court proceedings have dragged on for so long (the first case was instituted 36 years ago!). Nobody can deny that justice delayed is justice denied.

Opportunity is taken to clarify once and for all a point that has been made by other correspondents as to why Barclays Bank did not offer to bail out the NBM group in 1973. I can speak on this without fear of contradiction because, at the time, I was very close to fast moving events having been an assistant to Barclays Malta’s then head Louis E. Galea. The government did attempt to induce Barclays to join forces in setting up a new bank to assume the activities of the NBM on condition, of course, that the government had a majority (controlling) shareholding.

But Barclays held back as they saw through this proposal bearing in mind that the then government at the start of its legislature in 1971 had solemnly declared that all foreign interests in banking, broadcasting, telecommunications and oil had to come under government control. It was clear that Barclays, Rediffusion, Cable & Wireless, BP, Esso and Shell were in for it. Thus, once it was clear to Barclays that its local banking business was to come under government control (as eventually happened in 1975), there was a great risk that any involvement by Barclays with the NBM (again with government majority control) would present government with a sitting duck for both banks later to be fused into one bank. It was no secret that Dom Mintoff had been toying with the idea of Malta having just one bank, enabling the government to have a say in deciding the banking needs of all Malta’s commercial activities.

Had that happened, the image of Malta’s banking would undoubtedly have suffered greatly because the concept of one government controlled bank was a principle found only in communist countries. Fortunately, for the good of Malta, Barclays were smart enough to avoid falling into the trap.

Finally, it is well for readers to know that when the NBM closed its doors to the public for a whole business day on 12 December 1973, Barclays undertook, in the course of a late night session with top Central Bank of Malta (CBM) officials the previous day, to play a unique role in preventing a complete collapse of the local banking system by accepting – without any assurance that they would be reimbursed their face value – to honour all cheques drawn on any of the three banks comprising the NBM group. The CBM could not give an undertaking that such cheques would be honoured through the normal inter-bank clearing system but, once the NBM re-opened (initially for limited banking services) under the aegis of a Council of Administration, Barclays were duly reimbursed.

So much for the record.

Anthony R. Curmi

ST JULIAN’S