Piero Ugolini and Richard Nun
We refer to Mr Anthony Curmi’s latest – but likely not last – letter (TMIS, 29 September) which says that we are audacious, arrogant, not independent and have benefited from direct orders from the Malta Financial Services Authority. As before, Mr Curmi’s conclusions are wrong and misleading.
The Court appointed three Maltese experts to review the case, which is a clear indication that it was impressed and influenced by our testimony. It also clearly indicates that the Court now questions the many unsupported claims of Mr Curmi.
Mr Curmi’s calculations and flawed conclusions cannot dispel four fundamental facts:
1. NBM had been badly managed by the controlling shareholders. This was known by Mr Curmi and Mr Alfred Mifsud, and their Barclays colleagues who were sent to NBM in early 1974 to help straighten out the bank and train the former NBM staff. This fact was known to CBM and the NBM Board of Directors, as documented in CBM inspection reports and Minutes of the NBM board.
2. NBM was illiquid. This was known by its Board of Directors and Executive Committee and is explicitly documented in Minutes of their meetings.
3. NBM was insolvent. This was known by CBM officials and the Deloitte accounting firm and is documented in both official reports and in the Deloitte audit report.
4. Only the Government was willing and able to step up and salvage NBM before a total collapse that would have had a severely adverse impact on Maltese depositors, the public and the economy. The fact that NBM shareholders and potential new investors were unwilling or unable to recapitalise NBM is clear evidence of this.
Other important facts for the Maltese public to hear and understand:
* We have never been given any orders, direct or otherwise, by the MFSA. We were engaged to conduct a review of the evidence and, based on the facts, to give an opinion as to whether the shares of NBM had value and, if so, whether any compensation was due. Any compensation we have received has been minimal and solely for our objective analysis and independent opinion; it is in no way linked to the outcome of the court case. It remains a mystery why Mr Curmi, a person who – in real-time as events unfolded was very critical of the bad management at NBM (see Alfred Mifsud’s evidence under oath in Court), is putting so much time and effort into rewarding failure, even though he claims to have no pecuniary interest in the case.
The controlling shareholders of NBM – the Tagliaferro group – owned about one-fifth of the total shares in NBM, and it was their recurring default on their excessive exposures to NBM (140 per cent of NBM’s capital base) that contributed substantially to NBM’s failure. If a judgement is awarded using Mr Curmi’s creative calculation of €400 million, the Tagliaferro controlling shareholders would receive the largest share, roughly €80 million: a rich reward for failure!
Any compensation to NBM shareholders would be an unfair and undeserved transfer of wealth to them from the citizens of Malta. How is that justice?
It is also important to note that the European Court recently rejected the Northern Rock shareholders’ claims of human rights violation based on facts and events very similar to that of the National Bank of Malta. The Northern Rock case sets very important precedents and benchmarks in the European Union financial sector.
We believe that – after weighing the facts – the Court, the Court-appointed panel and the Maltese public will reach the same conclusions as we did, namely, that NBM shares had no value and so no compensation is justified. We remain ready, willing and able to support our conclusions with facts, not fiction, or events from decades later.
Piero Ugolini is a former Assistant Director of the International Monetary Fund and Richard Nun is a former Deputy Director of the Texas Banking Department