Over 94% accept Bank of Valletta offer

Over 94% of La Vallette multi-manager property fund shareholders have accepted BOV's 75c share offer.

30 June 2011, 12:00am
by Matthew Vella

3 min read

Bank of Valletta announced that its conditional 75c share offer to investors in the La Valette Multi Manager Property Fund closed as scheduled this afternoon, with acceptances amounting to 94.4% of investors in the fund - representing 95.2% of the shares in issue.

The bank said payments of the amounts due are being processed, and will reach those investors who accepted the offer by not later than Wednesday, 6 July 2010.

Many of the fund's investor were expected to take hte offer after Finco Treasury Management director Paul Bonello and legal advisor Ian Refalo told investors last week that any litigation against the bank would be too costly for investors to undertake.

The BOV offer, which pays 65% of the original share value of the fund's investments, binds signatories to waive all legal claims against the bank on the strength of two investigations the financial regulator has yet to complete on the property fund.

“Obviously, I’m not surprised that the offer was accepted by the majority of investors. The small investors had no other alternative… it’s a shameful episode that will leave an enormous impact on the psyche of the Maltese investor,” Paul Bonello told MaltaToday.

“The entire banking sector will suffer… investors had to accept the immoral offer from BOV. I could not ask many of the aged investors to spend 15 years in a court litigation against BOV.”

Bonello also said the impact of the property saga would be felt on the regulator, the MFSA. “The regulator did not use its legal powers to order BOV to suspend the offer until it completes its other investigations… and it could have asked the Courts to determine a fair compensation from BOV to the investors.”

BOV said the share offer would cost the bank €45 million, including €14.5 million in compensation. The bank says the offer was a “non-confrontational and expeditious closure” to the judicial protests by investors who held the bank responsible for the way the property fund, once valued in excess of €84 million, was depleted to some €24 million in 2009.

Bank of Valletta has been fined an administrative penalty of some €350,000 for breach of investment services rules over the administration of the La Valette multi-manager property fund, which lost €50 million in value. The bank said it will be appealing the decision.

The Malta Financial Services Authority fined Valletta Fund Management – BOV’s investment arm – €149,821 for “failure to act with the level of care and diligence required of licence holders with regards to the conduct of their business.”

VFM was found to have wrongly applied its own investment restriction which prohibited the fund from investing in other real estate funds whose debts were leveraged at more than 100% of net assets: meaning, having too much debt to survive a downturn in value.

Specifically, it was a €17 million investment in the Belgravia European Property Fund - that was geared at over 100% - that is suspected of having lost in excess of 90% and is today estimated at €1.3m, while other investments originally valued at some €47 million fell to €18.5 million.

The regulator also said VFM did not “properly monitor its delegates” – Valletta Fund Services and Insight Investment Management – on applying the restrictions, and failing to maintain adequate records.

BOV was itself fined €197,995 for the wrong application of the investment restriction, and for not making accurate reporting in the property fund’s annual financial reports for the years 2006-2009.

Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...

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@ Cool Breeze - thank you for your suggestions re complaining to the Ombudsman re the MFSA. It honestly did not occur to me, so thank you. As for finding the other 41 complainants, I have gone to the press in the hope that I will get a response from the others. I have no names whatsoever except for a few I came across on the following ws which I check regularly in the vain hope that someone makes contact. It would be interesting to see what the other 40 complainants have to say and if all have been sold the PATF No 2 by the same person at GLOBAL CAPITAL: http://www.sellendowments.com/news/investment/tep-funds-windfalls/comment-page-1/#comment-271

Joseph MELI •

Dear Candy Floss, You make an assumption that I am persuing my legal complaint against the BOV and that I am attempting to bring such an institution "to its knees"for indeed,whilst not empowered with great intellect, I nevertheless do think standiing up,also that I have faith in the judiciary(I was born at night -but it wasn't last night!)!In actual fact I am applying for a judicial review of the MFSA per se given that entity's massive flaws ,failings and shortcomings in protecting(sic) the consumer.Secondly,irrespective of the advice you received from the Ombudsman,you appear unaware that if you actually lodged a complaint with that entity against the service ,or lack therof,provided by the MFSA , the Ombudsman is then duty-bound to investigate such a complaint-and FYI there are two(2) such complaints I have lodged with the Ombudsman against the MFSA,and in particular their Consumer Complaints Manager, currently under investigation.Am I being disingenous in all my attempts to secure redress-,in all probability -yes ,but am I attempting to seek redress by not lying down and meekly accepting their bovine excreta -most definitely not ,I would argue.I am hearing a lot of questions but no answers or what cannot be done or how futile it is to attempt redress and recieve some form of demonstration of accountable probity for I am regularly and persistently confronted with a wall of indifference and disdain to overcome in achieving such long-shot objectives ,but nevetheless I will go down fighting and let them know they have been in a fight into the bargain-irrespective of how guileless, artless or costly this may appear-and its cost plenty already!For I ask a question now-what is the alternative?Yes I know its GLOBAL CAPITAL ,as this disgraceful investor's employer, who are ultimately culpable but they will merely cite unawareness or lack of knowledge of a "loose-cannon" ,so to speak,within their midst in your case ,so sadly it is up to you to prove negligence or non-adoption of policy or protocol(and why not try to form a consortium with the other registered 41 complainants -for who knows how many more effected investors may then come out of the woodwork ?)why not go out after this still un-named rogue trader initially as an individually named wrong-doer?aHowever,as you are undoubtedly aware, you would need to prove the points -and have all allegations to hand -that you raise against her.I dont profess to know any answers but I do know that I will not go lightly into that deep night but kicking ,sceaming and rebelling all the way however daft or pointless this may eventiually prove be!To strive,to seek ,to find but NEVER TO YIELD OR SURRENDER-until all hope is lost!

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@ Cool Breeze- my first stop two years ago was actually the Ombudsman where they recommended I lodge my complaint with the MFSA. As for the Financial Advisor in question, this was not an independent Financial Advisor but a GLOBAL CAPITAL advisor and therefore I believe that GLOBAL CAPITAL should bear the brunt of the implications and if then GLOBAL CAPITAL feels that she acted not in accordance to their policy or instructions then it's up to them what to do with her. In the BOV saga it finally boiled down to their financial advisors and their dodgy advice but still BOV should and was rightly held responsible. As for putting up a fight, do you really believe that the law courts are in any way impartial? Do you think that our law courts will ever bring an institution like BOV on its knees? I personally think that that's a very naive view of the local landscape. Sadly, besides simply not being able to afford a lengthy legal battle I do not share your faith in the Maltese judiciary!

Joseph MELI •

Dear Candy Floss, You are preaching to the converted but all you are doing is identifying the obvious -what t are you doing to rectify or remedy matters?You never said if you lodged an objection against the MFSA with the Ombudsman which is one method without any financial restrictioons or implications nor did you name and shame this financial advisor involved in your sad case working there now-what are you frightened of?I appreciate that all you say about the MFSA is bang on the button and that they are partisan and in cahoots with the very entities they are purported to monitor ,scrutinise and regulate-this aptly named "NETWoRK OF FREEMASONS" but I would move heaven and earth to not go down without a fight(as I am demonstrating in the La Valette Fund debacle)eevn though treu be known I can't afford it -but what's the alternative?Roll over and die perhaps?In your case it would simply be against an individual and not a national institution with big clout and would mor clearly highlight the hypocrisy and conflict of interest culture which permeates the MFSA-an acronym for MALTESE FINANCIAL SYCOPHANTS AND ACCOLYTES.

Toninu •

It has indeed been a sad day for investor protection in Malta as Paul Bonello of Finco said. We surrendered our shares to BOV against our will, because we had no choice. Either accept the offer or take BOV to court and bear all the expenses. How is that for justice ? The MFSA is just peeing in its pants, it did not have the strength nor the integrity to put its foot down and dictate to BOV, no, on the contrary, it bowed its head low and succumbed. And what about the Government, what about Tonio Borg ? He portrays himself as being a 'cuc' but a very clever one ! Well round and round the garden goes the teddy bear ! And all the financial experts at BOV/VFM got away with all their blunders while it is our pocket that continues to bear the brunt.

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@Cool Breeze - yes, we could do that and engage in a lengthy, expensive legal wrangle which we can ill-afford, but why is there an Authority in the first place? All over Europe people who have been mis-sold dodgy investments have gotten redress by their respective country's Financial Authority/Ombudsman without incurring more expense and anguish in their law courts. Why put in place a mechanism (MFSA) that is actually an authority in name only? How can the MFSA objectively investigate institutions, products and/or individuals it has licensed itself? That would be quite like openly admitting its uselessness and ineffeciency. In our case, employing a Financial Advisor who has a standing complaint against her at the same MFSA thoroughly takes the biscuit!

Joseph MELI •

FAO-CANDY FLOSS, This siimilar case to the La Valette Fund fiasco has been largely overlooked due the relatively small number of investors-which most certainly does not excuse the actions of Global Capital or the so-called financial advisor or the MFSA .Have you registered your complaint with the Ombudsman to investiagate the actions,or inactions of the TOOTHLESS AND TAME WATCHDOG-MFSA-in this matter-as the MFSA is duty bound( as is the Ombudsman) to investigate all complaints and provide answers"WITHOUT UNDUE OR AVOIDABLE DELAY"(as shown in their respective mission statements)especially the disgraceful Consumer Complaints Unit -Managed by that great defender of the consumer Mr.Geoffrey Bezzina?It appears that the female advisor(!) in this debacle is now engaged at the MFSA so go after her alone and initiate proceedings solely against her-and name and shame these people.

Adrian Pace •

This is what happens when you live in a country where there is no separation of powers. A) The government is a major shareholder of BOV. B) The regulator (MFSA) is also chosen by the government. C) The judiciary is also chosen by the government. Therefore isn't it obvious that the machinery will work in favour of BOV. I will be surprised if there will be any scapegoats in this saga but I doubt it as all maneuvers have managed to quieten down the public. If Maltese people really wanted a change, we would have been protesting in front of parliament but we have been tamed by our bipartisan political class. Hooray to the oligarchy.

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Ezempju iehor ta' min huwa l-aqwa ihawel. Tghid ghad jigi zmien li tibda tigi amministrata il-Gustizzja bis-serjeta fuq din il-bicca blata? Min huwa ic-CUC f' din il-Kawlata ?

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@ Silent Citizen - Well at least you were probably informed of the volatility of the HSBC China Fund! GLOBAL CAPITAL flogged the PATF No 2 fund as 'SAFER THAN A FIXED DEPOSIT ACCOUNT' and 'CAPITAL GUARANTEED' only to lose more than 40% of its value to 'safeguard' the investors. Losing 40% of our life savings definitely does not constitute 'safeguarding' us...and the toothless, gormless MFSA is still 'investigating' 2 years after the fallout. There are 41 complainants regarding this unethical, negligent mis-selling of this product by GLOBAL CAPITAL and we are still waiting for the MFSA to wake up and smell the coffee...If this is not a straightforward case of mis-selling I don't know what is. Imagine purchasing the 'safest' investment there is and waking up to a -48% wipeout of your money...not to mention the psychological toll knowing that your life savings have been squandered away by a greedy 'Independent' Financial Advisor!

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Jidher li l bank hadd ma jista ghalih u l investituri kellhom jaccettae. Dawn l investituri zghar ma kellhomx flus li ifitxu l bank bil qorti. Biss issa baqa haga wahda................. x passi se jittiehdu kontra dawk in nies li mexxew il fund. Jew ghax dawn huma partita nzazzjonalisti ma jigri xejn imma jekk cashier imur short isalbuh. Nistennew risposta mil bank

Mark Fenech •

Kontra qalbna kellna naċċettaw, imma issa riedu naraw x'jagħmel ic-Chairman ta' MFSA dwar iż-żewġ rapporti l-oħra - insider information u misselling procedure. Għalhekk il-każ għadu miftuħ minkejja li l-MFSA ma kellhomx ħila jgħidu lil BOV stenna naqra sakemm nispiċċa r-rapporti. Issa giethom l-għaġla, wara li damu 3 snin jgħidu li kollox kien sewwa minn naħa tal-BOV. Aħna tlifna imma l-BOV sejjer jkun l-akbar tellief, għax issa jara l-azzjoni li sejrin jieħdu dawk li sofrew u ffirmaw bir-revolver ma rashom.

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While a lot of fuss is being done on this Fund, nobody mentioned the Euro China Bonus Fund which was administered by HSBC Malta. The fund was a failure from the first days, in fact, as it did not make any income in the first year the Bank (arrogantly) deducted its administration fee from the number of shares one had. The value of the fund kept going down and down. The only hope is that when the fund matures at the end of this year investors will have their money back, plus some 1 or 2% addtion to it, after five years investment.