More than meets the eye in Malita’s changing of the guard

No formal company announcement has sanctioned the replacement of the board of directors at Malita Investments plc, the special purpose vehicle that finances the City Gate Project.

But the irony of the replacement yet to take place - putting Paul Bonello at the helm instead of Kenneth Farrugia - has business observers' eyebrows raised.

As partner of Finco Treasury, Bonello led an indefatigable campaign against Bank of Valletta to recoup over €15 million (before cost of recovery from third parties) in lost savings from the La Valette multi-manager property fund, a fund managed by a BOV subsidiary, the Valletta Fund Management and Valletta Fund Services.

That Kenneth Farrugia happens to be a director of VFM and chief officer of BOV Group's fund services, evokes the suspicion that there is more than meets the eye in the choice of Bonello - who addressed a Labour mass meeting the 2013 election in support of the party's bid for power - to replace him at the helm of Malita.

Successfully, Bonello stood up to the bank's infallible status when after two years of judicial protests and a legal case still ongoing in the Maltese courts, the financial regulator ordered a full reimbursement of La Valette investors' savings from the property fund. The bank has always disagreed with the decision, insisting that it never breached investment restrictions as interpreted by the Malta Financial Services Authority. It also offered a €40 million conditional compensation, which later had to be topped up by an additional compensation ordered by the MFSA.

In a comment to MaltaToday, Kenneth Farrugia said last week that Malita Investments had not issued any company announcement, meaning that the board complement remains unchanged.

"As you are aware Malita Investments plc is a listed entity and as such is governed by a very strict code insofar as the appointment of directors and senior executives are concerned. In fact, on the basis of the MFSA's Listing Rules, changes to the composition of any member of the board of directors of a listed company, requires the issuance of a Company Announcement which is thereon published on the website of the Malta Stock Exchange," Farrugia said.

Malita Investments finances the €82 million City Gate project by issuing bonds to the public, and receiving rents from the land leased to Malta International Airport plc, and the Valletta Cruise Terminal.