BOV right of reply on La Vallette multi-manager property fund

Bank of Valletta's right of reply on reports appearing in MaltaToday on the La Vallette Sicav multi-manager property fund:

Bank of Valletta plc refers to the Annual General Meeting of the La Valette SICAV plc (the SICAV) that was held on 17 February, the proceedings of which have been widely reported in the press.

In accordance with statutory requirements, the meeting was convened to (a) consider and if thought fit, approve the audited accounts of the SICAV for the financial year ended 30 September 2010; (b) to appoint the auditors for the forthcoming year, and (c) to appoint the Directors, also for the forthcoming year. Following extensive representations by a number of shareholders, a poll was carried out entirely in accordance with the requirements of the Companies Act and the statute of the SICAV, and all three resolutions were approved, with over 75% of the eligible votes cast in favour of each resolution.

As reported in the press, although the Annual General Meeting related to all thirteen funds of the SICAV (which between them total over 22,000 shareholders), proceedings were dominated by matters relating to the La Valette Multi Manager Property Fund (the Fund).  The Bank of Valletta wishes, once again, to reaffirm its position relating to this Fund. However, before doing so, BOV wishes to stress that the issues relating to the Property Fund have not and will not in any way adversely affect the values or operation of the other funds in the SICAV, or indeed of the Property Fund itself. The legal structure of the funds in the SICAV provides for the separate patrimony and therefore the full legal and financial protection of each sub-fund.  Moreover, Valletta Fund Management, the SICAV manager, has informed the SICAV Board that, without prejudice, it will reimburse the SICAV for all legal, professional and related costs that may be incurred in respect of the extant Judicial Protests and related regulatory enquiries.

Bank of Valletta’s position relating to the Property Fund is as follows:-

Performance of Fund:  Bank of Valletta has already publicly expressed its sincere regret on the poor performance of the Fund, and of its unwavering commitment to continue to work with the SICAV Board and other parties in an attempt to secure for investors the best possible outcome in the circumstances concerned.

Right of legal action:  BOV absolutely respects the right of any shareholder to take issue with and institute regulatory and/or legal action against the Bank or any of its subsidiaries.  However, the Bank strongly believes that this should be done via the well established regulatory and judicial rules, processes and procedures, and not via an attempted trial by media, whereby the parties concerned seek to obviate the requirement to adduce evidence in support of their as yet unsubstantiated allegations.

Matters under dispute:There are a number of issues in contention between the parties, many of which are technical in nature, and some of them issues upon which reasonable people may form differing views and opinions.  The respective positions are set out in detail in the Judicial Protests and Counter Protests - all of which are public documents.  The Bank of Valletta concurs with the position taken by the directors of the SICAV that the AGM held on 17 February was not the proper forum for debating or determining the merits or otherwise of the respective legal positions of the parties involved. This ought to be determined solely by the application of the due legal process referred to above.

Complaints:  BOV also fully respects the right of each and every shareholder to file a complaint whether with the BOV Group and/or with the Regulator.  BOV has in place procedures - which are fully compliant with regulatory requirements - for the processing of such complaints.

MFSA investigation:  It is public knowledge that there is an enquiry or investigation being undertaken by the MFSA on certain aspects relating to the Property Fund.  As has been publicly acknowledged by the MFSA, this investigation is still in progress, and has not as yet been completed. The MFSA has stressed that “due process at law has to take place”.  Bank of Valletta believes that until such time as the investigation is completed in all respects, and that all regulatory and related processes have been followed, all matters relating thereto are bound by the strict rules of confidentiality that bind matters between the Bank and the Authority.  Accordingly, the Bank believes that it would be inappropriate to make any comment on details relating to the ongoing investigation until such time as this has been fully concluded.

Acceptance of responsibility:  All the shareholders in the Fund can rest assured that BOV will face up to its responsibilities if, following the application of the full regulatory and the due and proper judicial processes, it is found wanting in the conduct of the Fund.  And the Bank will face up to its responsibilities to all the shareholders in the Fund, and not just to those who have chosen to participate in the Judicial Protests served to date and/or who have chosen to file a complaint with the MFSA.  Accordingly, all shareholders will be treated on an equivalent basis in accordance with the outcome of the due and proper regulatory and judicial processes described above.

Redemptions in the Fund: Both the MFSA and the Bank itself are anxious to conclude enquiries concerning redemptions in the Fund at the earliest possible opportunity.  The Bank, having undertaken its own investigation into the matter, firmly believes that it acted properly and in good faith at all times, and that it took all reasonable measures to guard the confidentiality of deliberations that necessarily took place concerning the question of the suspension of dealings in the Fund.  The Bank is on public record as stating that it will take the most serious view if any individual within the Bank is shown to have acted in breach of trust concerning the use of confidential information.  The Bank urges all concerned to await the outcome of the MFSA investigation into this matter – an investigation to which the Bank is extending its fullest co-operation.  Until that time, it is grossly unprofessional and wholly improper for anybody to make wild and unsubstantiated allegations that assume that any investor who redeemed units in the Fund de facto acted improperly and/or had access to privileged information.

Finally, BOV wishes to reiterate that it understands and regrets the distress that all these developments have caused to investors, and by the poor performance of the Property Fund. However, it appeals to all concerned to conduct themselves properly, professionally and with all due decorum. Whereas the Bank respects the rights of all to institute legal action, and/or to otherwise invoke the regulatory authority, it has found the conduct of certain parties involved to be distasteful, unbecoming and unprofessional.

The Bank certainly has a responsibility to the Property Fund investors - which it readily acknowledges - but it also has a responsibility to its own shareholders, who are not necessarily the same parties.  The Bank is therefore duty bound to ensure that any claims in respect of the Fund, for whatever grounds and reasons, are fair and justified – and it is for this reason that full and due processes at regulation and at law must be allowed to take place.

It is entirely inappropriate and highly unprofessional for certain parties to attempt to coerce the Bank, and to shortcut this process by a self serving and high profile campaign of rumour, unsubstantiated allegations and unethical innuendo – and very actively seeking to damage the reputations of the Bank and certain of its executives. Such an approach is inexcusable, wrong and short sighted. 

Whatever the outcome of the current dispute, nobody will gain by actively seeking to damage the standing and reputation of the Bank of Valletta and its people – and by extension of Malta as a serious financial services jurisdiction. The Bank wishes to reassure both its shareholders and those of the Property Fund that it will, as always, fulfil its responsibilities in a fit and proper manner.