Government slaps fishing cooperative with judicial letter over unpaid loan

The government has slapped a fishing cooperative with a judicial letter after it failed to pay a €95,407 loan granted in 2002.

In comments to MaltaToday, the fisheries department confirmed that Ghaqda Koperattiva tas-Sajd has not repaid the loan and “the cooperative has been served with a judicial letter filed in court for the repayment of the loan.”

The loan was made in 2002 for a project to set up a freezing/cold storage and packing facility, which the department said was to enable fishermen “pack their catch in an approved establishment and seek markets abroad.”

However, these facilities, including a cold room, are not being used and the cooperative’s secretary, Pawlu Piscopo, said that separate legal proceedings are impeding the cooperative from using the facilities in Marsaxlokk.  

Piscopo said that the cooperative had asked for an extension to repay the loan before the 2013 election, which was duly granted by the then minister responsible for fisheries, George Pullicino.

He added that a similar agreement was reached with the Labour government following the election. However, he said that “now after MaltaToday’s probe, the government has demanded immediate repayment.”

In reaction, the government said it was never approached after the 2013 election about any agreement.

Piscopo said that the cooperative has replied to the government through its lawyers and is demanding more breathing time and the facility to pay the loan in installments. 

However, a quick look at the cooperative’s latest accounts submitted to the Board of Cooperatives, clearly shows that it is in financially dire straits. 

The 2014 audited accounts – submitted in February of this year – gave the cooperative an adverse opinion because it failed to recover over €56,000 from its commercial debtors and suffered a €37,105 loss.

The auditors waved a red flag because the cooperative’s financial statements are significantly different from generally accepted accounting principles set in 2009 for small enterprises. 

The report, compiled by auditing company Parker Randall Turner, said that “if these debts are not recovered, the cooperative will be in a critical situation and will not be in a position to repay its creditors”. 

Over and above the outstanding loan with the fisheries department, the cooperative owes some €90,000 in unpaid water and electricity bills. 

The report said the cooperative is not in a position to make these repayments, however speaking to MaltaToday, Piscopo – who also happens to be the secretary general of the Cooperatives Malta – dismissed the cooperative’s grim financial state and insisted that the cooperative will honour its agreement if the government agrees to accept its repayment conditions. 

Moreover, the cooperative insists that the outstanding water and electricity bills were clocked up by third parties.

The cooperative is locked in a protracted legal battle with Lambusa Maritime Company Limited, with which it had entered into an agreement for a fish import and export operation at the cooperative’s premises in Marsaxlokk. 

In a court decision in 2014, the operating agreement was declared null and Lambusa Maritime Company Limited was ordered to pay €66,411 in unpaid operating fees, and €37,539 in electricity bills.

The operator was also given 60 days to vacate the premises which the cooperative rents from the government. 

The court said that although the agreement with the government prohibits sub-letting of the premises, this was circumvented through the operating agreement reached between the cooperative and Lambusa Maritime Company Limited. 

However, the operator has appealed and it insists that contrary to what was agreed in the original contract, the premises did not have the necessary planning and trade permits and could not operate as a packaging plant.

Moreover, Lambusa Maritime Company Limited, represented by Angelic Mifsud, told the court that the payments demanded by the cooperative are null because the premises are not insured and some €30,000 in government subsidies were used to pay for diesel instead of electricity. 

In 2013, Piscopo was caught importing diesel illegally when his vessel was found carrying 40,000 litres of diesel, 8,000 litres of which were allegedly being brought into Malta illegally.

But in his judicial protest against the Customs director-general, Piscopo argued that other vessels found carrying undeclared diesel were offered the opportunity to enter into an administrative arrangement to pay the customs due on the fuel but he was not.