Another step forward to mediocrity

The Times of Malta

Another step forward to mediocrity

Dr George Hyzler ( The Times 7th February 2002) in defending his government`s decision for the` Maltapost contract signed with a NZ company,` prefers to attack his predecessors, hoping that twisting or obscuring facts will make the present mediocrity that little bit more acceptable.

He says that lack of vision typifies the no-longer-new Labour. So vision in Dr Hyzler`s dictionary is putting to the side` the White Paper on privatisation published soon after the Mid-Med Bank sale scandal, and taking a leaf from the Minister of Finance book by concluding direct negotiations without a transparent bidding process. Some vision!

Then he is extremely economic with the truth when he says that Labour did the same with Singapore concerning Freeport. Can Dr Hyzler please produce any document where Labour committed itself to do any business with the Port of Singapore without a transparent bidding process. Singapore were just given a facility to conduct a due diligence of Freeport without any commitment by either party. Labour did not even have a policy for privatising Freeport and the Singapore involvement was being sought to engage them in the possibility of management enhancement` and procurement of new business by networking into Singapore`s unique international shipping network.

He then says that Labour is misinforming in saying that technical assistance from the German Post was obtained for free when in fact Lm60,000 were paid. Is this not indicative of what technical fees should cost. So the German Post were doing the whole postal system re-organisation for some Lm60,000 whereas the NZ firm is being paid Lm735,000 with very limited clawback facility in case of non-delivery.

But that it is only half the story. Dr Hyzler should mention` the agreement for printing of postage stamps and enhanced international distribution which the German Post brought to Maltapost which delivered instant benefits many times over the technical fees.` All in all the technical services negotiated by the original Maltapost team under Labour were cash flow positive and produced an operating profit.` I can categorically state that management accounts for the period from incorporation in May 1998 to November 1998, when I last touched with Maltapost through the then Mid-Med Bank shareholding, showed substantial operating profit. So where are the politically motivated and short-sighted decisions taken in 1997/1998 which according to Dr Hyzler brought untold hardship and disruption to postal employees and stunted the company`s growth` That this profit performance was turned into losses under Dr Hyzler`s` administration, cannot be blamed on Labour, I hope.

I can re-assure Dr Hyzler that what Malta is now be paying through its nose for technical services would by now, under Labour plans,` have all been implemented with little or no cost in technical services including centralisation` of core postal sorting services and conversion of branches into modern retail network extending into ancillary products, including financial services.

But enough defence from the unjust accusations levied by Dr Hyzler. I wish to pass judgement of the deal with Transend after having studied the published documentation.

It is strategically wrong and economically hopeless. Strategically wrong but it is crazy to buy technology through equity. It is expensive and locks the company into the technology of one provider without the possibility of seeking technical inputs from other more reliable economic sources.` The` future as it unfolds brings` changes to` the economic fortunes often` turning giants into dwarfs and vice-versa.

It is economically hopeless because selling a 35% stake in Maltapost with a guaranteed monopoly on UPU postal service, with the assurance of 17% increase in postal rates and declaring willingness to privatise the rest in a fractionalised manner leaving the foreign minority shareholder` in the effective control of whole company,` and all this` for a mere` Lm1225000 payable just Lm490,000 in cash and the rest bartered in instalment over highly over-priced technical services, is daylight robbery. Effectively the NZ company are investing part of the profits from the technical services in the cash element of the transaction and securing themselves the right to control Maltapost for posterity.` In` the process they will comfortably` keep charging sizeable technical services each` year to the detriment of the small shareholders and the consumers who will eventually foot the bill through monopoly driven rate increases.

Has` this country has lost so much confidence in its own ability to manage itself that even a service that under colonial rule was always domestically controlled has to be offered on a silver platter to a firm from down down under. If for Dr Hyzler this is a step forward than he must be driving` looking at the rear mirror.