Closing down

The Malta Independent

Closing Down

Following the Mid-Med Bank sale scandal a White Paper was issued with inputs from World Bank officials outlining the strategy that would be adopted for future privatisations.

The announcement last week that 35% of the equity of Maltapost has been `sold` to a New Zealand company specialising in Postal Consulting was very short on details and long on empty talk that this partnership will bring much value-added. Did we not hear this as a sort of justification for Mid-Med`s haphazard sale Was the White Paper completely forgotten`

We were not informed whether the selection of the NZ partner resulted from public offers, how many interested bidders there were, which bids were short-listed and on what criteria was the NZ bidder chosen .`

The indications are that, as in the case of Mid-Med, the sale was conducted through direct negotiations without any public offering. Even more serious it appears that the chosen partner not only is not paying a reasonable` premium for the strategic share ownership, but also is more or less bartering two-year technical services for the 35% equity position.

Maltapost is a company offering a strategically important service.` Under Labour`s serious privatisation policy such companies would remain under public sector control but a substantial minority equity would be privatised by offering it for subscription` to the general public with precautionary measures to avoid undue concentration of private ownership.

This formula offers the best of both worlds. On one hand it maintains public accountability for natural monopolies that are conditioned by the minute size of our economy. On the other hand it brings private sector discipline to the internal management of the organisation to avoid unethical and undue political interference.

PN`s way of privatising Maltapost, from the scant information provided, is a classical example of how not to.` Where is the transparency when only the superficial details have been given These are public assets. Their disposal demands full public accountability. Why must information be first denied on the incredible excuse that the deal was a commercial secret and then the documents be published only after extensive grilling by the Opposition and without any background justification`

What sense does it make to give a strategic holding to a technical partner which thus gains the prospects of controlling the company when the government eventually floats the remaining 65% in line with declared government policy to act only as regulator`

Why do we have to pay for technical inputs through equity priced at give away rates` When Maltapost was originally set up through my personal initiative we had technical partners competing for the job but equity was offered to none. Offering equity to a technical partner locks the company into the technology of the equity partner.` It leaves poor scope to negotiate the cost of technical inputs on an arm`s length basis through inviting competing bids. What if the technical partner does not deliver` Would we still be locked with him through the equity position`

And why should such a potentially controlling stake be offered through a quasi par` share capital increase without an appropriate premium reflecting the on-going business, the brand and the monopoly situation When the Government acquired the 45% equity holding in Maltapost formerly held by Mid-Med Bank prior to its sale to HSBC, government paid a premium to Mid-Med even though the company had only been operational a few months. How is it the government has a knack for buying high and selling low`

Have we` lost all sense of national pride or is government` in a closing down sale mode.` Is the government closing down`