Sometimes I wonder

Maltastar

Sometimes I wonder!

Sometimes I wonder;` how could the Privatisation Union whom Parliamentary Secretary` Dr Hyzler is trying to involve in co- authorship of the Maltapost-Transend NZ deal in a clear blame sharing effort,` allow this one to go through`

The only logic that stands is that the Minister of Finance, to whom the Privatisation Unit reports, needed something as bad as this to shift away attention from his Mid-Med privatisation fiasco.` And if the blame bearer is Dr Hyzler, one of his competitors on the sixth district, so much the better.

Clearly Dr Hyzler is totally out of his depth in trying to defend the deal. Vision, he says explains it all. Vision can explain away anything. It is so intangible, so personal that one could just as well dismantle all bureaucracy, all checks, balances and controls and decide all on one`s convictions, based on the so called vision.

When critics bring down Dr Hyzler from his head in the cloud vision to hard realities and ask such simple questions as how the price per share of Lm1.25 was arrived at, Dr Hyzler`s reply amazes and dazzles.

Well, he says,` the book value was between 90c to 95c and so the government got a 30% premium over book value which must be something to be proud of according to Dr Hyzler`s amateurish knowledge of corporate finance and investment banking.

When I hear these sort of replies I am always caught between two opposed thoughts.` Should I laugh at their stupidity or should I cry for Malta`s sake` On reflection I opt for the latter and bring out my rage through public criticism in the hope that at least something is learned from our mistakes.

I tend to disregard the proverb of `where ignorance is bliss it`s folly to be wise` but the Maltapost deal, coming as the first privatisation following the Mid-Med Bank scandal,` proves` that proverbs exude more wisdom than fatigued ministers and parliamentary secretaries.

Is it possible that Dr Hyzler has used the book value as a basis of negotiation of the share price of Maltapost` The fact that the government has committed itself to increased local postage rates by 17%, the fact that Dr Hyzler has confirmed that government will bear the full social costs of relieving Maltapost from surplus employees not required for the Kiwis version of Maltapost, the fact that these will enhance the company`s profitability,` all this does not come into the equation for fixing the share price`

But then I should be the last one to wonder that these things do happen. John Dalli has negotiated single-handedly the sale` 70% of Mid-Med to HSBC. The buyer could fall a large reservoir of in-house investment banking expertise to conclude such an acquisition on favourable terms. You would have thought the this government , with` a penchant for employing useless consultants for the most trivial matters,` would have engaged some expert advice in negotiating such a complex multi-hundred million dollar deal. Yet Min. Dalli says he did it all by himself.

When the valuation documents were placed before the PAC I got corroborating evidence for what I had suspected all the way. From the beginning I had claimed that the valuations were made by the HSBC side and Min Dalli just swallowed them. He retorted with outright negation and claimed that those valuation were his own work. No one else was involved. So if the valuations were not coming from HSBC he was the only one who can claim their copyright.

But this puts John Dalli in an even more awkward position. Because the heftily discounted price at which the Mid-Med sale to HSBC was closed was arrived at by including a 6% risk premium in the` discount rate at which` expected future earnings of the Bank were brought down to present day values.

On top of the 6.25% risk free rate 6% risk premium was added so that the discount factor used in the valuations was 12.25%. Mathematics provide that the higher the discounting factor the lower the present day value and therefore the lower the price at which the bank was sold.

I have been asking the question now for almost three years.` How can Min Dalli explain his own inclusion of 6% risk premium in the sale of Mid-Med Bank when his job was to do exactly the opposite` i.e. to assert that Mid-Med Bank was a solid profitable bank commanding half the banking market in Malta and that no risk premium should be added to the risk free rate at which future earnings were to be discounted.

Min Dalli replies by deflection. He normally asks why did I advice the Labour government to sell the Maltacom shares to unknown bearer foreign shareholders. I explained for the nth time that this is not true and that in any case it is no answer to the question which Min Dalli keeps avoiding.

Sometimes I wonder! But if this is not corruption it is gross gross negligence and they are both serious and punishable as they all lead to the same result. The Maltese tax-payer is being short changed by an incompetent lot who after amassing debt which eclipse Argentinian proportions, they are now distress selling our best assets.