Dalli admits his own fiasco

The Sunday Times of Malta

What Minister John Dalli wrote in the Sunday Times of 5^th May 2002 about the MIA privatisation needs to be reread.

“It is a quite a common tactic that when politicians are criticised and they have no decent answer, they switch to address a different type of criticism, that which was never made in the first place.  JohnDalli excels at it.”

“The value obtained for the privatisation of MIA puts the value of the company at around Lm70 million, and this after we had been "advised" by the Labour press and spokesmen to abort the process after September 11 as we would never get a decent price for the company

But we did get a decent price, by any standard, especially by Labour standards. When Labour was privatising MIA just before their disintegration in 1998, they were valuing the company at Lm30 million.

It is pathetic to read the main player in the then privatisation argue this away. Lo and behold, 30 to the power of Alfred Mifsud is greater than 70.”

It is a quite a common tactic that when politicians are criticised and they have no decent answer, they switch to address a different type of criticism, that which was never made in the first place.  John Dalli excels at it.

Firstly he says that I and others in the Labour rank were wrong in advising that it would be prudent to delay privatisation of MIA from the last quarter of last year, as originally intended, in order not to depress the value in the light of the sombre outlook for air travel cast by the 11 September events.   Yet somehow we were proved right by the Minister himself who in spite of projecting this revenue to come in by the end of last year, and this as late as the November Budget debate, it so happens that this revenue will at best flow in this second quarter of 2002 when the air travel situation is thankfully returning to normality.

Then he rebuts my non-existent criticism that the price which values the whole company at Lm70 million is indecent when I had valued the company at Lm30 million for the privatisation which Labour intended.

“Does the acquiring consortium have the right to take full control of the operations of the airport …. ?”

It is not my style to criticise before knowing the facts.  And the facts are not yet known.  So I do not know if it is correct that the privatisation value of 40% of MIA equity will in fact be Lm40 million or whether this is a composite figure which on top of the Lm20 million being paid for the shares adds other income by way of distribution of past profits and advance payments of future leases of theimmoveables.  When the facts are known and if it results that the price is not right the Minister can rest assured that he will not be spared criticism.  

As to the difference of the figures between the valuation under Labour and valuation of the company under the current privatisation I already wrote in The Times on 2^nd May 2002 explaining in detail why the two figures are incomparable.

“After the initial three years does the acquiring consortium have the right to acquire majority control of MIA?”

In brief this privatisation offers full and total control of MIA to the acquirer whereas the 20% intended to be offered by the last Labour government kept control of this strategic asset and natural monopoly firmly in the hands of the government.   If the acquirer paid more to Min. Dalli than Labour expected to net under its privatisation plans it is only because Min Dalli gave them more, much more, including total control over our one and only airport, prejudicing in the process our national interest.

But why answer to criticism not made and totally disregard criticism made, pointedly and sharply?   I expect the Minister to illuminate us on the following:

Does the acquiring consortium have the right to take full control of the operations of the airport and help themselves to technical and management contracts which will absorb the profits of the company leaving little profits to fall to the bottom line for the benefit of other shareholders?

After the initial three years does the acquiring consortium have the right to acquire majority control of MIA?

The Minister’s silence to these questions ominously indicates that my suspicion that the higher price reflects the award of much more rights than Labour ever intended to give to acquirers under its privatisation programme is not unfounded.   The price cannot be seen in isolation but only in the context of the rights actually being conferred.   Min Dalli seems to have conferred rights which pass total control of Malta’s only airport to foreign interests.   This represents a strategic risk on a national level.

But there is another viewpoint to this.   Let’s take the Minister’s word that he got Lm40 million for 40% equity sale.   This values the whole MIA at Lm100 million not Lm70 million.    Now give and take a bit this is as much as Mid-Med Bank was valued when John Dalli sold 67% for Lm71million.

Now considering that Mid-Med makes Lm15 million p.a. and commands half the banking market, considering that HSBC were giving full and absolute control over the Bank, and considering that MIA makes ‘only’ some Lm5 million profits and that the acquirer has been given the possibility of majority control and not outright majority control, is this not a self-signed certificate of the incompetence with which the Mid-Med Bank privatisation was handled by Minister Dalli.   On this one there is very broad agreement which is now rendered even broader by the endorsement of the author of the fiasco himself.