Non-pressing Distressing Press

The Malta Independent on Sunday



This week`s experience shows that the local press has lost all objective sense of what makes news. News items are judged by any measure but their news value. Probably the best yardstick is how much the content can create obstacles to the Malta Labour Party.

In a TV debate I had with Minister John Dalli there emerged several items of news value.` The least of which was probably my assertion that Labour should drop its objection to VAT and concentrate on more economic priorities as the economy is too weak to withstand another shock caused by a further change to the indirect taxation system.

`The news value was in my untypical accepting to answer a hypothetical question of what would my position be if the MLP put removal of VAT again in its election manifesto. This is likely to happen as much as next Easter is likely to fall on a Wednesday.`



I have been saying this ad nauseam and there was absolutely no news value in it. The news value was in my untypical accepting to answer a hypothetical question of what would my position be if the MLP put removal of VAT again in its election manifesto. This is likely to happen as much as next Easter is likely to fall on a Wednesday.

But there were much more news value in some of Minister Dalli utterings.` Yet the Press just take no notice as what Min Dalli said in spite of being well loaded with news value.` Probably what he said fails to pass the test of creating obstacles to the Labour Party.

Let me be specific. Minister Dalli made a categorical statement that his government had reached an agreement with the EU enabling us to continue purchasing at cheap international prices, basic commodities which in accordance to the acquis communitaire we would be obliged to pay at high internal EU prices. This applies to sugar, wheat and other cereals, animal feed, butter, meat and similar basic commodities.

There wasn`t any doubt in Min Dalli`s statement.` The deal was done, he said. So on Monday morning I got one of my journalist friends to contact MIC to find out why such a praiseworthy agreement was hidden from the public when dirty deals like the fisheries 25 mile capitulation was presented as an achievement.

I was not the least surprised when the information came back from MIC that no such deal was made, that negotiations were still going on but that it was proving difficult to get the EU to consider such concessions. And difficult it will be, as such conditions cannot easily be wrapped up dirty deal which skirt the problems of precedent for the EU.

`Minister Dalli made a categorical statement that his government had reached an agreement with the EU enabling us to continue purchasing at cheap international prices, basic commodities which in accordance to the acquis communitaire we would be obliged to pay at high internal EU prices`



Which means that when my arguments cornered John Dalli, the argument being that any environmental funding we may get from the EU is still coming from our pockets through higher prices of basic commodities, he had to pretend a deal was done when in fact nothing of the sort has yet happened.

But for our journalist this is carries no news value.` Or are they so used to Ministers making statements that are not corroborated by facts`

And yet there was more. I have been asking in my writings Min Dalli to explain to the nation why in making the calculations of the valuation of Mid-Med Bank he included a 6% risk premium in the discount factor to bring to present value the future expected earnings of the bank` The inclusion of such a high discount factor on top of the other 6% normal risk free rate ( bringing the overall discount factor to 12%) effectively cut by half the value of the bank leading to the low price which was negotiated in a direct basis with the first buyer that walked through the door.

The discount factor is used to bring out the time value of money in acknowledgment that a sum of money today is worth more than the same sum of money at a future point in time. How much more depends on the discount factor used.` The higher the discount factor the bigger the difference thus giving a low present value to future earnings.

Min Dalli never replied to my questions. But last Saturday he had to. He could ignore my writings but could not ignore my direct questions in a face to face debate.

In being short of a real answer all he could say is that he did this because he was a professional and that was the way how things are done professionally.

`6% `. that was the way how things are done professionally -- `A serious financial Press would challenge Min Dalli on this ludicrous assertion`



A serious financial Press would challenge Min Dalli on this ludicrous assertion. A bank like Mid-Med with consistent trading record and commanding half the banking market does not merit any discount factor. At most one could justify including not more than 2%. But 6% is unthinkable.` And why should our own Minister who was supposed to be negotiating the best deal for us include this high factor remains an enigma.` Certainly this is not the way to do things professionally.

But our Press cannot be interested in a Minister boasting professionalism in discounting by 50% the sale of one of our best prized assets when sold without any bids to the first interested buyer.

Our non- pressing distressing Press is more interested in knowing whether MLP would include removal of VAT again in its electoral manifesto ready to shout U-turn when in fact the Leader had warned prior to the 1998 election that if VAT is re-introduced by a PN government it would be nearly impossible to remove again 5 years down the road.