Mission Rediscovered

14^th September 2007
The Malta Independent - Friday Wisdom

Why did it have to take eight years for Maltapost to be put back on course for the mission it was born for?

It went off course looking for a suitor as far down in New Zealand until suddenly it found that its true and hopefully finally suitor lived exactly on the other side of the road at 67 Republic Street (Lombard Bank) from where it was born to Mid Med Bank at 233 Republic Street in 1998.

Typical of the local mentality, our politicians treat us as if we are all chicken heads with a tiny memory incapable of stretching back eight years. The sale of a controlling interest to Lombard Bank was presented as some great innovation without any mention that when Maltapost was created in 1998 from the ashes of the demised Posta Ltd., it was an initiative of Mid-Med Bank who, jointly with Maltacom, had persuaded the then Labour government that the future of Malta’s postal service could only be assured if the responsible organisation was diversified away from its core postal services to becoming a retail channel for low cost financial and telecom services.

These plans were obviously aborted when Mid-Med Bank was sold to foreign ownership and for some inexplicable reason Maltapost was thrown off course from the business objective for which it was created. It wandered throughout the world in search for a partner that could help it find its soul. How anybody thought that a Kiwi partner could help Maltapost get back on track is a mystery that still no one can explain.

Yet the Kiwis in spite of their failing to deliver, so much so that they were ousted from their management agreement after only two years, were permitted to reap substantial profits from sale of their 35% stake in Maltapost to Lombard Bank even though their original contribution to the share capital was originally sourced from technical services they had charged to Maltapost itself.

All government had to do when it recovered the investment in Maltapost from Mid-Med Bank, to avoid our postal services being passed along with the Bank under foreign ownership, was to organise a competitive bid for acquisition of such shares from financial services providers who were interested in continuing Maltapost original mission.

Surely, Lombard Bank would have immediately shown interest in acquiring a stake much earlier than they eventually did and this without leaving a substantial profit in the hand of the New Zealand sandwich shareholders. Not only that. Surely there would have been interest in Maltapost by other competitive bidders both local and overseas who would have considered the acquisition of a significant or controlling stake in Maltapost as a good stepping stone to the setting up of a fully licensed bank in order to increase the competition which has been so missing in the Maltese banking sector ever since the local operation of Midland Bank was merged into Mid-Med Bank to give a common organisation in the present form of HSBC Malta.

Not only Maltapost would today have been at least eight years down the road in executing the mission for which it was set up but as sure as night follows day government and the Maltese taxpayer would have clinched a much better deal. Firstly through the top dollar which government would have obtained from sale of its shareholding by means of competitive bidding, and secondly the Maltese consumer would have benefited from fairer pricing in banking services by restoration of the competitive element that went missing in 1999.

What happened instead? By mischievous design or by negligence, government allowed Lombard Bank to make a direct acquisition of the equity stake in Maltapost held by the Kiwis and then placed itself in a situation where it could only negotiate with Lombard Bank for further sale of its (government’s) stake in Maltapost. What should have happened is that government should have insisted that the Kiwis sell back their shares to the government at a fair price reflecting their original true investment and their performance under their management agreement and then organise competitive bidding for the sale of a controlling stake in Maltapost.

Wonder of wonders how our press does not even smell these maneuvers and always seems to be very lead footed when it comes to defending the interest of the Maltese taxpayers from the misdemeanors of government who to add insult to injury goes on further to depict such fiascos as creative innovation deserving the applause of fleeced taxpayers. Is it not odd that a government that professes its political religion in the operation of a free market has a knack for opting for direct one to one negotiation when it comes to selling state assets?

Still, for Maltapost it is better late than never. After a largely wasted eight year period searching for its soul all over the world, Maltapost seems back on track for its original mission after being suitored by the guy next door.