Bank of Valletta gives millions in unsecured loans to Air Malta after Konrad Mizzi’s hedging agreement flops

The Malta Independent on Sunday reports today that the Bank of Valletta has given unspecified millions in unsecured loans to Air Malta, after it was left up the proverbial creek without a paddle when Konrad Mizzi’s fuel-hedging agreement flopped as oil prices tumbled over the past year.

The Malta government owns just 25% of the bank, a public company which is listed on the Malta Stock Exchange, but retains the right to appoint the chairman and inevitably, a number of directors to represent its shareholding.

The incoming Labour government removed chairman Frederick Mifsud Bonnici and replaced him with party crony John Cassar White.

Since then, the bank has given a loan of 101 million euros to the crony-consortium Electrogas Malta Ltd, which entered into contract with the government of Malta to build and run a power station without having the financing to do it and when one of the lead consortium members, Gasol, was technically insolvent. Because Electrogas could not or did not offer security for the loan, the Malta government jumped into the breach as guarantor to a limit of 88 million euros.

Now we learn that the bank has loaned millions to Air Malta but that the government has not stood guarantor for the loan because that would constitute state aid to a state company and in breach of EU rules. The Bank of Valletta is therefore exposed to the tune of several unspecified millions in unsecured loans to an airline teetering on verge of bankruptcy.

Meanwhile, the prime minister was photographed on Friday evening celebrating the second marriage of his Taghna Lkoll aide and Super One radio disc jockey Joe Tanti, behaving as though he hasn’t a care in the world and everything is going swimmingly.