The political intrigue behind BICAL’s closure

The Malta Financial and Business Times continues the serialisation of MaltaToday’s exclusive reportage on the notorious dissipation of Cecil Pace’s BICAL empire

As featured last week, the BICAL bank was already in the eye of the Finance Ministry as a run on the bank threatens the bank with closure. A DOI statement in the days preceding 25 November announced the bank has encountered liquidity problems. Bank president Cecil Pace assures his clients that there was no danger facing his bank’s liquidity, and that assets by far exceeded liabilities.
But Cecil Pace is already concerned that actions by one of his directors has complicated matters ahead of BICAL’s closure.
Cachia Zammit lends the PN a hand
Unrecorded foreign transactions at BICAL had been allegedly used to pay for printing equipment purchased by the Nationalist party, through the intervention of a ‘joint’ manager at the bank without the approval of the BICAL board.
The late Lawrence Cachia Zammit, brother of Alexander "Sandy’ Cachia Zammit, PN Minister of Health before 1971, was the treasurer of the Nationalist party during the BICAL crisis.
It had been revealed in a much publicised court sitting that Lawrence Cachia Zammit had concealed government documents at the Rabat BICAL branch for his brother Sandy, today Malta’s resident ambassador to the Vatican.
During that November month in 1972, Cecil Pace would get to know through Hambros Bank that the credit limit in BICAL’s account of 360,000 pounds had been exceeded. Cecil Pace was baffled - none of the bank records in Malta had indicated that this was the case. He called for Lawrence Cachia Zammit, and asked him to come in from leave and meet on the Kihna, Pace’s yacht: "I am aware that there is a shortage that has not been recorded in the books. What happened?" Pace asked Cachia Zammit.
Cachia Zammit denied any wrongdoing, but was pressured by Cecil Pace into admitting to having made unrecorded foreign transactions of up to 360,000 pound sterling. Cachia Zammit insisted that he had meant to repay Pace for the money that went missing.
The foreign transactions were allegedly made to pay for printing equipment purchased by the Nationalist party apart from other personal expenses by Cachia Zammit in the expensive pastime of keeping racehorses. The bank appears to have never been repaid by the Nationalist party for the disbursements of foreign payments made through Hambros bank.
Cachia Zammit had in fact written a letter confirming the discrepancy in the funds, offering to make up for the missing funds by personally transferring property to Cecil Pace’s companies. Certainly, a segment of the misappropriated money appears to have been utilised to sponsor expenses related to the upkeep of racehorses by Cachia Zammit’s wife, Angele nee Borg Manduca in Malta, Rome, Madrid, Paris and London.
A more considerable segment however had been allegedly used to pay for the printing equipment purchase by the Nationalist Party.
Mintoff lays his claim
According to Cecil Pace, he had been asked to accept to become deputy leader of the Labour party by Mintoff. An employer of 3,000, and a popular personality, Pace had the ability to garner great support for the MLP. "Not being politically minded, I rejected the offer. Soon I was approached again this time with the proposal to sign away half my equities to nominees and I would be rewarded with ‘choicy’ contracts for my companies whilst my bank would be handling Government accounts and permits to open branches all over the island," Pace says.
"None of these proposals interested me, but I was told better agree than go to jail. I asked on what grounds and I was told that reasons would be found. And so it came about that I was arrested, mainly based on the pretext that I stole, by devious means, all the monies deposited and hence a controller was to take over all my assets to protect all depositors, creditors and shareholders."
The contents of the letters have now been corroborated by new facts that are published in MaltaToday.
To come to terms with the background of this statement one has to return to the early seventies. One of Mintoff’s closest aides Anton Buttigieg, later to become President of Malta, met Cecil Pace for lunch at the Excelsior Hotel, one of the many hotels owned by Cecil Pace and later to be given away unscrupulously for a pittance to ‘well placed’ speculators.
Mr Pace’s refusal to offer his services as deputy leader and hence bolster Labour’s chances at the polls had not thwarted others from making other proposals to him. This is the exchange between poet and politician Anton Buttigieg and Cecil Pace, as recalled by Pace himself:
Anton Buttigieg: "Why not welcome him [Mintoff] as a partner. He is quite the businessman you know." Buttigieg suggests to Cecil Pace he transfer part of the bank that was later to be closed down, to Mintoff’s nominees. In return Cecil Pace would have the possibility to open new branches and to take over government accounts.
Cecil Pace: "Then all this is to make him richer."
Buttigieg did not stop here. He also referred to Pace’s companies and insinuated that they too be partly transferred to Mintoff’s nominees.
And there were other messengers. allegedly Frans Dalli also suggested to Cecil Pace that he should consider the idea of partnering up with Dom. Certainly, the comments that remain enshrined in Cecil Pace’s memory are those allegedly made by Karmenu Mifsud Bonnici, who way back in 1972 had already appeared to have taken up his role as Mintoff’s emissary. He had just taken over as BICAL controller following the suspension of the bank licence on 25 November 1972.
KMB: "Are you going to sign the deal with Mintoff?" he reminded Cecil Pace a day before his arrest on the 6 January 1973. The conversation took place in the presence of Dr George Schembri, who was later to be appointed a judge. "His proposal offers you advantages."
Cecil Pace: "And if I don’t sign?"
KMB: "They will arrest you."
Cecil Pace: "Why arrest me?"
KMB: "They will find reasons. They will come for you tomorrow morning. You have time to sleep over it."
The next day Cecil Pace waited for the police to arrive. It was the 6 of January 1973, the feast of the three kings. Sergeant Joe Cordina, later to become a director of prisons and now head of the Civil Protection Unit, arrived to take him off to Kordin. Cecil Pace would remain there for the next 14 years.