It was often claimed that in a Ministerial Cabinet that wasn’t exactly overflowing with talent, one shining star was Minister Austin Gatt. This reputation has in the past months been significantly tarnished.
The debacle that is Arriva, the ghost town that is Smart City, the BWSC case and road construction works which seem to go on forever have demonstrated that Gatt’s foresight and managerial competence are very questionable to say the least.
Let me however pick on something else the Minister Gatt was responsible for but was again the subject of what can now be clearly seen to have been faulty decisions. I am referring to the sale in 2006 of the 60% Government holding in Maltacom (now GO plc) to Tecom Investments.
Gatt had claimed at the time that the sale of Maltacom achieved two important goals; the continuation of the government's privatisation strategy and the teaming up with a strategic partner who would enable the company to grow into the international market. He stated that the business of Government was not to run telecoms companies. I am the first to agree that this is true, but it should be pointed out that ownership does not necessitate involvement in management.
The 40% of GO shares that still belong to private individual investors do not confer upon these investors any management rights or obligations. The real reasons for the sale would appear not to have been ideological but that Government wanted to reduce its deficit prior to joining the Euro.
In pursuing this policy, Government also chose to ignore local investors in offering them further participation in the Maltese economy. It chose to sell all its 60% interest in the venture to a foreign entity rather than give the opportunity to the people to invest further in their own economy. This majority shareholding gave the foreign investor absolute power in a strategic local company which was already well-run and expanding its horizons.
Has this acquisition by Tecom been beneficial to Maltacom or the local economy? It might have been if the strategic partner chosen been one which had the ability to bring radical new ideas into Maltacom. However, Maltacom since 1997 had been moving rapidly forward. Before the advent of Tecom, Maltacom had entered the mobile business, rolled out ADSL broadband services, introduced cheap international voice over IP services such as 1021 and was already piloting television services.
All Tecom seem to have done was institute a name change, continue already commenced projects, get rid of most Maltese top management and to their eternal shame lose, in the reckless Greek investment, over one hundred million Euros of profits that Maltacom had accumulated in past years. The downward path of GO is well reflected in its share price, which from around four Euros when the sale to Tecom took place, is now at below one Euro.
That Tecom’s background and experience did not make it an ideal strategic partner for Maltacom should have been clear from day one. Now, GO, its employees, small shareholders and the country have to bear the consequences of this monumental error of ministerial judgement.