A majority shareholder in the company that formerly owned the Grand Hotel Excelsior, who was “totally divested” of his property rights at a ministerial stroke of pen 50 years ago, is claiming a breach of his fundamental rights.

The claim was made in constitutional proceedings filed recently by Massimiliano Martone as an offshoot of the politico-legal saga surrounding the now-defunct Bank of Industry, Commerce and Agriculture Ltd, more commonly known as BICAL, that was put under administration in 1972.

That order, issued by the finance minister of the day, meant that the bank, owned by siblings Cecil and Henry Pace, was placed under the direction of a state-appointed controller, along with a number of companies which, though not owned by the Pace brothers, were somehow connected to BICAL.

One of those companies was Malta and Europe Hotels Ltd [MEHL] whose majority shareholder was Martone’s father, Michele, who subsequently transferred his shares to his son, the applicant.

That ministerial decision meant that the shareholders of MEHL were “totally divested” of control and administration of the company, Martone claims.

Those functions were entrusted to a controller and liquidator appointed by the minister, but decades later, they still have not distributed any funds, nor published accounts nor updated shareholders on their work.

And worse still, these officials are immune from legal action in terms of law, says Martone who has now taken his grievances before the constitutional courts.

How did it all start?

MEHL was set up on June 8, 1966, with a shareholding capital of Lm900,000.

The aim of the company was to build and run a hotel in Floriana, later named the Grand Hotel Excelsior.

Building works kicked off in 1966 and were completed by July 1972, funded by means of a loan which MEHL took from BICAL.

Four months after completion of works, on November 25, the then minister of finance  put the bank under administration in terms of the Banking Act of 1970.

Three days later, the government appointed lawyer Karmenu Mifsud Bonnici as controller of the bank.

In September 1974, the ministerial order was extended to a number of companies, including the hotel-owning company, even though MEHL did not belong to the Pace brothers.

The controller took over administration at MEHL with all the legal powers endowed upon him by the Banking Act by virtue of his office.

The ministerial order made it clear that he was to dispose of the company’s assets and “keep the funds in such profitable manner as may be appropriate in the circumstances with a view to eventual payment or distribution of those funds according to law”.

Michele Martone held 51% of the shares in MEHL. In 1991, he transferred that property to his son who is now suing the state, the current controller and liquidator whose shortcomings have resulted in “devastating, irrevocable and prejudicial” consequences for MEHL’s shareholders.

Unjustified interference

The government’s decision 50 years ago to put MEHL under administration, despite the fact that those investigated were the BICAL owners, was an act “of disproportionate and unjustified interference,” Martone claimed.

The minister’s order “blatantly” impinged upon shareholders’ property rights. In 1985, Emanuel Bonello took over as controller.

The Grand Hotel Excelsior was run to the ground on account of shortcomings by the controller, until it was sold for Lm2,540,000 in 1991.

The sale meant that MEHL was left with no other assets or commercial ventures.

Yet, the controller did not step down.

To date, the company is still shown on the Register of Companies as being “in dissolution”.

A “scheme of dissolution” was prepared in 2014 but to date, those funds have still not been distributed to the shareholders, including Martone.

Moreover, lawyer Robert Tufigno and accountant Raymond Gatt, on behalf of MGI Malta, as liquidator and controller of MEHL respectively, have still not published accounts, nor accounted for their tasks.

And in terms of the Controlled Companies (Procedure for Liquidation) Act they are immune from legal action.

Martone is claiming that all this clearly breached his fundamental right to peaceful enjoyment of property, namely the shares that were meant to secure substantial interests for the shareholder.

He is calling upon the First Hall, Civil Court in its constitutional jurisdiction to declare that the ministerial order and sale of hotel both breached his rights.

The delays by the controller and liquidator also resulted in damages that are to be shouldered by the state, claims Martone.

Lawyers Mario de Marco and Ryan Bezzina are assisting Martone who is represented in the case by Luigi Martone.