Sea Malta chairman Marlene Mizzi resigned on Monday, explaining she disagrees with the sale of the government's majority shareholding in the national shipping line to a Grimaldi subsidiary. Vanessa Macdonald asked her about some of the issues raised over the past year.

The government has sold, for an as yet undisclosed sum, a company burdened by debt, with one ship that is rapidly becoming obsolete, operating routes that are anyway liberalised and with a heavily overloaded and highly paid workforce. Why would anyone want to buy it?

Sea Malta has established markets, trained and experienced personnel and valuable knowledge of the business. For the right price everything is saleable. However, a report commissioned by the majority shareholder on the saleability of Sea Malta specifically said it was not saleable unless there was a capital injection. We have been saying this since 1999 - we did not need the report to tell us so. Yet, nothing was done about it. If this capital had been made available to Sea Malta as was done with other entities, the financial situation of the company today would have been very different.

The sale of Sea Malta boils down to two issues: Whether it could ever be profitable and whether the service has a strategic interest that cannot be served by the private sector. On the first topic, can we establish what the real losses were? The Prime Minister mentioned pre-tax losses of Lm3.6 million in the last eight years; Minister Austin Gatt said recently accumulated losses amounted to Lm2.3 million.

The accounts for 2004 and 2005 are not audited yet and I am not going to make the mistake of quoting confidential information as the ministry did when they published such information in a press release. The accounts must first be audited and then presented for approval to the directors before one is allowed to make them public.

I would like to point out that the government had been alerted as to the situation of the company since 1999. Had our red light alert been heeded, the government would today be selling a profitable company.

So what were the losses until the last audited accounts, for the year ending March 2003?

The holding company made a loss of Lm10,434 and the group a loss of Lm510,798.

You insist the company could be profitable. What would the proposed restructuring have entailed?

I would like to state that contrary to what happened in other entities, restructuring for Sea Malta was never considered. However, a restructuring plan spanning four years is available.

We were pro-active about this and in July 2004 we drew up a report, called Commercial Objectives And Corrective Actions. This was drawn up after a meeting with the Prime Minister in June last year when he asked whether Sea Malta could be viable. The report gives various options, including an evaluation of extra manpower, evaluation of work practices, strict control on administration costs, re-alignment of financial costs etc. During my chairmanship the workforce dropped from 163 to 123 by applying the principle of natural wastage.

The report showed that, under one particular option, by 2007/8, we would have had a Lm663,000 net profit on operations and a positive turnaround of a few hundred liri. This was based on a capital injection of Lm3 million.

It would have covered the financing of the loan for the Maltese Falcon, bought through a commercial loan. The money would have helped to repay the loan and overdraft, significantly reducing our financing costs. Even as we speak, the company is making profits from its operations.

What about a new ship? Isn't the Zebbug just about obsolete?

She is 36 years old and this is considered very old for a vessel. We would have liked to have replaced her five or six years ago. We were promised Lm2.5 million to do this. The change of heart only came around with a change of the ministry portfolios.

A new vessel would have meant we could have been more efficient and increased our routes.

Your resignation letter said Minister Gatt said the capital injection had been turned down four years earlier. Can you explain?

I have to emphasise that the first time we wrote to the government asking for a capital injection was in 1999, warning that there would be financial problems without it. At this stage, the government always said the money would come and that it was a matter of "when" not "if".

In May 2003, when Sea Malta fell into Dr Gatt's portfolio, he paid a courtesy visit to the company and said the planned capital injection had been rejected "some 4 years ago". This took us all by surprise. It seems we had all been taken for a ride.

The Prime Minister said the company exists because of a guarantee provided by the government. What does it cost the government?

Sea Malta has been portrayed as a burden on the government, as taxpayers' money going down the drain. Let me make this absolutely clear: Not one cent of taxpayers' money has found its way to Sea Malta, except for the Lm150,000 public service obligation deal since April 2004 which pays for a guaranteed three-weekly sailing to Reggio Calabria as required by industry.

Sea Malta has always covered its own debts, including the interest, salaries and recurrent creditors. We work on overdraft from the banks.

Our operating profit has ensured that we are coping with the debt situation in a hand-to-mouth fashion. Our major creditors are government entities like the Malta Maritime Authority, which were patient with us. And we managed, as well as we could in the circumstances, the foreign creditors.

The government guarantee is a "letter of comfort", which ensures that if anything were to happen, the government would honour payment to the creditors, that is, it ensures a going concern.

It is an important document but you cannot pay salaries with it or buy fuel for the vessels. Contrary to the impression given, the furnishing of a guarantee every six months does not mean we were getting a cheque every six months!

From statements made, the government gives the impression that the value of a letter of comfort is the same as forking out taxpayers' money. If this is so, then why didn't the government give the letter of comfort to the Brindisi operation and forward the taxpayers' money to Sea Malta? I am sure the Maltese taxpayer would have preferred this!

Why should the government pay for Sea Malta to get ships when there are other shipping lines that can provide them, with better economies of scale?

The track record shows that other shipping lines used Malta until it suited them to. When they realised that calling at Malta was no longer profitable they stopped. Bulcon was here for three months, TTT Lines came for two visits and Tirrenia also left.

And yet we still haven't learnt! Sea Malta has been the only continuously reliable service, the one that often saves the day; ask Multigas, STMicrolectronics, the many trailer operators, the Federation of Industry. Sea Malta abided by its social obligations to the state at the cost of its bottom line. But this vital aspect has been ignored completely.

The Prime Minister commented that I did not have a macroeconomic vision. The truth is that I resigned because I had an international vision for the company, let alone a macroeconomic one. The government is refusing to see that you cannot consider the worth of this company by looking at the bottom line but by looking at industry and what it is worth to the nation and by looking beyond our shores. Refusal to invest in the company has deleted this potential.

It seems to me that by harping on and on about the bottom line without going into the reasons for this, the government is making the mistake of thinking it is solving a problem for the nation. The truth is, with Sea Malta withdrawn from the playing field, the market in the West Mediterranean is going to be managed by two dominant players. In economic terms, this is a duopoly and a very dangerous situation indeed.

What right do we have to assume that the new owners would ignore the needs of the local industry?

I would like to make it clear that I have nothing against the company interested in purchasing the shares of Sea Malta. As capable business people, they are seeing an opportunity and they are taking it. Their interest is first and foremost the bottom line. Whether the strategy planners of the new owners, or people in a boardroom somewhere in Italy will consider the needs of local industry or not, or whether the needs of Malta are going to supersede the need to make profits from the operation remains to be seen.

Until now, the needs of our industry and respecting its social obligations, as per the company's Memorandum and Articles, were a constant consideration at Sea Malta, even at the cost of the bottom line. This does not seem to be of any importance to the government.

Dr Gatt has accused you of depleting the assets of the company under your chairmanship.

The best form of defence is attack and this is what Dr Gatt is doing. It is his style and I expected it. I have no doubt he will do everything to destroy my credibility.

But facts show otherwise. The company is still here, six years later, without having had to dismiss anyone, retaining our market share, maintaining our vessels at enormous cost, chartering vessels at thousands of dollars per day to retain a continuous service to industry - all from the company funds. On top of that we had to face the perils of a fiercely competitive market.

During this time the shareholders swept all problems under the carpet. Anyone worth one's salt in business knows that this is an enormous feat in the circumstances. So this is where the company's assets were "squandered": To pay for subsidising the nation.

Dr Gatt accused me of "squandering" public funds and depleting the company's assets, a very serious accusation, which I invite him to state again when not hiding behind the shield of parliamentary immunity.

He would discover that this "squanderer" of funds has retained the previous chairman's car, which is now nine-years-old. He would find that she was paid the princely sum of Lm5,000 per annum for her onerous responsibilities. And, no contract promising golden handshakes.

This attack on persons or entities showing any sort of disagreement with the government is becoming all too familiar.

Dr Gonzi accused you of failing to comply with government policy, a very serious accusation. In what way did you fail to comply?

I haven't a clue as to what this non-compliance may be. The Prime Minister's courteous letter also referred to an uncanny similarity to the comments made by the opposition. Both these concepts are alien to me.

I originally gave my letter of resignation to Dr Gonzi on June 8. During the one-hour meeting, I put forward the same arguments as those listed in my letter. He gave no hint that I did not comply with government policy or that my arguments were similar to those of the opposition.

On the contrary, he was surprised by my letter of resignation and refused to accept it. He also confirmed that I had always had the Cabinet's approval.

I cannot imagine what could have changed between June 8 and June 20 (when he accepted my resignation).

And as to colluding with the opposition, this is ridiculous. I have been making the same comments for the past four years. The government simply did not want to listen.

Your letter of resignation was quite frank. Why not just go quietly, saying "resigning for personal reasons"?

I don't think that would have been the right thing to do. I have been occupying a public office, paid from public funds and so the public is owed an explanation. I was never afraid to stand up and be counted and never afraid to stand by my convictions. I was correct all through my chairmanship and I wanted to be correct to the end.

Have you said anything which could have broken the confidentiality clause that would normally bind a chairman?

Nothing that is a board matter has ever been, or will ever be, divulged by me. I have executed my duties diligently and with integrity. I left Sea Malta with great sadness but with my head held high.

What about the restructuring report? Shouldn't you have put it into the public domain when it could still have made an impact?

No. It has detailed and confidential information about the commercial aspects of the company. And as the Prime Minister requested it, I felt it was up to him to publish it. But the shareholder did not take any notice of it.

We could not have succeeded at restructuring without the shareholder's input.

However, at this point in time, it is important that people know that Sea Malta was not a burden on their pockets, was being pro-active and could have been profitable.

Contrary to what the government is saying, I am still convinced that this deal is not in the national interest. But for the sake of the country, I sincerely hope I am wrong and the government is right.

The Company

Sea Malta was set up in 1973 to establish maintain, develop and operate sea transport services to and from Malta, serve the national economy and interests of the country and provide services for local manufacturing and for export. Its vessels - the MV Maltese Falcon and the Zebbug, operate weekly to Genoa, Marseilles, and Tunis, three times a week to Reggio Calabria and twice weekly to Catania.

The government has a 69.22 per cent shareholding, the remainder being held by Libyan and Tunisian interests and by Maltese shareholders.

It employs 123 staff.

Marlene Mizzi was appointed chairman in 1997.