Malta’s biggest lender, government-controlled Bank of Valletta, is paying seven foreign consultants between €2,000 and €1,500 each per day, amounting to millions every year, The Shift has learned.
Senior bank officials, speaking to The Shift on condition of anonymity said the consultants were all selected by the current BOV CEO, Rick Hunkin, the first-ever foreign CEO of the Maltese bank, hired at the start of 2020.
According to the sources, the seven consultants, whose contracts range between one and two years, are all close acquaintances of Hunkin’s, dating back to connections made at British and other financial institutions where Hunkin worked before coming to Malta.
The information seen by The Shift reveals that two of these consultants have been given a two-year contract, and are receiving €2,000 a day for their work. Their individual contracts will cost the bank almost €1 million each. One of these consultants was previously sacked by a British bank and is known to be very close to Hunkin.
Five other consultants have been given contracts with a duration varying between 12 and 24 months at a pay of €1,500 per day. They are expected to be paid some €360,000 per year according to their contracts, which in some cases have already been extended by a further 12 months.
According to calculations made by The Shift, the seven contracted consultants at BOV will share more than €5 million in fees by the end of their contracts. Their names are being withheld for security reasons.
BOV sources described these fees as “exorbitant” and “unnecessary”, the bank has defended its decision saying the consultants are filling in areas where no local expertise exists.
While refusing to give specific details on the thousands the bank is forking out daily for these consultants, citing “commercial sensitivity”, a BOV spokesman told The Shift that “the bank engages local and international consultants who it deems to be specialised in the area of expertise and does so only when it cannot make use of its own internal resources”.
“The fees charged are commensurate with the fees that experienced consultants in these areas of specialisation charge,” the BOV spokesman added.
While declining to confirm that all seven hired consultants were ‘close’ to the current CEO in his previous work engagements, the spokesman said the engagements were made through the proper channels.
“Such consultancy agreements are bound by agreed deliverables and are only entered into following a detailed selection process which is governed by the Bank’s procurement process and approval levels.
Any significant contract also required board approval which has been properly sought and obtained in all cases,” he said.
A struggling bank with a marred reputation
While BOV has always been one of the pillars of Malta’s economy, the institution was targeted by the incoming Labour government when it was returned to power in 2013.
Many of the bank’s leaders were removed and replaced with party loyalists, and the bank was chaired for several years by the financial auditor of the Labour Party, Deo Scerri, who had limited experience in the sector.
These changes coincided with the period during which the Maltese government started its controversial passport selling business, large numbers of Libyan nationals began transferring money to Malta, and commercial gaming companies infiltrated by the Italian mafia were allegedly using the bank to move large amounts of funds.
The bank also became entangled in the Pilatus Bank scandal – the now-shuttered lender that’s been described as a money laundering machine – which used BOV as its correspondent bank.
In 2019, the bank was fined some €60,000 by the FIAU for breaches related to money laundering. The Shift is informed that the FIAU is still investigating the bank’s relationship and possible infringements in its dealings with Pilatus bank.
Although the government only controls a minority shareholding in the bank, it has retained the right to appoint the bank’s chairman and several directors. This gives the government of the day effective control over the institution.
BOV has also recently been implicated in two other scandals related to ongoing litigations abroad, which may hit the bank’s profits.
All these factors have led to a significant drop in the bank’s value, with shares currently trading at just €0.85c per share, a plunge of some 40% when compared to 2017.
With Covid-19 and the global downward economic trend also hitting the bank’s prospects, shareholders have failed to receive a dividend for the past two years, with the bank citing ECB directives as the reason.