A lawsuit filed against Bank of Valletta by one of its own board members alleging false declarations and manipulation did not require a company announcement, the bank has insisted in replies to questions by The Shift.

The newsroom revealed last week how James Grech, the longest-serving director on the board of BOV and a Labour Party candidate in the last general elections, filed a lawsuit against the bank accusing it of “lies, manipulation and false declarations” with regulators, including the Malta Financial Services Authority and the European Central Bank.

Despite the situation, which may have repercussions for the Malta Stock Exchange-listed listed bank and its shareholders, BOV did not issue a company announcement on the exchange, which was considered a departure from standard practice.

Senior bank sources expressed shock with The Shift at the BOV’s lack of transparency, stating that a case of such severity, in which the bank is being sued by one of its own directors, “was undoubtedly news that merited sharing with shareholders.”

They pointed out that while the bank issues company announcements when a director is approved by regulatory authorities, the bank did not deem it necessary to disclose to shareholders that one of its own directors was accusing it of malpractice and impropriety, adding this was “perplexing”.

Asked to explain why it had not informed the market about the singular lawsuit, a spokesperson said, “The Bank does not consider that the matter is one that would require a company announcement according to the capital market rules.”

As regards the lawsuit and the severe allegations Grech is making, the spokesman said that, on the basis of the documents the bank has seen, it “categorically rebuts each and every one of the allegations being made against it and will be defending the unfounded allegations made”.

The bank stressed that it has regulatory obligations and that it will continue to meet those obligations in accordance with regulatory requirements and expectations, in a non-discriminatory manner and in line with standard business practices applicable under the circumstances.

Lawsuit comes after director’s fallout with prime minister

The Shift is also informed that the lawsuit was filed after Grech fell out with Prime Minister Robert Abela.

The Shift is informed that Grech held several meetings with Abela in recent months, in which he gave him information not only on his own grievances against the bank but also about “the bank’s deterioration in recent years, particularly when Joseph Muscat was in power”.

Abela, The Shift is informed, refused to hear Grech out and snubbed his 2020 Labour Party leadership campaign canvasser, which left him with no other option but to go to court and expose the bank.

BOV, in which the government has the majority shareholding, has been involved in several scandals in past years, including the Deiulemar case in which it was forced to pay out tens of millions of euro in an out-of-court settlement; the payment of around €11,500 a day in consultancies; and dubious loans connected to government-backed projects such as the ElectroGas power station and the Vitals-Steward hospitals deal among others.

Grech’s issue with the bank dates back to 2019 when, as part of a new regulatory framework introduced by the ECB, an annual ‘Individual Suitability Report’ is carried out on members of the board of directors. That report is passed on to the regulators for approval.

Grech claims the government-appointed chairman at the time, Deo Scerri, informed him the regulators had not been satisfied with his assessment and asked him not to recontest his board position at the next shareholders’ meeting.

However, the regulators confirmed Grech just a few months later.

In his lawsuit, Grech states that he insisted on being informed if the bank had made the contested suitability report available to third parties. The bank denied this.

But Grech says he learned two years later that both the ECB and the MFSA had been given copies by then-BOV CEO Rick Hunkin. Grech is accusing the bank of unprofessionalism and making deliberate false declarations to the regulators.

He is asking the court to condemn the bank for breaching data protection laws and for the report, which he says is rife with lies, to be removed from the record.