Minister pledges to help firm prior to EC approval
Finance Minister Tonio Fenech has pledged to help the local plant of sealing solutions manufacturers Trelleborg undertake an investment of €2 million prior to the European Commission’s approval, this newspaper has learnt.
An EC spokesperson yesterday told this newspaper that although Malta has notified three support measures, the Commission Services are still assessing the government’s request.
“We have no details of the scheme for this company in particular - officially, of course - we have seen what has been in the press,” the EC spokesperson said. “But in general, any company could be included in the three support measures, including Trelleborg - if it fulfils the conditions the Member State has included in its notification. The Member State has some leeway and is not then obliged to notify of grants in specific cases.”
But the Business Promotion Act in the laws of Malta clearly states that the Minister shall in January of every year publish in the Government Gazette a list of companies that have benefited from state aid, together with “a general description of the activities of the company and of any cash grants from which the company benefits under this Act.”
When Business Today asked the Finance Ministry to reveal how much the Trelleborg aid will cost, a ministry official said the information is confidential, and perhaps wrongly, referred to the Business Promotion Act which he alleged the confidentiality of this information is protected by.
The Ministry would not answer on whether it has informed or consulted the European Commission on this grant either.
Shortly after the EC sent us its answers, Finance Minister Tonio Fenech called our offices to express his concern in our approaching the commission after he had denied our request for information.
“This is sensitive information and if jobs at Trelleborg or livelihood of families are affected because of your article - I will blame you for it,” Fenech threatened. “I will do it publicly, mentioning your name and the name of your paper.”
Dubbing our request as “some heroic act by a journalist”, Fenech said that even if a parliamentary question had to be asked on details pertaining to state aid at this time, he would not answer.
“If parliament accepts that this information as confidential, I don’t see why you should not,” he remarked.
After being asked on how he would react if the law were to require such information to be published, Fenech said: “There might be a time when I will divulge this information but it is in the national interest that I do not do so at this stage.
“I know I will be criticised for this,” he added, “but if this country does not want leadership, then I might as well quit. I have had enough. I have many avenues from where to make more money than politics.”
Asked why such a big deal for the disclosure of information which other European governments keep publishing every time they support the private sector, Fenech said: “First of all, the company receiving the grant would not want such information to be published. Secondly, everyone will come asking for help if we reveal the details, and this country cannot afford it. By revealing such information, other countries have brought the recession onto themselves.”
If the Maltese request for state aid measures were to be approved, they could be applied to support undertakings which are affected by the credit crunch resulting from the financial crisis, provided these firms were not already in difficulty on 1 July 2008.
State aid rules
Under the EC Treaty state aid rules, the European Commission adopted a temporary framework providing Member States with additional possibilities to tackle the effects of the credit squeeze on the real economy. The Framework forms part of the measures announced by the Commission in its 26 November European Economic Recovery Plan and was approved in record time following consultation with Member States. The Commission had considered that “due to the drying up of the lending market, even healthy companies may not be able to get the finance they need. This may seriously endanger their business”. The new framework therefore introduces a number of temporary measures to allow Member States to address the exceptional difficulties of companies to obtain finance. In particular, Member States will be able to grant without notification of individual cases subsidised loans, loan guarantees at a reduced premium, risk capital for SMEs and direct aids of up to €500,000. All measures are limited until the end of 2010 and subject to conditions. Based on Member States’ reports, the Commission will evaluate whether the measures should be maintained beyond 2010, depending on whether the crisis continues. The Framework will facilitate the tackling of the current difficulties in the economy First, to ensure sufficient bank lending to companies; second, to allow companies with liquidity problems due to the crisis to benefit from temporary relief through a limited grant; and third, to encourage companies to continue investing into a sustainable future, including the development of green products.
In order to meet these objectives, Member States may grant, under certain conditions and until the end of 2010: a lump sum of aid up to €500,000 per company for the next two years, to relieve them from current difficulties; state guarantees for loans at a reduced premium; subsidised loans, in particular for the production of green products (meeting environmental protection standards early or going beyond such standards); risk capital aid up to € 2.5 million per SME per year (instead of the current €1.5 million) in cases where at least 30 per cent (instead of the current 50 per cent) of the investment cost comes from private investors.