18 February 2004

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Economic crisis leads businessmen to desperation - GRTU chief alleges

By Kurt Sansone and Julian Manduca
It has been left to the GRTU director general Vince Farrugia to sound the plight of entrepreneurs having to shoulder the burden of increased pressure from banks and the tax collection authorities at a time when the economy is not looking good.
Farrugia yesterday confirmed that at least four GRTU members have committed suicide in the past few months because of the financial difficulties they encountered.
“This is a tragic situation, the pressures on businesses have increased and while the social system caters for employees who are made redundant there are no support structures for entrepreneurs,” Farrugia told The Malta Financial and Business Times.
Farrugia had first mentioned the suicides on Saturday during a seminar organised by the Labour Party for the social partners, but no official reaction was forthcoming from the authorities on the tragic claims.
Talking to this newspaper yesterday Farrugia said call-ins by the banks and uncompromising tax authorities have worsened the cash flow problem at a time when several businesses are struggling.
“Without entering into the merits of whether the entrepreneurs made good business plans, my appeal is to government to appreciate that when the economy takes a downturn the entrepreneur is completely alone.
“This is leading to a high rate of heart attacks, depressions and other similar stress-related sicknesses among entrepreneurs,” Farrugia said.
“Not a week passes that I don’t receive a phone call from distressed entrepreneurs or their spouses asking me to help them out,” the GRTU director general told this newspaper.
Farrugia said he was aware of the difficulties faced by a number of companies engaged in overtrading but asked whether simply shutting down was an option. “It’s easy to chide companies for over-trading, but the alternative would be for them to close down and sack employees. It is not an easy decision to take. There are too many businesses competing for the diminishing demand.”
The Malta Financial and Business Times asked Malta’s banks whether there was any change to their policies regarding loans and whether they had instituted new procedures so that the recovery of loans is more strictly followed and what was previously more flexible had become more rigid.
The banks were also asked whether there had been an increase in the value of loan defaults over the past few years.
HSBC limited itself to replying: “Information regarding provisions for loan defaults is available in HSBC’s published Reports and Accounts.
“These reports, which provide information up to 30 June 2003, are posted on the website of the Malta Stock Exchange.
“As full year results for 2003 are not yet published, HSBC can not disclose any information in relation thereto.” It is consequently not known whether there has been any change in the bank’s practices.
Alfred Triganza, a senior manager at APS Bank, told this newspaper: “Kindly note that the information requested is confidential and as a consequence we are not in a position to comment in its regard.”
The same questions sent to BOV were unanswered yesterday.

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Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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