MONEY DEC 2019 ISSUE 58

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TH E FI N A N CE EDI T I ON I SS U E 5 8

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COV ER STO R Y

Martin Bengtsson

ON THE TROT

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28 Mandy Falzon

DO NOT DISTURB EXCLUS IVE

Alastair Campbell

REFER-END-DOOM?

32 Geoffrey Debono

A CEO MINDSHIFT

4 · MONEY

Yule-tide — Another year is over and while we’re meant to be indulging in Christmas spirit and feeling the joy and merriment called for by this time of festivities, instead we’re witnessing a tidal flooding of corruption and murder accusations in the higher echelons of power. Protestors have taken to the streets to make their voices heard in no uncertain terms – people are fed up of the situation, of being associated with a mafia state, of corruption that permeates through the upper echelons of those in charge, of the lack of accountability being taken by all those involved.

And there seems to be quite a few people involved.

News portals must have witnessed traffic records over the past few weeks, with people craving for news and information as things unfold. Any business displaying a campaign banner on a news portal at this time will would have not regretted having one, but this is of little consolation for businesses. They have been negatively affected by the turmoil that the country is in.

International news agencies have dubbed Malta as a corrupt tax haven where journalists are murdered, and no one gets sent to jail.

Instead, they get lucrative deals and complete immunity.

The work that went into bringing Malta up to scratch from a financial services point of view, to be in line with EU requirements so that the country could apply to successfully join the EU – the work of 20-odd years – was flushed away in the space of a few weeks. Of course,

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WELCOME

the back story is longer, starting in 2013 if not earlier; however, it all came to a climax in November 2019 and imploded. The plot was already unravelling as loose threads came apart mainly due to the hacking of the Mossack Fonseca server which exposed the secret bank accounts of Keith Schembri, Konrad Mizzi, and the infamous clandestine Egrant.

COVER Martin Bengtsson Chief executive officer, LegolasBet Read the full story on page 18

Had Schembri and Mizzi been held accountable for their actions immediately, just how different would the turn of events have been?

Clearly there’s no point in playing a game of ‘what if?’; it achieves nothing but a feeling of helplessness and surmounting anger at the injustice.

Injustice is what any Maltese, or Maltabased person should be feeling. Injustice at having what was once described as an idyllic Mediterranean island, worthy of Calypso, enriched by the Knights of St John, stakeholder in a pivotal moment of World War II, brought down to its knees in shame by a handful of people whose already-full pockets could never be full enough.

There have been several strongly-worded articles by different entities, such as the Malta Chamber of Commerce, the Institute of Financial Services Practitioners, and the Malta Institute of Accountants, that have all highlighted the grave nature of the country’s situation within the professional sphere.

The underlying message is unequivocal and unanimous – action must be taken immediately to safeguard and restore the jurisdiction’s appeal.

It will take a lot of work to rebuild Malta’s reputation within the international business community – respectable companies aren’t inclined to want to trade or invest in jurisdictions swimming in the murky waters of corruption and murder accusations.

However, this is a fight that we mustn’t give up. For the sake of our moral compasses, our country, and future generations, we must continue to make our voices heard and demand the transparency that was promised to us.

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6 · MONEY

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CONTENTS

ISSUE 58

34

E XCLUSIVE

REFER-END-DOOMED? Giselle Borg Olivier speaks to Alastair Campbell, writer, communicator and strategist, while in Malta on an EY conference, for his take on the Brexit saga.

ECONOMY

TRICKLE-DOWN ECONOMICS A series of recent publications and research by the Central Bank of Malta has provided a wealth of data about the economy, in particular the impact that a few years of higher-than-average growth has had on the man in the street.

MONEY analyses the data.

FINANCE

FOUNDING FINANCE

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Chris Mifsud looks at companies that are scaling the heights with their innovative ideas, and funding avenues for businesses.

OPINION

THE BANKER WHO CAME FROM IRAN Political analyst Emanuel Delia on Malta’s umpteenth ‘missed’ signs which led to Ali Sadr Hashemi Nejad to become the banker he should never have been.

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BONDS

ESG PRACTICES & THE EMERGENCE OF GREEN BONDS Jordan Portelli takes an in-depth look at green bond issuance, earmarked for climate and environmental projects.

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CALL-TO-ACTION Richard Muscat Azzopardi compares the golden age of advertising with today's ways and says that we should brace ourselves for a transformation in marketing.

COVER STORY

ON THE TROT Duncan Barry interviews Martin Bengtsson, chief executive officer at LegolasBet, a gaming company founded in 2016, which is on the trot to breaking the Swedish trotting monopoly while also offering an array of other betting options.

ONE ON ONE

A CEO MINDSHIFT FOR SCALING GROWTH Dayna Clarke interviews Geoffrey Debono, chief executive officer at Debono Group, on his take on how a business can be successful and on diversification.

50

FINTECH

IS YOUR BUSINESS FUTURE-PROOF? If you want your business to have the best possible chance to survive, you need to futureproof it. But how? Theo Dix puts businesses to the test.

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MARKETING

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FA S H I O N

BACKPACK FRENZY The backpack is the de rigeur of large leather goods for men these days. For this edition of MONEY, we are putting together a selection of backpacks, from the designer to the crowdfunded backpack.

GIFTS

A STOCKING FULL OF STARS Start the new year in style with MONEY’s gift list.

INTERVIEW

DO NOT DISTURB The discussion on the ‘Right to Disconnect’ from work-related duties after working hours seems to be gaining ground on a national level. MEUSAC kickstarted this debate through a conference it organised recently which attracted a lot of interest. MONEY interviews Mandy Falzon, head at MEUSAC, on the outcome of the conference.

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L AST WORD

UNTIL THE NEXT BRICK IN THE WALL The Bluesman analysis the fact that despite the downside of life, all returns to an even keel eventually, as history has showed us many a time.

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E XCLUSIVE

ISSUE 58

REFER-END-DOOMED? Giselle Borg Olivier speaks to Alastair Campbell, writer, communicator and strategist, while in Malta on an EY conference, for his take on the Brexit saga.

Photos by Rene Rossignaud

THE FINANCE EDITION

E XCLUSIVE

MONEY · 11

Giselle is a freelance writer, proofreader and social media marketer who lives on Instagram and cappuccino. She runs Content for Success.

by expulsion according to the Labour Party rules. Mr Campbell has been pushing for a second referendum on Brexit as he explains in his own words.

Now that the October 31 Brexit deadline has been postponed, will these constant delays have repercussions on Britain?

What matters is where we end up, and, where we should end up (in my view) is by giving the British public the chance to think again – not based on the fantasies of 2016 but based on the realities of the deal that we now have.

So, yes, the repercussions are there and the world is looking at Britain thinking, ‘What are you guys up to?’, but the important thing is to resolve the debate, and the only way to resolve this debate now is to hold another referendum. (At the time of the interview with Mr Campbell, the election in the UK hadn't taken place.)

On October 25, Alastair Campbell was one of the key speakers of the EY Malta Attractiveness Survey 2019, having delivered a speech themed ‘Brexit: Make or Break’. Mr Campbell is no stranger to the stage or to the public eye, having been involved in UK politics since 1994 with a very prominent role as former UK Prime Minister Tony Blair's chief press secretary.

Earlier this year, he was kicked out of the Labour Party for voting Liberal Democrat in the EU election, a move which is punishable

Speaking about the referendum, every time the subject is brought up, one of the things that people comment on is that it’s too simplistic to ask the question as you have put it – either stay or agree with Johnson’s deal? Because there’s clearly a lot more on the table than just Johnson’s deal… we haven’t even mentioned the Single Customs Union.

All of this is complicated – there’s no easy solution. The big mistake was Cameron’s in having the referendum in the first place.

That is not to say that people can’t make big decisions – they can, but what he’s done is put a hand grenade in a system of parliamentary democracy and a referendum for the single most important decision facing the country.

So, yes, you can have a Customs Union…

… but how would you word the referendum question?

The referendum is: This is Brexit – do you accept this deal? Yes or No? How have you seen Britain change in terms of the way politics are done?

It’s all gone a bit crazy or what? I watched a documentary series recently about Mrs Thatcher's time and what was really surprising on looking back, was how much violence there was at that time – miner strike, Ireland, terrorism, poll tax riots. There was a lot of violence.

So actually you could argue that, yes, people are angry, yes, people are divided, but, ‘touch wood’, it hasn't turned to this sort of mass violence. We had an MP murdered during the referendum; there's a lot of abuse of MPS which is unacceptable.

I’ve known Boris Johnson very well for a long time; I think that he is deeply untrustworthy.

I think he's actually an amoral character in many ways, but he's positively Trumpian in the way that he undermines his duties.

I’ll give you a very small, but important, example: Recently he was supposed to be giving evidence to the Liaison Committee of Parliament which the chairs of all the select committees… he cancelled at the last minute.

Now, I just know that when Tony Blair was Prime Minister, he would not have done that.

And the thing between Johnson and the Queen? Well, I'm not the greatest monarchist in the world, but you must have respect for the Queen, for the institution, and for the →

12 · MONEY

E XCLUSIVE

ISSUE 58

I THINK HE [BORIS JOHNSON] IS ACTUALLY AN AMORAL CHARACTER IN MANY WAYS, BUT HE'S POSITIVELY TRUMPIAN IN THE WAY THAT HE UNDERMINES HIS DUTIES

(Editor's note: UK PM Johnson claimed victory on December 12 following an election on Sunday, December 15). One will now wait on the outcome of talks in relation to an orderly Brexit deal, as the chance of a referendum is bleaker than ever.)

What do you think of Malta's position in the Attractiveness survey? Do you feel Malta is much more attractive these days?

fact that it’s her and she's such an incredible woman. He has no qualms about lying to her.

Having ample experience as a campaign director for Tony Blair, what would your primary suggestion to new PM Boris Johnson be right now?

What I’d say to him is what Kenneth Clark said to him in Parliament, I think at around the time of the prorogation. ‘For the first time in your life, you now have a serious job; do you think you could take it seriously?’

And he's right. Be serious. Stop behaving like a child. I just don’t think that he can do

the job. Yes, he got a deal, but, as I said in my speech, the reason that he got a deal is because he caved to what the Europeans were asking for, and what the Irish were asking for.

I came to this same event about five years ago. Malta is a small country, and I know that there have been issues, such as having gaming being a big part of the economy (which has its issues too), but I would say that generally Malta has a broadly positive profile, and I think that what one takes away from events like this one is that the challenges are being looked at in a positive, proactive, strategic way.

If I think about the European Union, Malta counts for something and that's important.

Don't underestimate how much Malta has going for it in terms of climate, history, relative stability, so I'd say that there are issues that must be addressed and are being addressed.

14 · M O N E Y

FINANCE

ISSUE 58

THE FINANCE EDITION

MONEY · 15

FINANCE

Chris is the managing director of a marketing communications agency and holds an MBA from SDA Bocconi, Milan.

founding finance Chris Mifsud looks at companies that are scaling the heights with their innovative ideas, and funding avenues for businesses.

It is no small secret that Malta seems to enjoy an unyielding position with respect to liquidity. The launch of numerous bond issues on the local main and alternative (name Prospects locally) markets and similarly IPOs (Initial Public Offerings) is clear evidence of this.

More importantly are not the issues being offered themselves but the break-neck speed at which they are typically subscribed (often over-subscribed). This would make you believe that Malta might have a thriving and fertile start-up ecosystem. However, as is often the case on this island, a double personality trait starts revealing itself. In fact, the vast majority of funds raised in

these capital markets are tried and tested businesses, very often with property or development at their core, while others would be secular growth types of operations such as traditional retail, hospitality and even FMCG. This leaves a stark minority of these funding routes to higher risk start-up business concepts. This is, in Malta, also ironically the case for our version of London’s AIM (Alternative Investments Market), known as Prospects, a platform that offers less viable and generally smaller companies the chance to tap into the capital markets with more regulatory flexibility and substantially lower associated charges.

The island has no shortage of entrepreneurs

and business founders with good, viable commercial ideas. Stemming most likely from a culture that has thrived on an archipelago famously barren of resource, has resulted in an evolution in creating something out of nothing that goes beyond basic subsistence.

This is evident in the energy and enthusiasm of a culture of exciting ‘disrupters’ (horribly over-used term but there you have it) being cultivated in the business community. This is very well known to anyone who watches this market space and is connected enough to either the capital markets or the start-up end of the business community.

‘One lands on my desk every week and there seems to be no sign of it stopping.’ →

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FINANCE

I’m quoting the managing partner of a Malta-based advisory consultancy that is registered by the Malta Financial Services Authority (MFSA), a provider of corporate and management services.

‘That’s not to say that they’re all viable, in fact eight out of 10 can be dismissed in minutes, but it is good that they keep coming, shows that there is good energy beneath the surface and eventually we always have one or two ideas that are hard to punch holes into. If they’re backed by a good team, funding is the least of their challenges and we easily match them to the right source… if presented well, the investors virtually always step-up.’

THE ISLAND HAS NO SHORTAGE OF ENTREPRENEURS AND BUSINESS FOUNDERS WITH GOOD, VIABLE COMMERCIAL IDEAS

I’m looking so far at the perspective of the overall market, its regulation and have quoted a ‘matchmaker’ service provider. However, the stark reality from the perspective of the founding parties is that there is rarely any focus or interest on the complexity of the markets, and even less so the regulatory side to it. Founders or start-up entrepreneurs are a magical contradiction of fragility and limitless resolve. They are typically enamoured to their business concept, they can see the bigger picture, they most likely see global scalability and know (though don’t necessarily know how to communicate) that they’re onto a winner. Money in fact at this stage is something they have very little time for. This is clear when terms like ‘runway’ or ‘burn rate’ somewhat detach the importance of funding and only consider it as a means to purchase time and therefore multiply their chance of reaching escape velocity.

And so, what tends to happen in the real world, locally at least, is a mash-up of options including bank borrowing, private lending, equity, government subsidy and public borrowings or equity. If we take a ceteris paribus scenario of a good solid business concept, a strong, enthusiastic team and a basic feasibility that shows proof-of-life, the next steps are generally an expedition into multiple funding channels. As is the case in many of life’s adventures, a good network opens doors, sometimes locally more so. By tapping a solid network, entrepreneurs can study the trade-offs of for example bank borrowing

ISSUE 58

versus a convertible bond from an angel investor. It is typically advised that at this stage, funding seekers are guided by business advisors. The boot-strapped start-up though rarely has the reserves for handsome service fees, success based or otherwise. It is not uncommon in fact that the seasoned investor that can identify a potential and promising success story, steps in at even this stage where the cost of equity is at its lowest (risk also arguably being the highest) just to give the business a chance to start the search for funding.

From here on though, the adventure is an amazon-like experience of flirting with listing possibilities (on main or alternative markets), public borrowing, dialogues with banks, strategic or silent investors and anything in between, with no small amount of attractive but distracting options that could lead to dead ends. The outcome is often a weighted mix of all of those, but with a significant preference for private funding at the earlier stages that allow the stepping up towards public funding at a second stage and all the administrative costs and some historical proof of success that regulation will require.

The much-revered venture capital culture synonymous with the west coast start-ups and promises of unicorn IPOs is a distant dream for any business founders locally.

What Malta offers is a more informal possibility that tends to sometimes lack specific structures though is however all swimming in an ocean of liquidity that has yet showed no signs of drying up. Indeed 2019 has shown countless bond issues and property and tech IPOs having been extremely successful in reaching total annual funds well into the nine-figure dimension. All in all, local entrepreneurs, diversifiers, disrupters, founders or anyone really that can show proof-of-life, ideally a couple of years of monetisation potential under their belt and (increasingly important) a fantastic team to steer their dream, will find the right funding match with the right guidance. The right guidance, oodles of grit and maybe a little nudge from fate will turn a spark into a flame and at least allow enough time for subsequent funding rounds to drive scalability and (too subjective to define) success.

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18 ¡ MONEY

ISSUE 58

COVER STORY

Duncan has over two decades of experience in feature writing and journalism. He is also a freelance writer. In 2012, he was the national winner of the EU Health Prize for Journalists.

ON THE TROT Duncan Barry interviews Martin Bengtsson, chief executive officer at LegolasBet, a gaming company founded in 2016, which is on the trot to breaking the Swedish trotting monopoly while also offering an array of other betting options.

Can you give us some background on LegolasBet?

important thing was technical infrastructure and connectivity. It is also easy to travel from Malta, to other destination-business locations.

LegolasBet launched in 2016 as a pool betting platform for trotting. True to the identity of the brand, our Swedish owner and investor, Rune Andersson, is a highly devoted trotting aficionado. Since many Swedes share a national passion for trotting, when it comes to alternatives for betting, there has only been one company providing this - ATG (Aktiebolaget Trav & Galopp). ATG had a monopoly on the Swedish market and all attempts on breaking this monopoly have failed. LegolasBet wanted to change that, and so here we are.

Our company was born out of a desire to create an alternative betting choice for the trotting community in Sweden. During the last year, we have also expanded our portfolio of products to offer our players a holistic platform, including Sportsbook and Casino, to please all gaming enthusiasts.

LegolasBet is here to compete with rivals in the iGaming Industry, but respectfully promises to raise the bar without imitating competitor strategies. We have a different history, and because of that we also embrace different values. We have created our own philosophy and we practice it every day. From a company that only offered pool betting for trotting in 2016, today LegolasBet enjoys a large customer base, attracting 18 different countries with our broad-spectrum portfolio of exciting casino games and wide sportsbook

What makes Malta an attractive place to invest in when it comes to the gaming industry?

The main advantages of setting up a business in Malta is that the island offers a solid regulation, preferable tax levels and significant talent all in one place. Malta is still the iGaming hub of Europe. To complement this beautiful iGaming hub is the amazing Maltese population. They are friendly, helpful, ambitious and very keen to drive and protect the iGaming industry. This supports our business. It makes us feel extremely welcome and inspires us to build our business to superior industry standards. offerings. However, trotting will always be the true inspiration behind the brand.

Do you feel Malta is among the top EU countries to attract business of this sort?

What drove you to set up business in Malta?

Malta is the European hub for iGaming with a good infrastructure and there is a lot of talent gathered in one place. For us, Malta is the perfect base for our business to grow. The Malta license allows us to operate in and from Malta across the EU in any market that does not locally regulate gaming. We were also attracted by the ability to find experienced, multilingual and educated talent within Malta itself and from across Europe. Another very

I think Malta is still the iGaming hub of Europe and it does enjoy many advantages compared to other countries. I believe that the MGA is miles ahead of a lot of other jurisdictions.

However, with competition constantly increasing, the trend within the sector is that European countries are having their own gaming regulatory regime, which means that the value of an MGA license will decrease, because other countries will be covered by their own legislation.

THE FINANCE EDITION

COVER STORY

For me, Malta is still number one, but If I should try to point out another country that can rival Malta as the iGaming hub in the coming years, it would be the south of Spain; Gibraltar, Malaga and Marbella. It could prove relatively smooth for businesses there; in finding the right skills and talent, as well as favourable cost of living and salaries. Having said this, I do not believe that this location will grow to the level which rivals Malta as an iGaming hub. However, it is important that the Maltese Government continues to protect and support our industry, and ensures to find positive solutions on current affairs which may affect our industry, such as the hike in rental prices, banking facilities for iGaming companies, and the general cost of living in Malta which is constantly on the rise, so that these factors do not continue to threaten the future of iGaming in Malta, as well as other industries and fellow citizens alike.

my opinion is that Malta is one of the best places to live in Europe. The island is also very safe, it has an excellent education system and a modern and efficient health system. Indeed, my son was born at Mater Dei Hospital and I am amazed by the outstanding quality of service and care.

Any other good things about Malta that you don’t think are often spoken of?

How will LegolasBet differentiate and be successful in a very competitive industry?

From a business point of view, I think that Maltese people have an amazingly positive vision of the future and this is certainly an asset – they believe that tomorrow will be better than today. As a start-up business, in a highly competitive market, it is crucial to be surrounded with a positive and upbeat atmosphere. And on a more personal level,

Our strategy is crystal-clear, our success starts internally with our amazing people who are part of LegolasBet team. How we inspire each other and how we believe in our unique brand, reflects how our customers feel when they connect with our product and services.

The Legolasbet brand represents the values that we are currently shaping – we are the anti-boredom community; always ready for a challenge, evolving through perseverance, resilient in adversity. The brand identity for Legolasbet is based on our mission to challenge the Swedish trotting monopoly and to honour our customers, who are invested in the community. Just like the horse that no one saw coming, changed the landscape of trotting and engaged a whole country.

This is what the Legolasbet brand strives for,

MONEY · 19

expanding this dream to an ever-growing gaming community and offering a full portfolio of products to complement trotting, be it sports or casino.

At LegolasBet, we have a collaborative interview process whereby our candidates are invited to share their professional success stories, both professionally and beyond, so we can understand if their personal and professional values are naturally aligned with ours. We value our teams greatly, and we take every opportunity to show this, through words of appreciation, business coaching, beer Fridays, end-of-month team brunches, and other valuable and fun events to simply say ‘thank you’ to each other and grow together. We are proud of our linear structure at Legolasbet, where everyone is invited to share new ideas. The culture is all about selfempowerment and our roles are autonomous, so we all could become an innovation partner in this exciting business.

We work very hard to attract the right, experienced talent who are in the industry for a purpose, to be part of a growing, dynamic company. I am very proud of the people we have at LegolasBet and I am 100% sure they are what differentiates us in this market.

Martin Bengtsson has 17 years of iGaming experience. To those who know him, his leadership style is one that is inclusive, as well as, visionary. He ensures every team member at all levels, feels involved and engaged with the company’s mission. He is a sport enthusiast at heart, with a truly genuine and inspiring entrepreneurial spirit. Mr Bengtsson has, in the past, enjoyed working with top brands in the industry, including Svenska Spell and Betsson. Today, he is the chief executive officer at LegolasBet, a company founded in 2016. Here he has led the development and execution of innovative strategies, which have consequently resulted in strong growth for the business. One thing is certain, Mr Bengtsson has a particular passion for bringing something unique to the industry, be it a new Trotting product, or other surprises he has in store for 2020. His background hails from the finance industry and his experience involved creating growth strategies for businesses and collaborating with investors, equity firms and other organisations.

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THE FINANCE EDITION

MONEY · 21

BONDS

Jordan is an economist and a portfolio manager for a local asset management company.

ESG practices & the emergence of green bonds Jordan Portelli takes an in-depth look at green bond issuance, earmarked for climate and environmental projects.

In recent years the notion of environmental issues continued to pile pressures on companies and their practices. Indeed, many companies are devoting remarkable efforts and investment to focus on Environmental, Social and Governance (ESG), as nowadays investors are increasingly focusing on companies which are doing their bit on this front. In fact, today prior to making an investment decision, investors are factoring into their analysis equation the ESG perspective.

In a nutshell, environmental concerns have increased drastically over the past years, namely on studies that global trends in climate have changed. This led to increased pressures on companies too in doing their part in order to protect more the environment, through its ESG policies.

Environmental aspects may include a waste management practices of a company, its energy use, or its practices of mitigating pollution, among others. On the other

hand, the social part is more aligned to the relationship front. Namely, it focuses on a company’s relationship with its suppliers and if the latter holds the same ESG practices in its operations. Meanwhile, the governance aspect mainly relates to a company’s internal practices and its relations with its investors. It focuses on the use of accurate and transparent accounting methods and the dissemination of accurate information to its stakeholders.

Today, market practitioners believe that companies that hold a solid ESG framework will benefit in unlocking competitive value, attract and retain best talent and possibly keep activists at bay.

Green bonds and their emergence Recently, we have seen a wave in issuance of the so called ‘green bonds’, which basically form part of the ESG preposition and its practices. In simple terms, green bonds are bonds that are earmarked for projects that for instance promote energy efficiency, waste management practices or pollution prevention.

Illustrations by ouch.pics

A very recent and practical example of green bonds was the recent issuance, in November this year, of two-billion-euro →

22 · MONEY

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BONDS

worth of denominated green bonds by Apple.

The multinational technology company earmarked the proceeds from the issuance to cut carbon emissions by its suppliers and to develop more energy efficient and recyclable products.

In all fairness, over the years Apple was very vocal in its ESG practices and this is visible through its efforts of constantly being at the forefront in this regard. Rightly so, the company claims that it is the largest corporate issuer of green bonds following a 1.5-billion-dollar issue in 2016 and a subsequent one-billion-dollar issue in 2017.

Furthermore, it devotes huge efforts to be very much transparent in its ESG journey. In fact, the company is expected to publish a public report annually to share information with its investors on how the proceeds of such green bonds are being spent, in addition to estimates of how much carbon is being saved, as a result of such practices. Thus, it comes as no surprise that market participants believe that Apple has a strong and robust framework in place and continues to strongly support the company in this regard.

Likewise, looking more at the environmentalsocial aspect of the ESG framework, a more interesting but surprising to a certain extent, was the recent investment in ESG policies by emerging market (EM) companies. Usually, EM issuers are seen to lack transparency in their operational practices, in addition to the governance aspect and in reality, it is one of the reasons why investors usually are paid a premium from an EM investment, as opposed to investments in the more developed world.

Interestingly enough it was the issued bond by the world’s second largest beef supplier, Brazil’s Marfrig Global Foods, which tapped the market with a 500-million-dollar bond.

The company marketed the issue on the basis that the use of proceeds will be utilised to only buy cattle from ranchers in the Amazon region who comply with non-deforestation and other sustainable criteria such as animal welfare and fair-labour practices.

As years pass by, there is an ever-increasing interest in such types of instruments. It is a fact that the world is moving into a more eco-friendly and sustainable environment and thus it comes as no surprise that there is

A VERY RECENT AND PRACTICAL EXAMPLE OF GREEN BONDS WAS THE RECENT ISSUANCE, IN NOVEMBER THIS YEAR, OF TWO-BILLIONEURO WORTH OF DENOMINATED GREEN BONDS BY APPLE excess demand for environmentally sensitive investments. Indeed, recently we have seen prominent fund houses setting ESG funds, with the main mandate being to invest in companies that are doing their bit for a better climate and a more sustainable future.

Numerically speaking, over the past five years we have seen an exponential increase of green bonds. Data compiled by Bloomberg shows that supply exceeded 50 billion euros this year, well above the 32 billion euros issued last year. While in the US data compiled by Moody’s, one of the well renowned rating agencies, showed that in the first nine months of this year, 189.5 billion dollars were issued, a figure which already exceeded the 171.1 billion dollars supplied in 2018. Thus, a very straightforward statistical

data which shows a strong investors’ appetite for such investment vehicles.

The domestic arena on green bonds Even though over the years’ local companies considered ESG policies in their forwardlooking assessments, we still lag when compared to other European countries.

As with such investment instruments as vehicles for investors’ return, we lack both the necessary framework and investors’ knowledge.

That said, one should welcome the initiatives being taken by the current government to promote such arena. Indeed, during the presentation of the 2020 budget, it was announced that the Malta Stock Exchange (MSE) will be creating a framework for the issuance of green bonds in order to incentivise investments in environmental and sustainable development.

Undoubtedly, the safeguarding of our environment and its sustainability is a crucial aspect for our wellbeing. Thus, given the everincreasing market of local bond issuers, in addition to the incentives being put forward by the Government, a joint effort - even from corporate advisors - should be in place in order to create awareness among current or prospective issuers. This will surely be a big step forward which will be beneficial for all stakeholders involved.

International Settlements

Cash & Credit Management

Foreign Currencies

Digital Banking

2132 2100

cm.businessdev@fimbank.com

www.fimbank.com

FIMBank p.l.c., Mercury Tower, The Exchange Financial & Business Centre, Elia Zammit Street, St. Julian’s STJ 3155 FIMBank p.l.c. is a licensed credit institution regulated by the Malta Financial Services Authority and is listed on the Malta Stock Exchange.

24 ¡ MONE Y

ISSUE 58

FINTECH

Theo is a manager at EY providing strategy consultancy and transaction advisory services.

IS YOUR BUSINESS FUTURE-PROOF? If you want your business to have the best possible chance to survive, you need to future-proof it. But how? Theo Dix puts businesses to the test.

When organisations are busy focusing on their business, it can be difficult for them to keep up with the changing world. Today’s fast-moving and increasingly disruptive technologies, and the business models they enable, are adding to the pressure, resulting in competitive advantage for those companies that are quickest to adapt, but leaving many scratching their heads and uncertain of where to focus.

The world was a very different place 10 years ago. In 2009 Shell, Exxon Mobil, Wal-Mart, BP and Chevron were the five largest public companies in the world. In 2019 the five largest are all technology companies - Apple, Microsoft, Alphabet (Google), Amazon and Facebook, with Chinese tech giants Alibaba and Tencent also in the top 10.

Digital transformation was once all about the customer. Websites that provide information on a business, product and service; e-commerce capabilities; digital marketing and social media activity. Now many companies are realising that digital innovation can be infused across all areas of their organisation and have a transformative effect on both their business operations and processes. The big challenge that many

CEO and CFOs face is to determine where best to focus their often-limited energy and resources, and what business value such an investment can bring.

Inputting invoices, tracking receivables and logging payment transactions are high cost, low return, and not of high interest to employees.

Possibly, what is holding companies back is a lack of understanding of the basics, particularly by decision-makers. Perhaps no part of the enterprise has as many repetitive, routine tasks as the finance department.

This is a great space for Robotic Process Automation (RPA), the most traditional and simple of automation tools. RPA is the use of software that mimics human interaction with core systems, web and desktop applications

THE FINANCE EDITION

FINTECH

to execute processes requiring interaction among such applications. It runs unattended, working like a virtual employee, to run repetitive, rule-based, high volume processes efficiently, consistently and accurately at the user interface level. Typical tasks that prove to be easily automated with RPA include account-related reconciliation processes, data extraction from documents, comparison of data sets, composing and sending of template-based emails and data entry.

the customer value proposition. And companies that do no more than put digital wrappers around their existing brands and propositions, may find their future under threat.

We live in a digital word where the largest taxi company in the world runs a business without owning any cars, the most popular media company creates no content and the world’s largest accommodation provider owns no property. Ten years ago, there were only a few large firms that could be described as platform companies. By 2016 there were over 170 platform companies valued at US$1 billion or more.

Most of us have seen the use predictive analytics, when receiving movie or video recommendations based on content we have viewed in the past. When combined with machine-learning, an application of artificial intelligence (AI) that automatically learns and improves from experience without being explicitly programmed, these solutions get smarter. These same approaches can even help CFOs maintain optimal inventory levels, avoiding inventory write-downs and saving

WE LIVE IN A DIGITAL WORD WHERE THE LARGEST TAXI COMPANY IN THE WORLD RUNS A BUSINESS WITHOUT OWNING ANY CARS, THE MOST POPULAR MEDIA COMPANY CREATES NO CONTENT AND THE WORLD’S LARGEST ACCOMMODATION PROVIDER OWNS NO PROPERTY working capital. They can also be used to CFOs predict which customers will pay, be late in paying, or will not pay at all.

EY recently helped Microsoft to develop a blockchain-based solution to streamline the costly and time-consuming processes for managing content rights and royalties for its Xbox platform. The solution provides royalty information to Xbox game publishers in near real time, and dramatically lowered statement access times from 45 days to just minutes. The smart-contract based system is designed to significantly reduce operational inefficiencies and eliminate the need for costly manual reconciliation and partner reviews.

MONEY · 25

Businesses with large customer services functions could look to introduce some level of automation to handle the first level of interaction and some instances. Chatbot solutions can help reduce the demand on the customer service team, and in many instances, make their work more enjoyable by allowing them to handle the complex questions.

While the digitalisation of the back-end functions can add a lot of business value – quicker response times, working capital improvements, lower operating costs, more insights – it does nothing to change

Forging a successful digital future will likely mean buying as well as building capabilities in-house. Today, investors are prepared to reward companies that make bold technology and transformational acquisitions.

Companies need to think hard about how to free up capital to invest in digital and innovation. Leading companies strategically divest noncore or underperforming businesses not only to fund digital innovation, but to also refocus their core businesses.

Applying traditional valuation models for digital assets is similarly fraught with challenges - you can’t apply the same methodology to a clicks-and-order company as you would have done to a brick-andmortar business. Valuing potential rather than past performance and the worth of an organisation’s IP market of tomorrow is highly complex and not without risk.

Many companies are also exploring collaborations models in addition to buy vs build strategies. For example, banks initially saw many FinTechs as a threat to their business. Now, many of the most successful banks have enhanced their product offerings by white-labelling fintech solutions. But choosing the right partner to work with can often be as difficult as finding the right M&A target. Which are the technologies and products on the market that we should be focusing on? Where are the industry leaders focusing? How much is hype and what can the company truly deliver? How robust and easy to integrate are their solutions? The NextWave of transformation is already all around us. Is your business ready?

THE FINANCE EDITION

MONEY · 27

PROMO

Solutions for every workspace With its recently refurbished showroom, DEX Workspaces has changed its name to Vivendo Workspaces.

DEX Workspaces is the trusted name in workspace and office solutions, and the change doesn’t come lightly. The new name brings the business unit closer to the Vivendo family of brands, completing Malta’s most advanced offering across workspaces, hospitality, and wellness.

Vivendo has moved on from selling beautiful furniture to creating customised workspaces.

The name change is the last step to ensure

that that the B2B division in workspaces provides an even better experience for the consumer looking for an all-in-one workspace solution.

textures and products first-hand. There is an Acoustics Room to showcase their soundabsorbing features, and an Auditorium, with steppe-like seating and audio-visual facilities.

Vivendo’s commitment to their customers remains the same. The revamp of the showroom allows all architects and design professionals to use the workspace models for their meetings and creates a holistic experience where clients can sample different

The showroom provides a shop-in-shop home display of brands Technogym and Vitra to inspire architects and designers.

Furthermore, Vivendo has expanded their range of customised furniture to showcase how different designs can be adapted to suit multiple needs and configurations.

Vivendo Workspaces’ aim is to become the partner of choice for fully integrated workspaces, hospitality, and wellness spaces.

CEO Chris Gauci said: “We do not believe in standing still, and letting innovation happen on its own; we believe in making that innovation happen ourselves.”

Vivendo Workspaces, Mdina Road Qormi, QRM 9011 / +356 2277 3000 / workspaces@vivendo.mt — vivendo.mt

28 · MONEY

ISSUE 58

INTERVIEW

DO NOT DISTURB

The discussion on the ‘Right to Disconnect’ from work-related duties after working hours seems to be gaining ground on a national level. MEUSAC kickstarted this debate through a conference it organised recently which attracted a lot of interest. MONEY interviews Mandy Falzon, head at MEUSAC, on the outcome of the conference.

What is it that drove MEUSAC to kickstart this kind of debate?

Disconnecting or ‘switching-off’ after work is becoming an increasingly salient issue in an ever-increasing world of technology where an estimated 183 billion emails are sent and received worldwide each day. Most jobs require employees to follow up on workrelated emails, phone messages, or calls after working hours.

Various studies, including one conducted by FORUM Unions Maltin have shown that the great majority of workers do not switch off after work, affecting their work-life balance.

Another study, this time made by Colorado State University in the US, themed ‘Exhausted, But Unable to Disconnect’, showed that over 80% of workers carried on responding to emails and messages after work which created stress and anxiety. The study found that, on average, people spent eight hours a week - the equivalent of an entire extra workday - responding to emails and texts from their employer after hours.

MEUSAC continues to be at the forefront

in engaging stakeholders on matters of national and European importance and we have provided once again the platform to hold these discussions because as an agency we truly believe in the need to provide the right opportunities for different stakeholders to consult, engage and agree on the right policies.

MEUSAC is now gathering feedback of the stakeholders who attended the debate and participated in round-table discussions and will form a policy document that will be presented to the Maltese Government who, in turn, will use the information to determine the best plan of action.

France has been a great example in terms of introducing regulations on the Right to Disconnect digitally in a bid to reduce stress for employees and burnout. But not all EU Member States have followed suit. Do you feel that in a technology-driven world, the idea is more complicated than one would think, and can it be implemented on all levels if so?

From the conference itself, which was a

hands-on exercise, it transpired that there’s much more than meets the eye when it comes to introducing such policies. I mean where does one draw a line? Can something like this be implemented across all levels for all sectors? It is natural that these questions will crop up, considering the nature of the proposal. Even though France was one of the first countries to introduce legislation on this matter, putting it into practice has proved to be a challenge.

One must recognise that today’s economy requires flexibility and that a one-size-fits-all solution is not possible. Another matter that stakeholders are still not in total agreement on, is whether we need legislation to regulate the ‘right to disconnect’ or whether it should be a matter that should be mutually agreed between the employers and employees.

There are a few interesting examples of companies that in the absence of legislation have still implemented policies to encourage more workers to disconnect after working hours. For example, Volkswagen was reportedly the first company to implement a company-wide freeze on out-of-hours emails

THE FINANCE EDITION

INTERVIEW

MONEY · 29

IT IS ESTIMATED… THAT SOME 183 BILLION E-MAILS ARE SENT AND RECEIVED WORLDWIDE EACH DAY when the car manufacturer set its internal servers to not route emails to individual accounts between 6.15pm and 7am the next day.

Any more interesting facts emerged from the conference?

Interestingly, the Commissioner for Mental Health, Dr John Cachia, who addressed stakeholders during the conference, said that mental health was costing the nation some €400 million, and a good portion is related to work-related stress. I find the number to be worrying not only from an economic perspective but also the impact on employees’ well-being.

France’s right to disconnect is a nice idea, but it’s also vague when it comes to controls on employers/ees who fail to abide by this rule. What in your opinion would strike the right balance?

I think employees’ well-being should remain the most important factor to consider in any discussion related to this right whether it is through legislation or through constructive dialogue between the employers and employees. Chronic stress is becoming more common amongst employees and policy makers need to ensure that workers can disconnect from work and find the right time to unwind and spend more time with family and friends.

I believe that at the end of the day, everyone should be given leeway on what works best for him or her; and traditional mindsets of certain companies should change and evolve accordingly.

I do believe that switching off is a concept that goes hand in hand with work–life balance, an objective that has been at the core of the EU’s values. While there is currently no

Photo by Rene Rossignaud European legal framework in place to directly define, and regulate the right to switch off, the Working Time and the Work-Life Balance Directives do refer to this right in multiple ways. This includes the minimum daily and weekly rest periods that are required in order to safeguard workers’ health and safety, more family-related leave and flexible working arrangements to facilitate more work-life balance. Naturally, this must be seen within the context of the Union’s efforts to deliver the European Pillar for Social Rights that is aimed at improving the social situation of millions of Europeans.

The discussion on the right to disconnect is still in in its infancy in Malta; what I can say for sure is that most stakeholders who attended the conference told us that they will continue to build on the discussion in various ways.

That’s a very positive outcome for MEUSAC, as this encourages us to continue to widen the debate on the future of Europe in a bid

to see that new policies and legislation are implemented according to today’s needs for the good of all citizens in Europe, including Maltese citizens.

ABOUT MEUSAC Apart from creating various opportunities and tools for citizens to air their views to help shape EU policies and laws that directly affect them, MEUSAC assists various organisations to tap into EU funding opportunities and provides general information on the EU by promoting active citizenship. MEUSAC also hosts Europe Direct Valletta, one of many EU information centres found across the EU, serving as an additional platform to MEUSAC’s services.

— www.meusac.gov.mt

30 · MONEY

PROMO

ISSUE 58

PARTNERS in WINE Juanito and Astrid Camilleri have an unquenched thirst for perfection, the result: Ta’ Betta Wine Estates - which started from a small handsome plot of land.

How does one become a millionaire? Easy.

Start by being a billionaire and open a winery.

This is an adage often recited in wine circles, meant to instil an ironic smile but which can be eerily accurate.

Thankfully, there are people whose idea of wealth still delves well beyond the monetary and who find immense value in investing hefty resource and unlimited commitment to craft a product of unique character; makers of wine of the finest.

The year was 2002 when Juanito and Astrid Camilleri gained ownership of a small, handsome plot of land which would be their refuge from the very busy life which was clearly unfolding before them, both highly

driven professionals in their own fields, and both embarking on the challenging task of becoming new parents.

Consistent with their trademark trait of sharing with their closest, Juanito would find himself contemplating gatherings of friends and family over a bottle or three of his beloved tipple fuelled by crisp breezes of spring, while Astrid dreamt of having her very own patch of luscious produce which she would then shape into dishes of hearty food to share.

A chance meeting with Vincenzo Melia planted a seed which would, 17 years later, become a winery of unique character which is certainly doing its part in underscoring the tremendous

potential of wine from the Mediterranean.

Ta’ Betta Wine Estates promise much.

As a highly accomplished agronomist and a privileged close ‘disciple’ of the worldrenowned oenologist Giacomo Tachis of Super Tuscan fame, Vincenzo has developed a very keen eye for letting the territory speak to him of the wonderful sensations it has to offer. And he liked what this plot of land was trying to convey.

The 17-year journey was far from romantic, often highly strenuous and dangerously draining. Inebriating highs would be harshly pushed aside by senseless lows, challenging resolve to the very extreme. The Camilleris could of course anticipate that this would never be a walk in the park. The task of surrounding themselves with people whose

THE FINANCE EDITION

THERE ARE PEOPLE WHOSE IDEA OF WEALTH STILL DELVES WELL BEYOND THE MONETARY AND WHO FIND IMMENSE VALUE IN INVESTING HEFTY RESOURCE AND UNLIMITED COMMITMENT TO CRAFT A PRODUCT OF UNIQUE CHARACTER

PROMO

proficiencies went beyond their own in this new world of wine making and investing their own hard-earned capital into a venture not without high risks could be as hazardous as it could be exhilarating. No matter how meticulous one can be in the planning and designing of a project at hand, little can be done to anticipate unexpected and sometimes whimsical if not even devious counter-currents which pile on unnecessary strain to an already severely trying mission.

Mercifully, challenges of this nature also serve to further galvanise the resolve of the brave.

Today, Ta’ Betta Wine Estates can boast three wines of tremendous personality making them highly gratifying in their early years whilst destined to gain loads of character over many years to come; Jean Parisot 2017, an oak-fermented Chardonnay, Antonio Manoel

MONE Y · 31

2017, an opulent blend of Merlot and Cabernet Sauvignon and Philippe Villiers 2017, a robust blend of Syrah with Cabernet Franc.

We’ve all been consistently warned that the past does not guarantee future results, but a goblet of Ta’ Betta wines today has all it takes to give clear insights of an exciting future for lovers of good taste.

32 · MONEY

ONE ON ONE

A CEO MINDSHIFT for scaling growth

ISSUE 58

THE FINANCE EDITION

ONE ON ONE

Dayna Clarke interviews Geoffrey Debono, chief executive officer at Debono Group, on his take on how a business can be successful and on diversification.

What needs to happen to scale a growing business?

to access rides without the need of owning a private car.

Every business needs to understand and be able to articulate its purpose clearly. Armed with this clarity, when a company embarks on its journey, its purpose will determine its destination. The success of the journey will eventually be gauged on arrival to that destination. In business, more than ever, one needs to understand what the desired point of arrival clearly is.

Our new mobility ventures GoTo and Cool reflect this approach.

In 2005 our primary goal was to make Toyota the brand of choice, and we knew we could do that by focusing on customer needs. Our efforts were rewarded, and we managed to attain the pole position and maintain it for a consistent number of years.

What has been your biggest lesson in scaling the business?

Scaling a business is beyond growth. It requires high-energy, decisiveness and vision and a shared purpose. It is paramount to explain your purpose, vision and strategy at all levels and as much as possible garner support and enthusiasm about the Company’s mission and objectives so that this is achieved at all levels and delivered to the consumer.

What’s been the most challenging part?

As we continued to scale and diversify our business offerings, we increasingly relied on strong individuals with the drive to lead and deliver. These people understood and shared the vision we had for the business, relying on the delivery of cutting-edge customer experience, rather than just selling cars.

How your priorities as CEO shifted as the Debono Group grew?

Over time we built a robust organisational structure that has enabled us to drive ahead with the diversification of the Debono Group. This has helped me to focus more on identifying new market opportunities, particularly in the mobility space. My role is to ensure that in whatever route we embark, we’re guided by sustainability and a servicedriven philosophy to all our stakeholders being customers, employees or the community within which we operate.

We are living in a fascinating time for the mobility sector as regulatory changes, consumer preferences and technology are creating an environment enabling consumers

Diversification of business is risky, and one needs to move outside one’s comfort zone. The hardest part was diversifying in areas which may be considered in direct competition with the car sales industry.

Moving into business areas which offer practical and environmentally friendly mobility solutions required a long-term strategic vision and a leap of faith.

What’s a backlog idea that you’d like to achieve someday?

MONEY · 33

Dayna is a senior speech therapist by day and feature writer by night.

When she’s not busy fixing words, she is travelling the world to add to her fridge magnet collection.

other stakeholders who are increasingly championing alternative mobility projects.

The results so far have been encouraging, and that adds to the satisfaction of the job.

What would you have done different to scale growth over the last 40 years?

There are several areas I would have done differently in recent years to scale

DIVERSIFICATION OF BUSINESS IS RISKY, AND ONE NEEDS TO MOVE OUTSIDE ONE’S COMFORT ZONE

the business, including growing with the franchise we represent outside of Malta.

What does the future hold for Debono Group?

I would like to attain a private pilot license.

What’s been the most fun part?

Malta offers a unique opportunity for innovative mobility projects. The nation-wide deployment in a country the size of a city on a European and international scale makes us attractive to foreign investors who want to partner with us to deploy new solutions.

Our efforts have also been facilitated by the actions undertaken by the public and

Our purpose is to be the leader in the delivery of mobility solutions that go at the heart of congestion and that help improve people commuting experience and their overall quality of life. We are also busy developing property projects, including the development of a unique centre, that will be entirely focused on the well-being of its tenant employees and community at large, allowing them access to top-notch services for optimal physical and emotional well-being.

34 · MONEY

ECONOMY

ISSUE 58

TRICKLE-DOWN ECONOMICS A series of recent publications and research by the Central Bank of Malta has provided a wealth of data about the economy, in particular the impact that a few years of higher-than-average growth has had on the man in the street. MONEY analyses the data.

The rapid economic growth of the past few years in Malta has created prosperity which has brought about an inevitable trickle-down effect.

Take the most obvious positives: more companies coming to Malta and boosting tax revenue. Thousands of foreigners renting properties and creating a source of income for their owners. A 17 per cent increase in population meaning 17 per cent more people to shop in supermarkets, to use mobile phones, to eat out in restaurants, and to fly in and out of the country – not to mention the increased number of relatives and friends who visit. Record-low unemployment meaning that those who wish to work can almost certainly find a job, while those who have a job are faced with various options if they wish to progress their career to achieve a better standard of living.

However, there are also negatives: the takeup of the housing stock for rentals has meant fewer properties for sale – and higher prices for those properties that make it onto the market. Higher rental prices is one of the

factors that reduced the length of time that foreigners work here before moving on – as well as the lack of a school for their children, which is yet to materialise despite years of planning. And then of course, there are the social concerns: take, for example, the influx of foreign workers who are possibly being exploited by agents even before they land on the island to seek a better life for themselves and their families back home.

Those standing at arms’ length from partisan politics take a dispassionate view, using data gathered painstakingly over the years to flag the slightest movements in trend lines.

However, the truth is all too often buried in the political noise. To quote the immortal Dilbert cartoon: “Studies have shown that accurate numbers are not any more useful than the ones you make up.”

So, what has the Central Bank of Malta come up with recently?

Perhaps that is an exaggeration, as the numbers quoted by the ‘nay-sayers’ and by the ‘ra-ra’ band are often correct – but the figures can be taken out of context, giving a very different spin to the facts.

Studies, published in the Research Bulletin and in the Quarterly Review, delved into income and wealth inequality. Unfortunately, decades of political ideologies have failed to come up with a way to even out wealth

THE FINANCE EDITION

ECONOMY

median – a narrower gap than in 2010 when the ratio was 2.38.

However, this improvement needs to be further analysed to be fully understood.

For example, the households which earn more than the median (those in the middleto-upper parts of the distribution curve) saw higher increases in their income than did those with lower incomes. To put it in simplistic terms, the poor undoubtedly improved their lot, but the richer got even richer. This widening of the gap between the bottom and the top of the statistics means that the Gini Coefficient, which indicates wealth inequality, increased slightly.

The Central Bank of Malta also looked at median gross income (i.e. before deductions for tax, social security etc.). In 2016, this stood at €25,417, an increase of €4,856 (23.6%) compared with 2010.

But there is another metric which is just as important to consider: liabilities. How comfortably off you are must be seen not only in the context of how much you earn but also in the context of how much you owe.

The Central Bank of Malta study found that in this case, the inequality gap has narrowed, with the Gini Coefficient dropping from 0.682 in 2010 to 0.559 in 2016. This is partly the result of easier housing loans, which had particularly helped those in the middleliability bracket.

The median mortgage debt-to-household income rate stood at 221.7% in 2016, up 8.8% from the previous survey in 2013. This is due to the higher mortgages being taken on – which partly reflect both higher property prices, as well as longer repayment periods.

equitably across society – but trying to do so remains a fundamental principle in many democracies, whether through fiscal means or by providing a social benefits’ safety net.

What is happening in Malta? The study found that in 2016, the households that earned most brought in 2.3 times as much as those at the

What happens when you look at the net wealth? Here the picture once again shows a widening gap, with the Gini Coefficient rising from 0.566 to 0.598. The high level of home ownership (either outright or with a mortgage) in Malta – 80.6 per cent – helps to ensure that real assets (including property and self-employed businesses, valuables and vehicles) are more equally distributed across households than are purely financial assets like deposits and investments. However, the lower income households still appear to be finding it more challenging to acquire real

MONEY · 35

…THOSE AGED OVER 65 DID NOT EXPERIENCE ANY INCREASE IN INCOME BETWEEN 2010 AND 2016

assets – like houses – than those with higher incomes.

Interestingly, the survey has noted that more and more households are earning more than they spend, with the ability-to-save showing that 45.6% of households can save, up from just 23.7% in 2010.

Looking at household wealth, the share having some form of real asset has gone up, from 93.3% in 2013, to 95.4% in 2016 – with 78% of these assets being property.

The survey also analyses the households by age and found that those aged over 65 did not experience any increase in income between 2010 and 2016. What does this mean?

Although old page pensions have increased in line with the cost of living, this could indicate that they have not kept up with household income.

Given the natural cycles of family and work life, there were no surprises when it came to the analysis by age, with net wealth increasing as people get older, peaking between 45 and 54 at around €275,000. Across all households, it stood at €236,529. Median net wealth rose by 17.5% since 2010.

Investing in your own home seems to have a very positive impact on future wealth, with the survey noting that households that can save up enough money to partly or fully finance their home have a high probability of being in the wealthiest brackets as they get older.

They say that even the devil can quote statistics, but there is no doubt that numbers – especially when collected according to a rigid methodology based on proper research and modelling – are the pieces of the jigsaw that build up into a clearer picture.

brings cool back to the kitchen with engaging content, delicious recipes and a lifestyle flair.

E AT R E L I G I O U S LY Available from all Park Towers Supermarkets’ check-out points and selected outlets.

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MONEY · 37

OPINION

Manuel is a political blogger who writes for The Sunday Times and manueldelia.com.

BANKER WHO CAME FROM IRAN

the

Political analyst Emanuel Delia on Malta’s umpteenth ‘missed’ signs which led to Ali Sadr Hashemi Nejad to become the banker he should never have been.

Ali Sadr Hashemi Nejad is a household name in Malta. It was not always so. When he walked into the finance minister’s office in 2012, he was unknown. And he would remain largely anonymous outside the corridors of power until much later.

Mr Nejad filed an application for a Maltese banking license sometime after the Labour government came to power in early 2013.

By the end of that year he was granted the license to bank in Malta, which of course amounts to a European banking license.

Whatever due diligence was done into his affairs, it is a mystery how the box about his banking experience could have been ticked.

Before being granted a license to own and run a bank he had not worked in any other bank for a day.

We know from evidence published by the US Attorney in New York that Ali Sadr Hashemi Nejad was careful not to fill his due diligence forms altogether honestly. He instructed his staff not to mention the fact that he was Iranian. He had gone through great lengths to cover that fact up.

Due diligence is supposed to be about uncovering things. Ali Sadr Hashemi Nejad claimed his nationality was from St Kitts and Nevis. That should have raised alarms. The population of the Kittitian archipelago is only slightly larger than the population of Gozo.

The country is in the Caribbean, nowhere near where people are more typically called Ali or Sadr or Hashemi or Nejad. The name and nationality should have at least raised some questions.

inexplicable investments in Venezuela.

Those investments were a massive money laundering operation siphoning Iranian money through Turkey dodging international sanctions against Iran. The US Attorney indeed described Pilatus Bank as set up from “proceeds of crime”, a front in and of itself for other crimes like a local pizzeria that never seems to have customers owned by someone who gets visitors with bags of cash who do not eat much.

It should not have been too hard. The name appears twice in the UK company registry.

Both times the name comes with a Kittitian passport. But the dates of birth are different.

The odds that an Ali Sadr Hashemi Nejad might come from the 56,000-strong islands of St Kitts and Nevis are stratospheric. The odds that there are two Ali Sadr Hashemi Nejads from the 56,000 population of St Kitts are unimaginable. That should have raised flags.

Ali Sadr Hashemi Nejad networked well in his short time in Malta. He got his St Kitts passport from Henley & Partners, the government’s exclusive choice for Malta’s own passport selling scheme. Some describe Christian Kälin who owns Henley & Partners as a friend of Ali Sadr. Christian Kälin disagrees with that description. He insists that inviting him over to his Switzerland home for his wedding anniversary party did not amount to friendship.

More signals would be ignored. To get a banking license Ali Sadr needed to show he had the cash to back his new venture up.

Digging into the provenance of the cash would have led a proper inquiry to Ali Sadr’s

Kälin and Hashemi Nejad did have common friends, though. The most prominent one would be Joseph Muscat, Malta’s Prime Minister, who took time off from running the →

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OPINION

ISSUE 58

country in 2015 to celebrate Hashemi Nejad’s wedding in Florence.

That sort of proximity too should have been a sign for investigators. But it too was missed.

All this and much more came in the public domain when Daphne Caruana Galizia and a source from within – Maria Efimova – told us what this bank few even knew about, had been up to.

Millions flowed in from Azerbaijan into accounts in the names of people called Aliyev (the family of the president of that country) and Heydarov (the family of a senior minister of that country). That should have raised flags. The Aliyevs and the Heydarovs were known worldwide for buying properties they could not possibly afford unless they were embezzling state funds or taking fat backhanders. That should have raised flags.

It didn’t.

Money also flowed from various other politically exposed names such as one Dos Santos, whose father used to be dictator of Angola believed to have stolen blood diamonds from his own country. That should have raised flags. It didn’t.

Maybe local investigators were slightly less au fait with worldwide news than they should have been. But surely, they would have recognised Keith Schembri’s name in the very short list of clients – around 180 – that banked at Pilatus Bank. Why was Keith Schembri banking at an off-shore money laundering factory?

Looking at what he used the account for would have answered that. His accountant, Brian Tonna, deposited six figure sums in his account. The two would argue the deposits reflected an innocent repayment of a personal loan, not at all kickbacks on the back of the sale of passports to Russian oligarchs.

If that were so, why did they not conduct the transaction at the Bank of Valletta? Why seek to hide the harmless.

That should have been a sign, but it too was missed.

Another sign was a preliminary report by Malta’s anti-money laundering agency, the FIAU, that found a host of breaches in the way

ANOTHER SIGN WAS A PRELIMINARY REPORT BY MALTA’S ANTI-MONEY LAUNDERING AGENCY, THE FIAU, THAT FOUND A HOST OF BREACHES IN THE WAY PILATUS BANK CONDUCTED ITS BUSINESS Pilatus Bank conducted its business. Then the boss of the FIAU resigned and was replaced by his deputy who proceeded to issue another report saying Pilatus Bank had a clean bill of health. That despite the fact there had been no evidence Pilatus Bank had changed anything.

That should have been a sign, but it too was missed.

Missed by who? Here’s the rub. Ali Sadr Hashemi Nejad may be the protagonist of this drama but this is not a one-man show.

KPMG assisted Hashemi Nejad in his application. He was their client, but their ethical and legal obligations do not allow them to cover up for crooks. They were on the front line: the place where Ali Sadr’s nonexistent expertise, concealed nationality, the opacity of the provenance of his wealth and so on should have been revealed. But his chief advisor at KPMG was also a wedding guest in Florence and her number two went on to work for Ali Sadr at Pilatus. Hardly a credible source for an independent assessment.

The FIAU was overseen by a police officer whose wife is a government minister. Hardly the most obvious motivation to get to the bottom of things. A dutiful director of the agency quit when he realised the police would

do nothing about his findings. Two agents he recruited were fired on the spot. The new director knew who buttered his bread and clammed up.

The government is directly implicated.

Exposing the Henley & Partners link brings into question Malta’s own flagship passports scheme. The friendship with Ali Sadr ought to be devastating for the Prime Minister’s reputation, such as it is. And senior government figures trusted Pilatus Bank with its darkest secrets. Keith Schembri is alleged to have stashed kickbacks there. And has the last word on the Egrant evidence alleged to have been held at Pilatus Bank been said?

With all those interests, is it even possible to hope we can learn any lessons from the Pilatus catastrophe? That is very doubtful. Ali Sadr Hashemi Nejad, however, may yet learn his lesson at the US federal justice system.

The prosecutor there is asking he spends 125 years in prison and that is for crimes he is alleged to have committed before Malta made him something he had never really been before: a banker.

Manuel Delia co-wrote “Murder on the Malta Express: Who Killed Daphne Caruana Galizia?” with John Sweeney and Carlo Bonini. Read more about the Pilatus scandal in their book.

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ISSUE 58

MARKETING

Richard is the CEO of Switch — Digital & Brand, a marketing agency that forms part of ICOM, the world's largest network of independent agencies. [richard@switch.com.mt]

CALL-TOACTION Richard Muscat Azzopardi compares the golden age of advertising with today's ways and says that we should brace ourselves for a transformation in marketing.

What should I be thinking of going into 2020?

There is a common perception that this is the hardest period to be in marketing. As the digital marketing platforms change and make our lives as marketers harder, as consumers become more cynical and hard to read and reach, it seems as if we’re being squeezed on all sides.

It might say more about me than it does about marketing, but I believe that every era of marketing presented its own challenges and opportunities. It is up to us to make the best of them.

The 1950s and 1960s were the golden age of advertising (as opposed to marketing). The

age where an ad agency could win a major account based on a tag line. We refer to this in all our proposals, because it is an image of advertising that most people still cling to.

Agencies tend to be chosen at pitch stage (or given awards) based on a creative idea, but nowadays we’re judged on performance that’s measured in a very different way.

Instead of tackling a single issue, in this article I’ve decided to look at some of the major shifts we’re seeing on a macro level. Shifts that will define how we should set ourselves up in 2020 in preparation for the next decade or so.

What made the golden age of advertising so good was that it was a period where big-ticket creative ideas were rewarded. Creatives dared more and companies let them roll with ideas for longer, because it took time to measure the results. The great campaigns of the time even defined a generation. This was the era that gave us the Malboro Man, the Volkswagen Lemon, and deBeers’ Diamonds are Forever.

Campaigns that changed how people think.

The role of marketing has become so varied and important that the traditional role of CMO is currently held by the CEO, and the CEO’s role is to bring a set of C-level executives that specialise in areas like brand, customer journey, growth and data together to deliver results that a traditional CMO couldn’t offer.

The role of the CMO

To go back to the Mad Men analogy, the CMO role will eventually go the same way as the

THE FINANCE EDITION

audiences to stand out from the ones who were trying to take shortcuts.

As marketers, we should take it upon ourselves to balance out the long-term good of whoever’s paying us to do our job and the well-being of the people we’re marketing to.

If checks and balances on our industry make it harder for people to run smash-and-grab operations, then I’m willing to pay the price of inconvenience for it.

And what about consumers? What about their privacy?

Privacy seems to be the hot topic of the last half of this decade, and overall I think that consumers have much more protection than they’ve ever had before. My doubt, however, is whether most people care. lift guy in Mad Men. Everyone presses their own button in the lift now. Just like every member of the organisation is responsible for marketing in one way or another.

From where I’m sitting, and please keep in mind that my exposure to leadership of global organisations is limited to what I read, I think that global organisations will increasingly move towards models that promote specialisation in specific areas of marketing, so we’re getting more marketing people at C-level, not less, but they have more specific titles nowadays.

We tend to live in an echo-chamber (I know I do, at least) of people who care about the environment, people who care about their privacy, people who care about other humans - and yet the world is showing us that most people are OK with not doing making changes to protect the environment, to protect their privacy or to not vote for the Far Right.

People are happy with being a product if they’re getting something valuable in return, and my guess is that the privacy breaches need to be far more intrusive for them to see consumers moving away from tools they’ve learned to love.

“GDPR, privacy - I’ve had enough!”

My first experience in digital marketing was in a company that was obsessed with the rules.

We were super careful about our reputation with each person we contacted. I carried this over to Switch and I’ve always told our marketers to remember that we’re humans, and we’re talking to humans. As long as we market to people in a way that we would want our own data to be treated, then we should be safe.

In the short term, these new rules and regulations (and the restrictions on tools) are a pain for everyone, even if you were marketing ethically, however as time goes by it will help separate the wheat from the chaff. The regulations will help marketers who are building deep connections with their

M O N E Y · 41

MARKETING

Spam and privacy issues will continue so long as there are people who are willing to profit

IT’S TIME TO DUST THE RECIPE BOOKS AND LEARN HOW TO COOK AGAIN - AND THE NEXT FIVE YEARS WILL SEE A SLEW OF NEW RECIPES WITH FLAVOURS WE’VE NEVER IMAGINED BEFORE

off them, but now spammers’ lives are made harder with increased regulation and harsher penalties.

The next 5 years I’m strongly of the opinion that, despite all we’ve said till now, or maybe thanks to all we’ve said till now, 2020 is the best time to be a marketer. The next five years are going to see changes that will make us wonder what marketing looked like in 2019.

Just like we look back five years and the marketing profession was being decimated

by Facebook. Everyone thought that being a marketer was just as easy as being able to post on Facebook. Businesses were convinced that all their marketing costs would vanish because the cost of physical media was going to vanish.

Now we’re in a world where the dominance of Facebook (the platform, not the company) is diminishing. People are spending more and more time on channels that we can’t monitor yet. They’re more likely to share stuff that excites them on the “dark” web: Whatsapp, Facebook Chat, Instagram chat, Snapchat etc.

These are all encrypted from peer to peer, so we have no visibility into the content that’s being shared (and we’re OK with it), so we’re going to have to find new ways of monitoring how effective our content is.

As the reactions to our content go dark, so does the ability to listen, to gauge the engagement and to simply post your next offer on your Facebook page and press “Boost”. No more frozen lasagna. It’s time to dust the recipe books and learn how to cook again - and the next five years will see a slew of new recipes with flavours we’ve never imagined before.

THE PRINCE and his palace

PHOTOGRAPHER Marvin Grech

STYLIST Peter Carbonaro

MODEL Mikey at Models M

Shot on location in a Palazzo, Birkirkara For any enquiries on the Palazzo contact Fleur Doublet on +356 9903 8356

Shirt, tie, trousers by Charles & Ron

Jacket, polo, trousers by Charles & Ron

Sweater at Fly the Fly, Sliema; jeans by Armani Jeans, The Point

Kimono at Fly the Fly, Sliema; trousers by Charles & Ron; stylist's own necklace

All items by Charles & Ron

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ISSUE 58

FA S H I O N

BACKPACK FRENZY

Conrad is an economist by profession but has over a decade of experience in the men’s clothing trade. He now splits his energies in-between his two passions: tech and fashion.

DESIGNER MILITARY GEAR Brown and black is not a favourite colour combination of mine but this bag pulls it off nicely. Maybe this particular shade of ‘sesamo’ beige does the trick. One might consider a designer bag in a synthetic material somewhat secondary, but it does have some advantages: 1) easy to clean 2) durable and 3) lightweight. Prada is renowned for this technical fabric; it features across many product categories. €1,700 / prada.com

THE KICKSTARTER BACKPACK Form vs function. Traditional leather bags, even the finest of brands, deliver beauty but tend to be clunky and heavy when compared to contemporary designs made from modern fabrics. This backpack brand (that has some record-breaking crowdfunding rounds on file) possibly found a neat compromise. In terms of compartments and function, the options offered by the Nomatic backpack are unparalleled, whilst in terms of looks the style is a ‘clean’ in tad and it’s great for both formal and casual occasions. €229 / nomatic.com

The backpack is the de rigeur of large leather goods for men these days. The main device (laptop or phone) might be lightweight but once you add the accessories (battery pack, cables, etc.) and gadgets (e.g. gymbal) we carry around, it no longer remains that ‘light’ weight. Thus, the idea of ditching the traditional briefcase in favour of a backpack does make sense after all.

For this edition of MONEY, we are putting together a selection of backpacks, from the designer to the crowd-funded backpack. The choice is very wide, this is just a small selection.

THE FINANCE EDITION

MONEY · 53

FA S H I O N

VALEXTRA: MILAN’S LITTLE SECRET Known for its understated style, this is one of Milan’s lesser known brands. The main store is located on Via Manzoni, a couple of metres away from ‘Palazzo Armani’. This model might look ‘simple’ but the detailing is anything but: full leather lining, trimmings in matte silver, lacquered edges and more.

This is one masterpiece of a leather bag which if well taken care of, is bound to last for many years.

GUCCI HIKING BAG The Gucci Alpina Bag is quite a statement in terms of both shape and colour. The cotton canvas material of this bag gives it a ‘leathery feel’ while making it lighter.

This large backpack owes its inspiration to the hiking world. The detachable bottle carriers explain it all. €1,980 / brownsfashion.com

€2,580 / valextra.com

RECYCLED TARPAULIN The Zurich based eco-label has been around for quite a while now. Bags are produced from used truck tarpaulin. This fabric used on road trailers as a side-curtain or cover is probably one of the toughest fabrics around.

This particular model comes with a padded base for a 15” laptop, a zippered outer pocket on the flap that’s also adjustable for more volume. Padded shoulder straps too. €360 / freitag.ch

FOR THE GENTS, THIS TIME Parisian brand Longchamp needs no introduction especially the ‘le pliage’ line. Another wise femaleoriented brand, Longchamp has been steadily widening its product offer for men. The selection is more focused on style rather than function. The bag shown here is pretty much a simple backpack in a soft leather and a drawstring closure. Curiosity: Longchamp is one of the last French fashion labels that is still privately owned. €720 / longchamp.com

Back in 2015, Conrad started working on Vestis.AI, a digital personal shopper and private stylist app powered through a combination of AI and human creativity which is scheduled to launch in 2020’s second quarter. If you would like to become a test-user visit www.vestis.ai/test and follow the instructions.

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ISSUE 58

GIFTS

4

1

A STOCKING FULL OF STARS Start the new year in style with MONEY’s gift list.

2

3

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MONEY · 55

GIFTS

5

6

7

8

1

Gucci Black Leather Belt €450 / gucci.com

2

Fitbit Versa 2 Smartwatch €200 / amazon.com

3

Crescent Down Works + Todd Snyder Puffer Coat €639 / toddsnyder.com

4

Caldera + Lab The Good Serum €90 / calderalab.com

5

Apple AirPods Pro €249 / apple.com

6

Panasonic Professional Hair Clipper €172 / amazon.com

7

Clarks Originals x Bodega Wallabee Boot €200 / amazon.com

8

Beoplay A1 Limited Edition Speaker €250 / beoplay.com

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ISSUE 58

L AST WORD

The Bluesman is a Maltese sound engineer working in New York.

Until the next

BRICK IN THE WALL The Bluesman analysis the fact that despite the downside of life, all returns to an even keel eventually, as history has showed us many a time.

The Fine Young Cannibals were being driven crazy, Phil Collins was still lamenting the failure of love, The Mechanics the regret of a life too rushed and the Eternal Virgin likening her name to prayer, but the most apropos song must have been Pink Floyd’s The Wall released 10 years prior.

The year was 1989 and the event was the bringing down of the Berlin Wall of course.

Originally built in 1961 to stem the exodus which by then had reached over 2.5 million as East Germans, not unreasonably, fled that part of their fatherland for the part not under Soviet control. It started out as a wire fence and over the years was further reinforced and lengthened. There was a ‘kill zone’ between concrete walls in the Berlin portion about 150 yards wide, where escapees were fired upon from towers by the guards there who,

the excuse was, protected the East from the decadence of the West. Watchtowers, antivehicle trenches, guard dogs and trip-wire operated machine guns in case the guards missed. It’s a wonder that anybody attempted an escape, but many did.

The number of escapees killed in Berlin over the years was around 140. It may not seem like a lot but a heavy toll for what can be

THE FINANCE EDITION

L AST WORD

MONEY · 57

compared to only ‘crossing the road in a traffic-free zone’ within their city if you like to stretch a metaphor. Tunneling, swimming, cars, every conceivable and imaginative way. Pathe News was full of these stories.

I remember one escape in a car hardly big enough to have room for a clutch. Space was made under the dash, in the boot and under the back seat. Many others also shot across the 87-mile internal border through Germany.

Those killed exceeded 600, although this number is disputed.

Ultimately, the wall came down, in sweet repressive-regime comeuppance, by bureaucratic blunder. As Gorbachev’s Glasnost policy spread, the Communist Party found itself under pressure to ease back somewhat and lighten up its repressive policies. To this end, following the Soviet President’s visit to the GDR [East Germany], it was decided to allow travel across the border but in making the announcement at a press conference, the official doing so, Gunter Schabowski, who had barely read the pronouncement hemmed and hawed as he was questioned by journalists for the details and incorrectly stated that the lifting of the travel ban was to be with immediate effect. The news spread like wildfire and crowds gathered at the checkpoints to take advantage of this new policy. Over the course of the day and night, the mass of people overwhelmed the military and eventually the guards were ordered to stand down and open the gates. Over those first hours, among the many thousands of East Germans who had

THE NEXT DAY THE SOUND OF DRILLS AND SLEDGE HAMMERS HERALDED THE BREACHING OF CONCRETE, AND THE FALLING OF THE IRON CURTAIN

made it across the border was a 35-year-old woman named Angela Merkel who was on her way home but, on hearing what was going on, opted to head to the West.

The next day the sound of drills and sledge hammers heralded the breaching of concrete, and the falling of the Iron Curtain. German reunification took place in October of 1990.

Also, in that year, there were free [ish?] elections in the Soviet Congress; Solidarity winning in Poland; former dissident Havel becoming President of Czechoslovakia; Ceausescu and wife’s sticky end, among other events around the globe. The year 1989 is also considered the Grateful Dead’s best touring year, so an all-around good year I would suggest. The world bends towards Liberty albeit in fits and starts.

Unfortunately, as I have had occasion to note previously, memories grow dim, folk forget.

We’ve never had it so good said British Prime Minister Harold Macmillan roughly 30 years prior in 1957, then proceeded with restraints on spending and wages. By the late 60s rising inflation was already eroding the gains from the boom which had been masking a decline in the UK’s economic competitiveness and soon the oil crisis and the unwelcome return of mass unemployment sounded the death knell on all this largesse. Then again in the

mid-80s, boom time again during Margaret Thatcher’s premiership, with unemployment at a 10-year low by the end of 1989.

So all this journeying into fairly recent events is to highlight the fact that history is cyclical and veering in one direction does not preclude a correction to the other side and whichever side one stands on in this current wave of adjustment [hopefully for justice, charity and survival on this planet], one is able to recognise how we got to this point. Frustration at feeling ignored by those in charge, frustration at being left behind economically and unable to see yourself bettering your offspring’s lot and, eventually, manipulated into assigning blame for your circumstance on anyone or anything but the reality. At some point the swing back will return us to an even keel and slightly improved as humanity.

1989. Again, not a bad year. The first liver transplant was also performed in 1989. A procedure that singer David Crosby was grateful existed when Dr Ronald W. Busuttil, director of the Dumont-UCLA Liver Transplant Centre, saved his life with one. Top fiction books were ‘The Joy Luck Club’ and ‘Satanic Verses’, while non-fiction were ‘A Brief History of Time’ and ‘All I Needed to Know I Learned in Kindergarten’.

58 · MONEY

NEWS

ISSUE 58

Partitioning wall system ALLinONE Slim is a comprehensive partitioning wall system, developed by Mascagni to address all the needs of modern work exigencies, where spaces need to adjust to users’ changing requirements. Simple designs and unique features offer an intelligent solution to numerous functions; transparent glass can be placed alongside solid panels that can easily be reconfigured again and again. Uniting design and technology and the possibility of creating exciting combinations, ALLinONE Slim is the right solution in areas where there is the need for soundproofing amongst other work space requirements.

Oxford House, Triq L-Imdina, Central Business District, Birkirkara / +356 2546 4000 — www.oxfordhouse.com.mt

10 years of innovative projects and design

The architecture and interior design firm is committed to making the world a better place. “Good design can make the world a better place”, this is the belief that is guiding DAAA Haus for the past 10 years, a multidisciplinary architecture and design studio with offices in Malta, Milan, Ragusa and soon in Mumbai, India.

celebrate this occasion, including a gala party that was held on the terrace overview of the Cugó Gran Macina Grand Harbour Hotel in Malta, a flagship project of the studio and the design of a logo celebrating the anniversary, with the four geometric elements inspired by the shapes that Bruno Munari conceived in the early 1960s.

To celebrate the 10th-year anniversary, DAAA Haus came up with a series of initiatives to

“Design’s a way of life,” says Keith Pillow.

He continues: “Anything around us is

about design. It’s a powerful way of living, everything that surrounds us, it’s emotional.

Emotions that form our social character.” In these 10 years, this approach has given rise to ambitious projects, such as Cugó Gran Macina Grand Harbour, a luxury boutique hotel built in Malta in 2017 and winner of various awards; or Rocksalt (2015), a 19th-century garage in Sliema transformed into a modern and chic café, the first DAAA Haus project to be published in international journals.

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