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Man seeks €3m in damages from Central Bank

Claims bank's decisions were discriminatory

Lawrence Borg is claiming he incurred substantial damages because of the Central Bank’s refusal to allow him to use the Forward Buying Rate Scheme it was operating between 1988 and 1996.

Lawrence Borg is claiming he incurred substantial damages because of the Central Bank’s refusal to allow him to use the Forward Buying Rate Scheme it was operating between 1988 and 1996.

A tour operator who claims he was the victim of a frame-up by the Central Bank of Malta in the late 1980s has filed a claim for compensation amounting to about €3 million.

Lawrence Borg, 69, claims he incurred substantial damages because of the Central Bank’s refusal to allow him to use the Forward Buying Rate Scheme it was operating between 1988 and 1996.

The scheme was a method used by businesses, especially those dealing with foreign exchange, with which they could buy money or other physical or financial assets in anticipation of a price rise or a future increase in demand.

In an application filed before the Bank’s Governor, Mr Borg explained that he owned Cerviola Holidays Limited, registered in the United Kingdom in 1985. The company operated as a tour operator and held the Air Travel Organiser’s Licence between 1985 and 1997. Subsequently it had stopped trading.

Cerviola Holidays operated through its office in the UK and acted mainly as a tour operator for British tourists visiting Malta. Every year, the company managed to attract and secure around 15,000 British tourists to Malta and placed them in various hotels across the islands.

The company employed in total around nine employees who were mainly situated in the UK.

Mr Borg told The Sunday Times of Malta that his ordeal began around November 1987 when he was arrested at the airport’s departures lounge with a group of tourists. It had been alleged that he had been illegally taking money out of Malta.

On that occasion, the police had searched each and every passenger hoping to find money spread among them, but none was found.

The following January Mr Borg and three employees of Cerviola Holidays were taken to court in relation to the company’s operations.

Following a court order, Mr Borg had his bank accounts, property and passport restricted.

After a lengthy court case in which they faced four years in jail, the court delivered judgment in 1996, declaring Mr Borg, the employees and the company not guilty of all charges brought against them.

Mr Borg, in turn, opened a court case against the Central Bank to seek compensation for damages incurred after the company was denied the right to benefit from the Forward Buying Rate Scheme during the lengthy legal proceedings. The court had declared that although Mr Borg and the company were not guilty, the bank was basing its decision on suspicions it still had. 

Between 1987 and 1996, the company was applying for the FBR scheme but every application was rejected by the Central Bank.

According to Mr Borg, Cerviola Holidays Limited was the only tour operator which was denied the right to be granted the Forward Buying Rate by the Central Bank. Mr Borg claims that the decisions were discriminatory in the company’s regard and led to decreased profits.

After having exhausted all of its funds and reserves, the shareholders were no longer in a position to financially support the operations so the company stopped trading.

“It was all abuse of power and, essentially, a frame up by the Central Bank,” Mr Borg insisted. He also repeated the claims in a letter to the European Banking Authority, in which he informed it about the pending claim.

A spokesman for the Central Bank told The Sunday Times of Malta that the case had been already decided upon by the courts and that these may no longer be appealed. When pressed on the claims, the spokesman said the bank had nothing more to add.

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