Fresh Information Sheds Light On Inflated Product Placement Deals At Progress Press
Some companies were overpaying to put freebie samples of personal care products in glossy magazines in The Sunday Times, with its publisher Progress Press allegedly inflating its print figures.
In the promotions, freebie samples of the personal care products were affixed to the magazines that were inserted in The Sunday Times. Multiple sources and corroborating evidence has suggested that the number being quoted to the companies was substantially greater than the actual circulation or sales of the newspaper.
Progress Press is part of the Allied Group that also includes Allied Newspapers, publishers of The Times and Sunday Times. Lovin Malta has already revealed how Progress Press, part of the Allied Group that also publishes The Times and Sunday Times, inflated the number of printed copies on invoices to outside media houses.
Allied officials have since strenuously rebutted the story, with Paul Mercieca, chairperson of the board of directors, branding it as “riddled with insinuations and inaccuracies”.
Sources said that these freebies were limited to Sunday Circle and Pink Magazine. The Circle was produced by an outside media house until it began to be produced by Allied about six years ago. Pink was always published directly by Allied.
Product placement in Pink Magazine was happening in the years before the magazine ceased publication in 2020.
Sources said that the companies at one point were being asked for samples in the range of 35,000 even though sales of The Sunday Times were substantially less, even when accounting for sale fluctuations. These companies were charged thousands of euros to have the samples affixed to the cover of Pink. The samples themselves cost them thousands more.
The sources alleged that the excess samples, amounting to many thousands, were then binned.
Officials deny earlier revelations
The findings about the magazine placements come amid Allied officials’ strenuous rebuttals of Lovin Malta’s earlier report published three weeks ago. That story reported that outside media houses producing glossy magazines distributed with The Sunday Times were being invoiced for 40,000 copies at a time when the circulation or sales of the newspaper was substantially less, allegedly a bit more than half that figure according to multiple sources.
The business model of the media houses was to generate revenue from advertising and absorb Progress Press’ monthly charge, which amounted to many thousands of euros.
Allied’s Acting CEO Alex Galea denounced the article as “defamatory” in a right of reply, while Paul Mercieca, chairperson of the board of directors, said it was “riddled with insinuations and inaccuracies”.
Yet the largest individual shareholder of Allied said he is “distressed.” Robert Hornyold-Strickland, who owns 13% of shares, said he “will be seeking clarification on the veracity of these allegations from the management of Allied Newspapers to get to the bottom of the matter.”
Mercieca and de Marco deny link between generous deals and overcharging
After the article was published, questions were sent to Mercieca as well as Giovanni Bonello (chairperson of council of the Strickland Foundation, the largest shareholder of Allied) and PN MP Mario de Marco (lawyer of Allied and council member of Strickland Foundation).
One of the questions delved into CEO Galea’s and de Marco’s involvement in negotiating reductions on outstanding payments left unpaid after at least some of the media houses terminated the relationship with Progress Press, which had soured. Settlements on reduced payments were made after years of threats fired by the opposing sides in judicial letters.
This means that Galea and de Marco ought to have been aware that the outside media houses in their response to Progress Press’ legal threats were alleging years of overcharging. In that context, was it right of them to engage in negotiations in the first place given the lofty objectives of the Strickland Foundation?
Although de Marco acted as a lawyer for Progress Press, the question was made in the context of his other role as council member of the Strickland Foundation.
Paul Mercieca replied in similar vein to what Galea had said as reported in Lovin Malta’s initial story – that the charge was “not solely a printing fee” and mentioned other things, including ‘insertion’, ‘pre-press work’, and ‘printing’. He also said that “circulation figures quoted are always indicative since newspaper sales are never the same from one day to the next.”
Sources and corroborating evidence show that the description on invoices changed at one time. The term 40,000 copies was superseded by more generic terms, such as printing, but without specifying numbers. At that time there was a frenzy of legal threats, including injunctions and garnishee orders.
Mercieca said that Progress Press eventually accepted reduced payments – of 50% or more – “because it chose to be extremely understanding of the financial difficulties these magazine publishers were facing and in the interests of recouping a realistic portion of the debt owed.”
Mario de Marco answered that he is bound “by confidentiality and professional secrecy”, and that “any involvement on my part was in my capacity as a lawyer.” Then he maintained that “creditors can agree to grant discounts/reductions to debtors for various reasons”, and that “any assumption” on the reason for reduced payments on dues on invoice “are therefore gratuitous, speculative and potentially misleading.”
Curt reply from diminished Strickland Foundation
The Strickland Foundation, which owns 79% of the shares of Allied Newspapers, was set up in 1979 by politician, journalist and founder of Allied Newspapers Mabel Strickland “to be of service to the people of Malta.”
Its point is “to direct, administer and manage” its assets to attain five objectives. These include supporting ‘philanthropic and charitable causes’; fostering ‘democratic principles’, ‘human rights’ and ‘a free press’; and improving ‘the standard of Maltese journalism and the preservation of its freedom and independence’. It is understood that the foundation gets its funding from dividends on its shares in Allied Group.
It is run by a council of 5 members, although sources said that one seat remains vacant after the death of Ronald Agius. The present members are retired human rights judge Giovanni Bonello, PN MP Mario de Marco, bank executive Marcel Cassar, and retired banker Frank Bonello.
Agius still features on the foundation’s website as a council member. The website itself doesn’t seem to have been updated in years. Under the Events page, none are listed whether past or present. On the Training page the last entry dates back to 1997, and under Talks it dates back to 2008.
Various questions were sent to chairperson Bonello, to which the council members responded collectively.
On whether de Marco’s involvement as a lawyer for Progress Press in the negotiations over reductions on invoiced amounts was compatible with the spirit or letter of the foundation’s objectives, the answer was “that Dr de Marco was acting in his professional capacity as a lawyer – not as a member of the Strickland Foundation – while the other parties were represented by their own lawyers.”
The foundation also maintained that it “is distinct from the Allied Group and plays no role whatsoever in the Group’s business or legal affairs.”
A legal source consulted said that this answer may be legalistically correct, but moralistically it might be another matter given the foundation’s objectives.
Asked to give examples of what the foundation has done in furtherance of its objectives in the past five years, and whether anyone has replaced Agius after his death and whom, the foundation said that it “makes public announcements on any events or initiatives it chooses to organise, or on the appointment of new members to its Council, as and when it deems fit.”
Foundation rules specify that “a vacancy shall under no circumstance be allowed to remain unfulfilled for more than 3 months”. And after three months “it shall be incumbent on the Chairman” to apply to the Court of Voluntary Jurisdiction to fill the vacancy. Agius died five months ago.
Minority shareholder breaks ranks
Sources said that although it appears that the foundation, although still engaged in some funding, it is much diminished from what it once was, or what it was supposed to be, due to a combination of factors.
The inflow of funding has also diminished for a variety of reasons. Millions have allegedly been lost in kickbacks largely in relation to purchasing of a printing press by Progress Press, according to details given in court by the police who are currently prosecuting two previous managing directors with corruption and money laundering.
The case of one of them, Adrian Hillman, recipient of hundreds of thousands from former Prime Minister’s Chief of Staff Keith Schembri in an offshore account, continued on Wednesday.
The former managing directors deny all charges.
Lovin Malta’s revelations in this article and the previous one have not featured in any of the details or charges in court.
Sources within Allied also spoke of financial strains including overstaffing and wage bill, particularly given the high salaries among top editorial and management ranks.
Hornyold-Strickland, Mabel’s nephew with 13% shareholding in Allied, said: “There is little I can do to influence Allied’s future because I do not control the company as a minority shareholder – the Strickland Foundation does.”
Hornyold-Strickland is currently challenging in court what he contends to be the “irregular” transfer of shares from Allied to the foundation, and which derived from Mabel’s estate. Allied and the foundation reject his contentions being made in the court case.
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