25/09/19

MALTA: FSA Response to Judicial Letter.

As published on internationalinvestment.net, Wednesday September 25, 2019.

The Malta Financial Services Authority has responded to a controversial and unprecedented judicial letter that was filed by one of its governors over an alleged misuse of funds relating to a 'golden handshake' given to a former employee.

In a statement sent to International Investment the MFSA said that it has "taken note of the judicial letter filed by one of the Governors of the Authority".

As reported, a public quarrel between the chief executive of the Malta Financial Services Authority (MFSA), Joseph Cuschieri, and the chief operating officer Reuben Fenech led to a legal challenge by an MFSA director that has rocked Malta's financial services industry.

"...the Authority wishes to make it clear that funds administered by it, are and will continue to be used exclusively in the exercise of its functions and operations. "Needless to say, the Board shall remain focused on the implementation of its vision and strategy," MFSA statement

The letter was filed by MFSA director Joe Brincat who warned the MFSA CEO, that any golden handshake payment was a breach of the rule of law that brought shame upon the government's administration of the country.

In the judicial protest, The Times of Malta reports that Dr Brincat, a former justice minister, told Cuschieri to "desist from offering a golden handshake," insisted that there was no approval for the use of such funds to terminate the contract of an employee.

Addressing Cuschieri directly, Brincat charged that "this is a crime, as the public funds which you are administering should have been used for specific purposes and not as a blank cheque for you", the report said. 

The MFSA statement sent to International Investment, said: "The Authority does not consider it appropriate to comment publicly on the ongoing matters referred to by the said Governor. However, the Authority wishes to make it clear that funds administered by it, are and will continue to be used exclusively in the exercise of its functions and operations.

"Needless to say, the Board shall remain focused on the implementation of its vision and strategy," it concluded.

This week, the Maltese Minister for Finance Edward Scicluna - who has refused to be drawn into the judicial letter row -  restated that Malta is showing the world that it is "very serious about addressing issues related to money-laundering and financial crime.

"It is the duty of financial practitioners to come forward with any suspicious activities," Minister for Finance Edward Scicluna said while addressing the the Second Financial Integrity Forum to financial practitioners within the Malta Financial Services Authority.

According to a report published earlier today from the event, by local news outlet The Malta Independent, Malta's parliamentary secretary Silvio Schembri said that weeks after taking political responsibility of the MFSA, he has presented to a bill to parliament to "relinquish the power to decide on the MFSA's budget" and it is now the MFSA's board of governors who decide on the required budget.

Another change is that the MFSA is the "sole decider" on when, how, and whom to recruit, the report stated.

Schembri addd that the changes the financial sector is encountering have to be addressed holistically, a change in mentality is key, in particular within institutions we often look up such as banks. 

"Being a small state as we are, this could be challenging but we are fully committed and determined to surpass it", Schembri added.