Bank of Valletta coughs up €26.5 million to end Swedish pensions headache

Bank of Valletta has agreed to pay put €26.5 million in a settlement with the Swedish pensions agency to avoid further litigation on its role as custodian of Falcon Funds.

Falcon Funds was a Swedish private pension run by a Maltese company, but whose investment decisions were vitiated by backroom dealings with its investment manager Temple Asset Management.

Over €247 million was lost, resulting in the shuttering of Temple in Malta, criminal action in Sweden against Temple director John Farrell; a two-year ban from the MFSA on holding approved positions for Falcon directors Tonio Fenech, the former Nationalist finance minister, and Ian Zammit and Joseph Xuereb; further court action in Malta from BOV against a host of entities involved in siphoning off cash from the pension fund; and the imprisonment of chief instigator and fraudster Max Serwin in Sweden.

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A total €32 million, including insurance compensation, will be returned to Falcon Funds savers, the Swedish pensions agency said.

“We worked to minimize the damage to pension savers and get back as much money as possible… Among other things, negotiations have taken place and are still ongoing between the Swedish Pensions Agency and actors who do not have direct responsibility for the fraud,” the agency said.

The agency said the agreement was a success in efforts to give money back to savers who lost their cash. “They increase confidence in the European fund regulations as the fund company’s custodians and insurance companies now take some responsibility for the fraud being committed,” said agency director Daniel Barr.

In 2020, Bank of Valletta appointed UK risk and compliance veteran Rick Hunkin as CEO.

In 2019, BOV was accused by the Swedish agency of delaying negotiations, with representative Henrik Borg saying the bank had first given the impression of “being very serious. It turned out to be just a delaying tactic, that is, a really nasty negotiating game.”