Zenith directors no longer ‘fit and proper’ to hold director or shareholder positions

Former Zenith directors Lorraine Falzon and Matthew Pace have been deemed unfit to hold any director or shareholder positions until criminal proceedings against them are concluded.

The Malta Financial Services Authority (MFSA) has taken regulatory action against the two, prohibiting them from accepting any new positions in companies licensed or supervised by the MSFA, or that require the authority’s approval or authorization.

This prohibition will remain in place until the criminal proceedings against them are res judicata, at which stage the MFSA will consider amending or withdrawing the directive after evaluating the judgement against them.

This decision can be appealed before the Financial Services Tribunal.

Zenith Finance, previously MFSP, rose to prominence after Pace was said to have been responsible for an investment portfolio of some $700,000 held by former chief of staff Keith Schembri in a British Virgin Islands company.

According to a report filed by former opposition leader Simon Busuttil to a magistrate in 2017, Schembri used this company to channel payments to individuals like former Allied director Adrian Hillman through MFSP investment portfolios.

Earlier in 2018, MFSP was ordered by the Financial Arbiter to pay out over €100,000 in compensation for investment mis-selling and for not acting in the best interests of clients.

In one case, MFSP mis-sold a €10,000 investment to a part-time McDonald’s employee and student in her 20s, whom the Financial Arbiter said did not have the necessary experience and knowledge to invest in the failed LM Managed Performance Fund. MFSP was ordered to pay back the amount lost.

The firm was fined €12,000 by the Malta Financial Services Authority in 2012 and had its licence to sell complex products restricted for three years over its sale practices. The Financial Intelligence Analysis Unit in June also fined MFSP €38,750 for failures in its anti-money laundering controls.

Pace and Falzon were charged in 2021 with money laundering, making a false declaration to a public authority, forgery and complicity in a criminal act.

A freezing order was issued against them, and both were denied bail initially.