Caruana Galizia inquiry: board member frustrated with witnesses passing the buck

Former Malta Financial Services Authority Joe Bannister and ex-police commissioner Michael Cassar due to testify in today's public inquiry sitting

The public inquiry into the murder of Daphne Caruana Galizia is being led by former judge Michael Mallia
The public inquiry into the murder of Daphne Caruana Galizia is being led by former judge Michael Mallia
16:19 Borg Cardona will inform the board of who he intends to summon to the witness stand in the next sitting at a later stage David Hudson
16:19 The next sitting will take place on 3 February at 2:30pm and then on 5 February at 2pm David Hudson
16:19 With that, the sitting has concluded. David Hudson
16:18 "Nexia BT had no banking licence during my time at the helm. They fell under the corporate providers list, for accountants,” Bannister says David Hudson
16:18 It was a Central Bank policy, replies Bannister. It was a bit tricky at the time of EU accession because it was against free trade. The due diligence is carried out on the people running the bank too. David Hudson
16:17 Borg Cardona says: “I’m informed that there was a policy of MFSA that new banks needed a substantial shareholding with existing banks.” David Hudson
16:17 The director general had told him that they were taking appropriate action on Pilatus. David Hudson
16:15 We needed more small banks, but I could not overrule the supervisory council in its decision to award a licence, Bannister says. David Hudson
16:15 He suddenly remembers a Mario Felice, who worked in the banking unit, but no more details. David Hudson
16:15 "I don't know. It needs to be studied in terms of developments. I've been out of the loop for two years and its not fair." David Hudson
16:14 "With hindisght, do you see room for improvement?" asks Lofaro David Hudson
16:14 "I cannot give you a guarantee on the quality of the investigations." David Hudson
16:14 “All I am telling you is that whatever they found, I worked on,” he says, to which the judges reply that he could not provide them with a guarantee. David Hudson
16:13 "I assure you that the MFSA did its job, I just can't tell you how,” Bannister says. The judges are still not convinced. “The buck did not stop with you, you yourself said so.” David Hudson
16:04 “I am under oath. Rest assured, that I am giving you everything,” Bannister says reassuringly. David Hudson
16:04 Said Pullicino sounds exasperated… “if you have any information, please pass it on to us. We are in the worst situation here... witnesses keep telling us: ‘not me, ask the other one.’” David Hudson
16:02 Asked whether he was still an advisor to the Prime Minister, he said he didn't know as he hadn't spoken to the new Prime Minister yet. David Hudson
16:01 "I said it must be pro bono." David Hudson
16:00 Bannister confirms that once he stepped down, because of retirement, he was appointed a special advisor. "The Prime Minister insisted, he said he needed my help with Brexit," he says. David Hudson
15:59 Obviously there was an issue which was being handled. He had never spoken to the Prime Minister about it and the Prime Minister could not speak to him about it. David Hudson
15:59 "No," he replies. David Hudson
15:59 "Did you ask for the KPMG report?" the board asks. David Hudson
15:58 Bannister says that Juanita Bencini of KPMG had said that the FIAU had found some deficiencies and that it had sent a letter saying everything was in order. Pilatus had held an internal investigation with law firm Camilleri Preziosi, he said. David Hudson
15:57 Borg Cardona asks him whether he ever spoke about this problem to someone. David Hudson
15:56 Said Pullicino: “we have a situation where a bank licensed by the MFSA comes into the limelight in the Panama Papers. Then you see someone leaving with suitcases in the dead of night…” Bannister replies: “Investigations were underway but we did not know the details. I’m not informed, I don’t know. I’m not shedding responsibility, I’m telling you exactly what the situation was in my time.” David Hudson
15:54 “I tried to keep a level of relativity between our salaries and those typical of the industry but it was not always possible.” David Hudson
15:54 One of the issues was the recruiting of foreign agents to work for the MFSA. "We were open to employing people, but the disparity between Maltese and foreign salaries is not something that could be breached." David Hudson
15:53 Every company which is licenced had to carry out supervisory reporting, he said. The director of each respective unit had the power to carry out supervisory visits. There were internal resources to deal with them, but business had expanded so fast that the staff could not cope. David Hudson
15:52 Bannister says that the MFSA’s money was never passed on to the FIAU. “Our surplusses all went to the government. Our problem was that business was increasing and we couldn't employ enough staff. We were always behind the curve." David Hudson
15:51 “There was a small financial problem on the side of the FIAU… Manfred Galdes’s salary as CEO was lower than as a director of the MFSA,” Bannister says. David Hudson
15:49 Was there some form of formal cooperation between the FIAU and MFSA? The FIAU board had a representative of the MFSA, Dr. Anton Bartolo who is a well known authority on money laundering. David Hudson
15:47 Borg Cardona mentions Keith Schembri, Sai Mizzi, Brian Tonna, Nexia BT. Were they known as business bringers to the MFSA? ”In my experience they never brought business to the MFSA," Bannister replies. David Hudson
15:47 REMINDER: it was not until March that the Maltese authorities froze the bank's assets, following the arrest of its chairman, Ali Sadr Hashemi Nejad. He was accused of involvement in a scheme to evade US economic sanctions against Iran. David Hudson
15:45 When the bank's licence was withdrawn, Bannister was told that the licence holder's American charges were the reason. David Hudson
15:45 A few days before the election in 2017, there were reports that the MFSA did not want to investigate the bank says Borg Cardona. "It was clear that what was reported in the press was not the accurate picture," Bannister says in reply. David Hudson
15:44 The Board asks the witness what his role was exactly. "Nobody reads the law," he replies chidingly. David Hudson
15:41 Bannister tells Borg Cardona to refer his questions to the head of the supervisory board. David Hudson
15:41 Borg Cardona says that basically the head of the supervisory board would have to answer. "Yes," he replies. David Hudson
15:40 "Even if I had asked to see these reports I would not be allowed to see them." David Hudson
15:40 The board expresses skepticism. David Hudson
15:40 Asked if he ever investigated them after the public claims made by Caruana Galizia, he said, “there was on site supervision by the banking unit. The reports by the banking unit to the FIAU I am not privy to." David Hudson
15:39 Despite the reputational damage wrought by them, in the financial sector, these were not licensed entities by the MFSA, Bannister says David Hudson
15:36 Borg Cardona asks about Keith Schembri and Nexia BT. Bannister said he never met them at the time. David Hudson
15:33 Camilleri would not be involved in the licensing process after that stage, he said. That was done by the supervisory council. David Hudson
15:32 Pre-licencing would be done with KPMG and it would see if it is a credible institution, he said. David Hudson
15:32 The board asks Bannister whether he knew the head of Pilatus Bank. "Yes," he replies. David Hudson
15:31 "In my time," he says, "there were three in charges of Supervisory Services. First there was Mr Carbone, then Mr André Camilleri. The license to Pilatus Bank was given by Camilleri when he was head of Supervisory Services. Marion Scicluna was then appointed four or five years ago." David Hudson
15:28 Said Pullicino asks who were the people responsible and what their role was. David Hudson
15:27 The enforcement part of the agency did not report to him directly, he said David Hudson
15:27 Lawyer Andrew Borg Cardona asks about enforcement. David Hudson
15:27 Asked whether he wanted to defend himself, he says: "I would always tell them to look at article 10 which describes the function of the supervisory council" David Hudson
15:26 The council doesn't report to the board, he says David Hudson
15:26 "The law gives a distinction between the board, chairman and supervisory council. I never received this report." David Hudson
15:26 He is asked whether he had ever received a report on Pilatus from FIAU or other bodies? David Hudson
15:25 He had been chair for 3 years in 1995 and then rejoined in 1999. He retired in March 2018 David Hudson
15:25 He is asked by the board about his tenure as Chairman of the MFSA David Hudson
15:25 Former MFSA chief Joe Bannister takes the stand David Hudson
15:25 We are back inside the courtroom David Hudson
14:45 Farrugia was asked how many reports linked to the Panama Papers were sent to the police. He replied that 15 such reports were sent to the police, but that these were related to Panama Papers, not necessarily involving PEPs. The rest of his testimony was heard behind closed doors. David Hudson
14:43 In the previous sitting, Kenneth Farrugia, the current Financial Intelligence Analysis Unit head, appointed in that role in February 2017, was asked to testify David Hudson
14:39 Cassar has been asked to testify once more to clarify a few points with the board David Hudson
14:39 The former Malta Financial Services Authority chief, Joe Bannister, is expected to testify after Cassar David Hudson
14:38 Our court reporter, Matthew Agius, has been told that his testimony should not take long David Hudson
14:37 The request has been upheld. The press have been asked to leave the courtroom. David Hudson
14:36 Cassar has asked that his testimony be heard behind closed doors David Hudson
14:36 The three judges have entered the courtroom David Hudson
14:36 Former Police Commissioner Michael Cassar is summoned to the stand once again David Hudson

Inquiry board member and former judge Joseph Said Pullicino sounded exasperated in today's sitting as he told the former MFSA chief that he was tired of hearing witnesses passing the buck and claiming they were not responsible for certain decisions.

"If you have any information, please pass it on to us. We are in the worst situation here... witnesses keep telling us: 'not me, ask the other one,'" Said Pullicino told Joe Bannister during his testimony.

Bannister, however, tried to reassure the board, saying that he was under oath and was doing his best to pass on anything he knew. He was being asked about Pilatus Bank's license and any due diligence which supposedly was in operation before the bank was handed a license.

When asked whether Bannister had ever received a report on Pilatus Bank from the Financial Intelligence Analysis Unit, Bannister passed the buck and said that the Supervisory Council should have received such a report and that if that were the case, the council doesn't report to the board.

"The law gives a distinction between the board, chairman and supervisory council. I never received this report," he said.

The enforcement part of the agency did not report to him directly either, he said.

Former FIAU investigator, Jonathan Ferris, is to testify in the next sitting.

Michael Cassar was also due to testify today before the public inquiry into the murder of journalist Daphne Caruana Galizia. He did so behind closed doors.

Caruana Galizia was assassinated in a targeted car bombing on October 16, 2017 outside her home in Bidnija.

The inquiry was set up to establish whether the murder could have been avoided.

In the last sitting, the Board, comprising of three retired judges, heard Security Services chief Joseph Bugeja testify that Principal Permanent Secretary Mario Cutajar would be present for annual security meetings. Much of Bugeja’s testimony, however, took place behind closed doors.

Previously, the Board had heard how Manfred Galdes, former head of the Financial Intelligence and Analysis Unit (FIAU), had handed potentially incriminating evidence on former Prime Minister Joseph Muscat’s Chief of Staff, Keith Schembri to Michael Cassar in 2016.

The inquiry board, made up of Justice Emeritus Michael Mallia, Chief Justice Emeritus Joseph Said Pullicino and Judge Abigail Lofaro, is bound to present the inquiry report, once it is completed, to the Prime Minister and Attorney General, to notify the public that the inquiry has been concluded and presented to the Prime Minister, and to publish the report within eight working days from when it is delivered to the Prime Minister.

The Prime Minister has to table the report in Parliament within five days of receiving it.

The inquiry, which started in December, must be completed within nine months.

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