Financial regulator’s director blames ‘media scrutiny’ for inspectors’ refusal to perform Pilatus site visit

The public inquiry into the murder of Daphne Caruana Galizia hears how officials from the Malta Financial Services Authority refused to carry out a site visit at Pilatus Bank because of the media attention the institution was receiving at the time

MFSA director general Marianne Scicluna
MFSA director general Marianne Scicluna

Malta Financial Services Authority director-general, Marianne Scicluna said inspectors tasked with an on-site inspection of Pilatus Bank in 2017 had refused to do so because of media scrutiny.

“An on-site visit was needed. We had a situation with our inspectors who were not feeling comfortable going on site. The reason they gave me was because of the media scrutiny, and they did not feel comfortable being filmed going on site,” Scicluna said.

Testifying in a sitting of the Daphne Caruana Galizia public inquiry on Monday, Scicluna said that this resulted in the resignation of a banking inspector, who preferred to step down rather than go on site.

The late journalist Daphne Caruana Galizia had reported back in June of 2017 that banking inspectors at MFSA had been refusing orders by their superiors to carry out an on-site inspection at the now closed Pilatus Bank. She referred to a Mario Felice in her blog, who had resigned in June.

A screen shot of the Running Commentary blog run by Daphne Caruana Galizia, showing the post in 2017 referring to MFSA inspectors' refusal to carry out an on-site visit at Pilatus Bank
A screen shot of the Running Commentary blog run by Daphne Caruana Galizia, showing the post in 2017 referring to MFSA inspectors' refusal to carry out an on-site visit at Pilatus Bank

Caruana Galizia had alleged that MFSA supervisors were reluctant to carry out an inspection at the bank because they did not want to partake in a white wash of the controversial banking institution.

The inquiry board heard how MFSA inspectors intended to go inside Pilatus Bank for a “top-down inspection” in May 2017 (at the time, Malta was in the midst of an election campaign) but ended up doing so in November.

“The MFSA were handed documents from the bank during that four-month period,” Scicluna said.

“Was it so terrifying?” lawyer Jason Azzopardi asked her.

“The person who resigned wanted nothing to do with Pilatus Bank. They did not want to end up in the papers,” Scicluna replied.

She added that an inquiring magistrate had originally prevented inspectors from visiting the bank, but to avoid delays, MFSA asked for the relative documentation.

“We started a number of actions. We immediately got into contact with the FIAU and requested updated due diligence checks and issued a directive prohibiting the destruction of documentation. A UK-based intelligence firm was also spoken to,” Scicluna confirmed.

FIAU deputy director, Alfred Zammit, also testified on Monday. Zammit told the board of inquiry that reports the FIAU compiled that concerned money laundering and the sales of passports, involving former tourism minister Konrad Mizzi and former OPM chief of staff Keith Schembri were passed on to the police.

"Whether the police followed up on these reports, I cannot say. I'm here representing the FIAU... it has done everything it can, sending reports to the police, to other international bodies. We met MONEYVAL every single day for two weeks. They concluded that the FIAU, from an intelligence point of view, were doing a very good job," he said.

The public inquiry is entrusted with the task of determining whether any wrongful action or omission by or within any State entity could have facilitated the assassination of Caruana Galizia or failed to prevent it, and particularly whether the State knew or should have known of risks to the journalist’s life at the time of her murder.

READ ALSO: Caruana Galizia public inquiry: FIAU deputy director says reports on Schembri and Mizzi were passed on to police