Watchdog resigns after being told to withdraw NAO audit on errant NGOs

Voluntary organisations commissioner Anthony Abela Medici had warned of FATF concern on unvetted NGOs but was asked to withdraw request for NAO audit

Anthony Abela Medici
Anthony Abela Medici

The Commissioner for Malta’s voluntary organisations has submitted his resignation, in an incident that followed the withdrawl of an audit he requested from the National Audit Office over non-compliant NGOs.

MaltaToday is informed that Anthony Abela Medici, appointed to the post in 2018, was asked personally by parliamentary secretary Clifton Grima to withdraw a request to the NAO to carry out an audit of some 1,900 annual returns from NGOs whose annual returns had not been vetted.

When faced with questions to explain the reason for such a personal intervention, a spokesperson for Grima would not justify the unorthodox request. “The Parliamentary Secretariat thanks Dr Abela Medici for all his work within the Voluntary Sector and wishes him the best for his future endeavours. The NAO is an independent institution, thus questions about the NAO should be directed to them.”

Abela Medici’s request reflected his concerns in his last annual report, published only in May, in which he detailed his office’s handling of Moneyval recommendations to regulate further registered voluntary organisations. “Moneyval and FATF consider voluntary organisations extremely vulnerable to abuse, especially money laundering and funding of terrorism,” Abela Medici said in his annual report detailing legal changes necessary to give the Commissioner to combat irregularities in registered NGOs.

MaltaToday understands the backlog of some 1,900 unvetted annual returns and hundreds of organisations that had not submitted these annual returns, dates back to 2010.

NGOs must be financially compliant with the OCVO’s regulations if they are to request government or European Union funds, with updated documentation sent to the OCVO to be scrutinised at the commissioner’s request. Most of these NGOs declare revenues below €50,000 and are therefore tax-exempt, but without proper vetting, these claims cannot be verified.

In his annual report, Abela Medici had said that a survey of the OCVO’s register showed between 5-8% of voluntary organisations still had not submitted their annual returns. The figure was 31 in 2012, climbing annually to 43, 46, 54, 65, 70, and 96 in 2018. This figure shot up to 486 in 2019, probably due to the extension of their submission deadline because of the 2020 pandemic.

Abela Medici called the percentage of non-compliance “alarming”, saying his office had to determine “the extent of risk to money laundering and funding of terrorism of all VOs under its jurisdiction.”

He also added that in total, 1,957 annual returns spanning the years 2012-2019 had yet to be vetted, but that short-staffed, the office could hardly cope with the volume. “A very proficient anual returns officer can vet up to a maximum of five reports per eight-hour day. This means that OCVO needs a minimum of two furtehr accountants to process the backlog of annual returns. These must have a basic knowledge of accounts and auditing.”

Abela Medici had said in his report that his office prepared 75 reports for Moneyval assessors, whose demands led to substantial changes to the law. “More emphasis has now been placed on the proper investigations of errant VOs, their administrators and the monies disbursed by such organisations. Much greater scrutiny of annual returns and accounts are now necessary.”

The OCVO was monitoring over 10,000 administrators on a daily basis by means of due diligence software, which check court cases whose sentence falls within the 10-year period that would bar them from holding executive positions.

Abela Medici, a retired forensic expert, succeeded Kenneth Wain as voluntary organisations commissioner in 2018. He was the second commissioner to occupy the post, which was created in 2007 to oversee voluntary organisations. The appointment followed Wain’s resignation after claiming that the law regulating voluntary organisations needed urgent changes.

Abela Medici spent 30 years working in the police’s forensic laboratory and in 2016 was elected by the Council of Ministers of the Council of Europe to serve on the Committee of Experts for the Prevention of Torture and inhumane or Degrading Treatment or Punishment.