Not MFSA’s remit to determine what should happen to Manoel Island, CEO says

The chief executive of the Malta Financial Services Authority was coy about the predicament of MIDI plc bondholders in light of government’s intention to take back Manoel Island.

Kenneth Farrugia would not comment on the specific bond related to the MIDI project when asked about private company bonds issued on the basis of projects that had no planning permit yet.

Farrugia said any bonds issued to finance projects that have no permit would have had to take that risk into consideration. The company would have to ensure it has the resources to mitigate the risk, he added.

Although MIDI plc has an approved master plan for Manoel Island it is still waiting for a planning permit to be able to initiate works on the project, which includes luxury residences and commercial outlets.

Farrugia was speaking during a media briefing for journalists on the authority’s annual report and financial statements for 2024, which was tabled in parliament on Monday afternoon.

The government is currently in talks with MIDI plc in a bid to reclaim public ownership of Manoel Island, which was granted to the company as part of a 99-year concession along with Tigné Point in 2000.

Farrugia said it was not the MFSA’s competence or role to say what should happen with Manoel Island.

He said the authority’s capital markets team regularly monitors bonds to ensure there is no abuse or suspicious activity and that companies that issued bonds adhere to their market obligations, such as publishing their financial results.

He added that the MFSA’s role is to ensure companies are transparent when issuing bonds so that prospective bondholders know what they are investing in.

“There is a misconception among the public that bonds are risk-free; they are not,” Farrugia said. He noted that Maltese bondholders are generally retail investors, who rarely seek financial advice from professional advisors and more often than not do not differentiate between secured and unsecured bonds, or the level of risk involved in each.

The talks between the government and MIDI plc are the direct result of pressure mounted by activists, who collected a 29,000-signature petition to have the island returned back to public ownership as a park.

Prime Minister Robert Abela has said government will not bail out MIDI shareholders but will safeguard the interests of small investors and bondholders, most of whom are elderly.

The government filed a judicial protest against MIDI last week, saying it will not extend the completion deadline for the project, which is supposed to be substantially complete by March 2026.

On Sunday, Abela doubled down and insisted he will make sure no buildings are erected on Manoel Island. The company has said it is willing to engage with the government in a bid to reach a negotiated settlement that will see Manoel Island being returned to the government.