Fiduciary companies, Bannister must go to save Financial Services sector -AD

The first step to address the issues raised by the publication of the Malta Files and save Malta's financial services sector is to address the conflicts of interest at in the regulator's top brass, say Alternattiva Democratika.

Keith Schembri and Konrad Mizzi's legacy will be the incalculable harm they have caused the country's reputation, Alternattiva Demokratika Chairperson Arnold Cassola said at a press conference outside the MFSA offices this morning.

“But we must also be careful not to allow foreign nations to exploit this weakness that emerged in the Panama Papers and say things that are not true. For example that Malta is an offshore centre. This is not true at all, Malta is not an offshore centre. Companies registered in Malta are publicly recorded and information of how they are composed are publicly available.” The Malta Files news story, was in fact, based on publicly-available information, he noted.

It was important to combat half-truths and untruths in media reports, Cassola said, qualifying that statement by highlighting the importance of addressing shortcomings in the system. He pointed to Pilatus bank, asking how the regulator “gave a licence in 12 weeks to a person who had no experience in banking.”

“We ask, was due diligence carried out properly? Was this bank given preference to speed things up or, as I am told by people working at MFSA, that the structures and resources have remained the same for the past 12 years.”

He reminded that AD was the only party to ask the National Audit Office to investigate this matter.

Professor Joseph Bannister, whilst chairperson of the MFSA was also deputy chairperson of Finance Malta, whose job was to attract foreign investment in Malta, Cassola said.

“So you have the Vice President advertising and bringing these people to Malta and then the same vice president who is also the regulator carrying out due diligence on the people he has attracted to Malta.” This has caused enormous harm to Malta's standing in the European Parliament, he said.

“Amongst MEPs it is unbelievable...cannot be understood how the chair of the MFSA is also vice president of Finance Malta. He must be removed immediately.”

The MFSA offices, Mriehel.

AD Secretary General Ralph Cassar expanded on the problem facing the financial services sector in Malta. The facility of having nominee companies was being abused, he said. “It is clear that in certain cases, these letterbox companies are covers for illegal operations. They are doing a lot of harm.” He called for the creation of an independent board of inquiry into the involvement of such companies in organized crime and money laundering.  “Nominee companies are magnets for shady business and organised crime."

Cassar also argued against the regulator's ties to government. The MFSA is riddled with conflicts of interests, he said.

The company tax rebate system was not sustainable in its current form, he said. Countries have a right to establish their own tax rates, but as a matter of principle, tax should be paid in the country where profits are made. “We cannot expect other countries to keep their mouths shut when their tax base is being eroded. We aren't talking about charity here. We need to smell the coffee before its too late.”

Fiduciary companies “are a cover up for potential criminal activity," AD's Vice Chairman Prof. Carmel Cacopardo suggested, arguing in favour of a public list of ultimate beneficial owners. “The secretive element should be removed,” he said.

Cassola said Italian publication Espresso has run an 8 page spread of persons connected to the mafia who have invested in Maltese companies. “Foreign countries are aiming at the fiduciary company aspect to hit the rebate,” he warned.