MFSA Chairperson matter – Hon Evarist Bartolo makes more concerning statements



Hon Evarist Bartolo through a post in has page on Facebook stated

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Joe Bannister is the Chairman of an authority in Malta which has the role of regulating and supervising the financial industry. Forming part of the same industry through directorships of collective investment schemes registered in the Cayman is a serious conflict of interest.

International Monetary Fund (IMF) The Making of Good Supervision: Learning to Say “No” – https://www.imf.org/external/pubs/ft/spn/2010/spn1008.pdf

The IMF further emphasizes that financial supervisors should have a clear and unambiguous mandate, operational independence coupled with accountability, skilled staff, and a relationship with industry that avoids “regulatory capture.” Regulatory capture means a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating.

The IMF explains operational independence. Supervisory agencies should be able to resist inappropriate political interference or inappropriate influence from the financial sector itself; this needs to be reflected in the processes for appointment and dismissal of senior staff, stable sources of agency funding , and adequate legal protection for staff. Provisions that require, for example, that key decisions on individual companies be referred to the government, should be avoided. Supervisory agencies should not manage or otherwise run the enterprises they supervise; the boards of supervisory agencies should not have directors who represent the industry.

The international financial institutions are clear: You cannot be the Chairman of a financial supervisor, such as the MFSA, and be a director of collective investment schemes in the Cayman at the same time. Chairman Bannister’s position is untenable.

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Maltawinds is aware that many are not comfortable with this position of Professor Bannister, yet some in the industry are afraid to speak due to the consequences that this would have on them if they are seen as  not on Prof Bannister side. It is a known secret that the Chairperson seems to have been close to certain Law firms and Accountancy firms in Malta. The way the industry is being managed seems to lead one to question whether this Authority is being transparent in the possible  conflicts it may have.

On a look to the financial statements of the MFSA it immediately comes evident the increase in expenses of the same authority by some Euro 2 million between 2013 and 2014. Evident is the is the expense called “ Implementation of ECB – Single Supervisory Mechanism” which amounts close to Euro 1 million. Substantial as well is the amount of Professional fees paid  as well as the increase in what is classified as Industry Training.  Many have questioned the criteria used in the appointment of consultants. Maltawinds did not  see any tenders in this respect so one questions who is getting the consultancy work, on what grounds and who decides.  It was claimed that for a while foreign consultants were present. From where do these come and was there a clear declaration that these are not directly linked to the position of individuals in other jurisdictions?

More transparency is certainly needed by the authority that is supposed to gain the general trust of promoting same.

The paradox is that both Prime Minister Dr Joseph Muscat and Hon Dr Simon Busuttil speak about transparency. Yet, according to Hon Dr Charles Mangion the parties have discussed the matter and agreed to stop there. What are the parties afraid of telling the public and all stakeholders?