Prime Minister wants Mamo to remain chairman despite MFSA scandals

Prime Minister Robert Abela has again nominated Prof John Mamo to chair the MFSA for the next three years despite a string of scandals on his watch that led to the forced resignation of his top man, former CEO Joseph Cuschieri.

Mamo, 74, appears before parliament’s Public Appointments Committee on Tuesday as the government aims to get unanimous approval to grant the former Fiat representative in Malta his second three-year term in office.

Financial service industry sources have told The Shift that Mamo’s reappointment is “inappropriate and sending the wrong message to Moneyval”.

“The MFSA has been in the news for the wrong reasons during the past years and all this happened under Mamo’s nose or even with his backing. It would be much better to start with a clean slate now that Moneval is all over us,” a senior financial expert said.

Others in the industry agreed: “We can’t continue down this road and re-appoint people who clearly failed. The MFSA’s oversight in supervision is one of the main causes of our problems with Moneyval and it seems that the government still can’t get it”.

Moneyval – the Council of Europe’s anti-money laundering supervisor – is soon expected to conclude its report on whether Malta is to be greylisted. If this happens, the financial services industry will be in for a rough ride with thousands of jobs on the line.

Mamo was appointed chairman of the MFSA in April 2018, with the backing of the Opposition. Over the last three years, the financial regulator has been involved in one scandal after another.

Under Mamo’s stewardship, the MFSA registered a multi-million euro deficit as the former CEO Joseph Cuschieri dished out millions in direct orders which the National Audit Office said were done with disregard for public procurement rules.

In an unprecedented move, one of the MFSA’s governors, former Labour Minister Joe Brincat, publicly accused Cuschieri of “abuse of power and public funds” in 2019. The prime minister, as well as Mamo, had publicly announced they had full confidence in Cuschieri. Brincat then filed a lawsuit against the MFSA that is still ongoing.

The Shift has also revealed how Cuschieri was taking unauthorised payments for attending board meetings, with Mamo’s knowledge but behind the board’s back. After getting wind of what was going on, the governors stopped these payments and ordered Cuschieri to refund some €23,000, MFSA documents show. Cuschieri is denying this.

Mamo was also directly involved in the recruitment process of Edwina Licari, a former colleague of Cuschieri at the Malta Gaming Authority who, shortly after his taking over at the MFSA, was swiftly recruited on a €100,000 job as the financial regulator’s chief legal officer.

Licari was the only candidate shortlisted for the job and selected through an interview conducted by Cuschieri and Mamo. Last November it was revealed that together Cuschieri and Licari had gone on a trip to Las Vegas financed by Yorgen Fenech who is accused of commissioning the murder of journalist Daphne Caruana Galizia.

At the time, Fenech was the owner of a casino regulated by the MGA where Licari was the chief legal officer. Cuschieri was already the CEO of the financial regulator. It later emerged that Cuschieri and Licari were regular travel companions on MGA and MFSA business trips that cost taxpayers some €0.5 million, The Shift revealed.

Though the conclusions of a probe on the conduct of both Cuschieri and Licari remain unpublished, the MFSA accepted the CEO’s resignation. The MFSA has so far taken no action against Licari.

The Finance Minister removed Licari from the board of the Financial Intelligence Analyses Unit (FIAU).

If Mamo is approved, it is not yet known whether the same board of governors will be retained.