Alleged fraudster’s ship servicing company never submitted audited accounts

Updated to include a response from the MFSA.

Multinational Logistic Services Ltd, a Malta-based ship servicing company at the centre of a $50 million fraud investigation by US authorities, has failed to submit audited accounts to the Malta Business Registry since 2004.

The Malta-based company is controlled by Frank Rafaraci, a 68-year-old American who is the subject of a US Department of Defense Criminal Complaint and request for extradition charging him with bribery and conspiracy to commit bribery, wire fraud and money laundering in his dealings with the US Navy.

Just a few months after Malta was greylisted by the Financial Action Task Force (FATF) due to, among other reasons, a lack of prosecutions in money laundering cases, Rafaraci was allowed to walk out of local courts due to legal technicalities, despite the extradition request filed by the US.

A hearing for the request has been set for 4 October amid concerns voiced by the Attorney General about the magistrates’ rulings on Rafaraci’s case and the alleged fraudster’s overseas links.

Questions have been sent to the Malta Financial Services Authority (MFSA) about why it has failed to take action about Multinational Logistic Services’ (MLS) missing accounts, which have not been filed since the ship servicing company was first registered in Malta.

Using a large network of companies across the world and at least three collaborators, one of whom was a key marine liaison official in the US Navy but has since turned state’s evidence in the case against Rafaraci, MLS was funnelling fraudulent money from transactions with the US Navy into local corporate bank accounts.

Together with his other key associates, a Malta-born lawyer named Anton Micallef, MLS’ chief financial officer and the chairman of its board of directors, Rafaraci built a system through which the company allegedly overcharged the US Navy for services it provided, and then channelled the money towards shell companies in Dubai through Malta.

Besides the negative attention received from the FATF greylisting of Malta in June of this year, the MFSA has over the years also come under scrutiny for its failure to take action against other companies that fail to submit audited accounts in spite of media reports clearly outlining the lack of scrutiny. Since 2018, the Malta Business Registry has taken over the task of ensuring companies submit audited accounts.

A major example of this can be seen in the widely reported financial issues in the companies relating to the media arms of both major political parties in Malta, Media.link and One Productions. The last time Media.link and One Productions filed audited accounts was in 2003 and 2010, respectively, raising further questions about the regulatory authorities’ independence.

The MFSA’s reputation also took a nosedive after years of scandals involving several of its high-ranking board members, including John Mamo, the MFSA’s current chairman, and its former CEO, Joseph Cuschieri, who were found to have breached public procurement rules on numerous contracts.

This is not the first time that the MFSA has been criticised for allowing companies at the center of criticism to get away with failing to file audited accounts according to law. Another case involved AJD Tuna Ltd, owned by Charles Azzopardi of Azzopardi Fisheries. Besides a whole other separate scandal revolving around the expansion of the company’s fish farms, AJD was also revealed by The Shift to have failed to file audited accounts since the company was established.

The fine levied in AJD’s regard, €20,000, was paltry in comparison to the hundreds of millions of euros in the tuna farming industry, one which is largely dominated by the same company. In 2013, one of the tuna farming industry’s record years, total exports had amounted to over €215 million.

After the article was published, an MFSA spokesperson said the following:

“As per the MFSA Act (Cap 330 of the Laws of Malta), the MFSA has a range of enforcement powers which include the imposition of fines to licence holders for failing to submit statutory documents. In the case of Multinational Logistic Services Ltd and the other companies mentioned in The Shift News’s article, the MFSA cannot impose any regulatory action upon the said entities since they are not licensed by the Authority.”