The government has made the somewhat unorthodox move of redeploying the new Malta Financial Services Authority CEO Kenneth Farrugia back to the Financial Intelligence Analysis Unit as its chairman.

Farrugia will be concurrently occupying both of the crucial roles that oversee the financial services industry.

Farrugia had moved to the MFSA CEO’s position from his post at the FIAU as director general a few months ago and was placed on a €15,000-a-month remuneration package.

Under Farrugia’s watch, the FIAU had been harshly criticised for a lack of action on a number of money laundering scandals, many involving members of government and officials, which was part of the reason behind Malta’s embarrassing grey-listing by the international Financial Action Task Force.

Under Farrugia, the FIAU also imposed heavy fines on financial services practitioners and the Unit’s modus operandi has been repeatedly called out by the courts as unconstitutional.

One FIAU chairman during Farrugia’s tenure was disgraced former attorney general Peter Grech. Current MFSA Chairman Jesmond Gatt had also recently moved to the Authority from the FIAU, where he had been chairman. Gatt also has a full-time job at another government entity as CEO of Malta Government Investments.

Some financial services practitioners have pointed to the fact that the entire industry will now largely fall under the remit of one man, which they fear will create overlaps, less transparency and fewer checks and balances.

Among the biggest problems Farrugia faced with questionable success at the FIAU were the Pilatus Bank and Satabank scandals. Both had been used as money laundering machines and both had to be wound down in the wake of Malta’s grey-listing.

The Shift reported a few weeks ago how the government handpicked Farrugia for the MFSA CEO role. He had been directly nominated even though, according to law, the appointment was to have been made through a public call.

Farrugia’s nomination was endorsed by the MFSA’s board of governors, the members of which are all appointed by the government. He was also placed on an attractive remuneration package on an indefinite contract that reaches up to €175,000 a year.

Such positions are normally filled by way of a definite three-year contract but an unexplained exception was made in Farrugia’s case.

Farrugia will now be grilled by Parliament’s Public Appointments Committee but with government MPs holding the committee’s majority, the hearing is expected to be a rubber-stamping exercise.