Finance minister in legal gaffe over nomination of new FIAU chair

Finance Minister Clyde Caruana thought it would have been smooth sailing through Parliament’s Public Appointments Committee’s grilling of Financial Intelligence Analysis Unit nominee chairman Kenneth Farrugia given the government’s committee majority.

But, if so, he found he was mistaken when the meeting had to be called off after it transpired the minister made a huge legal gaffe when nominating Farrugia to the post.

Farrugia’s appointment as chairman at the Unit where, until recently, he served as director general, is now stalled because Caruana had not ensured Farrugia was already an FIAU board member, the lack of which precludes him from being made chairman.

The law as amended only a few weeks ago requires the FIAU chairman to be nominated by the Prime Minister from among the FIAU’s board members.

When Opposition MP Karol Aquilina fired the Committee’s first question, asking Kenneth Farrugia whether he was a member of the board of the FIAU, Farrugia acknowledged that he was not.

The opposition immediately referred to the law to claim the nomination was illegal on two counts.

The law clearly states that it is the Prime Minister and not the finance minister who needs to make the nomination. Also, the nominated chairperson must be a sitting board member, which Farrugia currently is not.

Visibly embarrassed, Government’s Whip Andy Ellul asked for an immediate postponement of the Committee’s meeting to another date to seek “clarifications” from Caruana.

The finance minister himself was involved in the legal amendments to the FIAU law.

Farrugia had been at the FIAU for several years, also when Malta was grey-listed by the international Financial Action Task Force, in part due to the FIAU’s lack of action against money laundering.

Only a few weeks ago, Farrugia was placed on a €175,000 annual remuneration without a call as the Malta Financial Services Authority’s new CEO.

When at the FIAU, Farrugia was also responsible for imposing fines on a number of financial services operators after Malta was grey-listed, which are now being consistently found in breach of the Constitution and its guarantees.