MFSA under pressure on whether to sue former CEO over €400,000 fine

The financial services regulator, the MFSA, has sought advice from a reputable legal firm regarding the possibility of initiating action against its former CEO, Joseph Cuschieri, for allegedly abusing his position by arbitrarily sacking Reuben Fenech, the Chief Operations Officer of the Authority, The Shift is informed.

Although it seems that there are grounds for the MFSA to sue Cuschieri and try to recoup the massive and unprecedented compensation, CEO Kenneth Farrugia is under pressure from the government not to proceed with a court case.

As a consequence of Cuschieri’s illegal actions, the Court of Appeal last week ordered the regulator to pay Fenech over €400,000 in compensation and give him back his job, worth over €120,000 a year.

Asked to state who will be paying the compensation to the former COO and whether the funds will come out of taxpayer pockets, as is usually the case, Farrugia declined to reply.

He also did not disclose the legal advice given to the MFSA. Farrugia only told The Shift that “the Authority has taken note of the court’s decision”.

Sources close to the governing board told The Shift that most of the governors are pushing for a board resolution authorising the CEO to start legal action against Cuschieri. However, they admitted that pressure is being exerted “from the top” not to go down that route.

Prime Minister Robert Abela selects the board of the MFSA.

The unprecedented compensation by the Industrial Tribunal was received with shock at the MFSA, as Cuschieri had assured the Board of Governors that he had acted on sound legal advice.

Both the Tribunal and the Court of Appeal condemned Cuschieri’s conduct, declaring it abusive, illegal and arbitrary.

The Court slammed Cuschieri’s good governance credentials, stating that “it seemed that the CEO had a problem following the established rules of a public organisation he was entrusted to lead.”

In 2020, Cuschieri was forced out of the MFSA after it was found that he went abroad on a trip to Las Vegas with Chief Legal Counsel Edwina Licari. Yorgan Fenech funded the trip.

It later emerged that Cuschetri also broke the rules by engaging his travel companion at the MFSA and offering her a €120,000 per year job.

Cuschieri was also found to be receiving irregular payments at the MFSA, to which he wasn’t entitled.

Following his resignation from the MFSA, Minister Miriam Dalli appointed Cuschieri as CEO of Project Green, responsible for a €700 million government budget.