Some two-and-a-half years after it was completed, the Malta Financial Services Authority has published two reports which looked into, amongst other things, a trip to Las Vegas by Yorgen Fenech and the authority’s then-CEO Joseph Cuschieri.

MFSA CEO Joe Cuschieri and MFSA General Counsel Edwina Licari had suspended themselves after it emerged that they had travelled to the US in May 2018, on invitation by Yorgen Fenech.

The trip emerged in a Times of Malta report in November 2020, a year or so after Fenech was arrested and charged with masterminding the murder of journalist Daphne Caruana Galizia.

An independent panel – made up of former Chief Justice and now Standards Commissioner Joseph Azzopardi and independent lawyer Mark Simiana – was subsequently set up by the MFSA to look into the allegations.

That report was concluded on 23 November 2020 – 20 days after it was set-up – and found that Cuschieri had breached the MFSA’s ethics, but that Licari had not.

The full report was only published on Wednesday evening, after the MFSA was ordered to do so by the Information and Data Protection Commissioner in relation to a Freedom of Information Request which was filed, seeking a copy of the report.

At the time of the trip, Cuschieri had just taken up his role at the MFSA after he left the Malta Gaming Authority, while Licari was still serving as legal advisor at the MGA. She joined the MFSA a few months later. Licari resigned from the board of the Financial Intelligence Analysis Unit (FIAU) soon after the revelations.

Cuschieri resigned on 25 November 2020, but said that his resignation was not an admission of guilt. 

The day after, the MFSA had said that the conclusions of the review had led to them to ratify Cuschieri’s resignation, but that the same conclusions had led them to decide that Licari’s self-suspension was no longer warranted.

Licari in fact is still working with the MFSA.

Cuschieri had said back then that he had travelled with Fenech to advise him on regulatory matters. Fenech, back then a director of Tumas Group, which owns a casino company, was reportedly interested in investing in the United States.

The report reads that “Cuschieri told the board that he felt no conflict of interest since he had already left the MGA and the advice he rendered to Fenech regarded his casino activities which is regulated by the MGA and not by the MFSA.”

“Fenech paid all expenses relating to the trip but Cuschieri states that he did not ask for remuneration nor was he offered any,” the report notes.

The report quotes an excerpt from the MFSA guidelines of Hospitality, which states:

“It is not appropriate to accept any exclusive or expensive hospitality invitations. There is no comprehensive definition of what constitutes exclusive or expensive hospitality, but it would include invitations for lunches, dinners sporting or cultural and other entertainment events, particularly if only a small number of people have been invited to attend.”

It also quotes an extract from the European Central Bank’s Code of Conduct for high-level European Central Bank officials, which states that “members and alternates shall not solicit, and shall exercise caution when offered any advantages which are connected in any way with the duties and responsibilities conferred on them.”

The board said that it was not concerned on any conflict of interest Cuschieri may have had in connection with his previous position leading the MGA, but with any such conflict with his tenure as MFSA CEO.

The board said that since it is a well-known fact that Fenech’s family has vast commercial interests, it had instructed the competent officials to investigate Fenech’s commercial interests which are regulated by the MFSA.

“It results in fact that Fenech has many interests in companies which although not engaged directly in Financial Services, have so many different areas in which they operate that it is very probable that in one way or another, the MFSA may have to be engaged with one or more of these companies,” the report states.

“So much so that it resulted that Licari, who was subject to a separate albeit parallel review before this Board found occasion to abstain from her duties on account of Fenech’s involvement on at least three occasions since the commencement of her duties with the MFSA. A person of Cuschieri’s undoubted intelligence ought to have realised this,” the report continues.

“The Board therefore does not agree with Cuschieri that there was no possible conflict of interest in accompanying Fenech and advising him. In any case it is abundantly clear to the Board that Cuschieri infringed both the above mentioned Guidelines on Hospitality and the ECB Code of Conduct even if no future conflict of interest would have occurred in that he accepted hospitality which was both expensive and exclusive,” the board concluded.

The report states that Cuschieri was cleared of other allegations, which related to payments for board meetings, him being witness in a court case filed by a company against Tumas Group, and on how an expression of interest for the potential lease of new offices for the MFSA was handled.

Licari, who was also subject to a review by the same board, meanwhile was found not to have breached the MFSA’s ethics, although the board noted that her trip to Las Vegas did not fall within its scope as Licari was, at the time, still employed by the MGA and held that her presence on the trip was authorised by the MGA and was travelling as a representative of the authority.

Cuschieri expresses ‘reservations’ at board conclusions on Las Vegas trip

In a reply sent to the MFSA, Cuschieri said that he had seen the concluded report for the first time upon receipt in March 2023.

“While I understand that the MFSA has been directed to publish the report by the DPC, I wish to express my disappointment that I was never given the opportunity to make formal representations about the contents and conclusions of this report or any other reports or reviews which were carried out by the MFSA since my self-suspension on 29 October 2020. It is pertinent to point out that I was only afforded a 50-minute interview with the Board of review which was held on 17 November 2020 and after that I heard nothing,” Cuschieri said.

He said that he generally agreed with the board’s conclusions with regards to allegations concerning the payment for board meetings, the Tumas Group court case, and the expression of interest for lease of office space among others, but said that he had reservations on the board’s conclusions on the Las Vegas trip.

“While I respect the Board’s conclusions, I have my reservations as to whether I was in breach of the ethics framework referred to in the report. As far as I was aware at the time, the Tumas Group and/or its subsidiaries did not fall within the scope of the MFSA’s supervisory oversight,” he said.

He said that key decisions at the MFSA were always taken by groups of people and collectively by management at various layers and statutory committees within the organisation – and rarely unilaterally by the CEO except for ordinary day-to-day business.

“The Board stated that the Tumas Group’s vast commercial interests (which transcend different economic sectors) may make it possible for a conflict to arise. While that is broadly true, conflicts can be managed and declared – in fact there are policies and procedures in place to that effect. In a small country like Malta, it is not uncommon for conflicts to arise when you are in public office,” he said.

“In this respect, I would like to make it clear that at no point in time (throughout my tenure) I felt conflicted or prejudiced where I had to formally declare a conflict. Having said that, if I ever felt conflicted, I would have immediately declared the conflict in line with the MFSA’s accepted procedures,” he added.

He added finally that he resigned from his position at the MFSA on his own free will, solely to protect the institution from unnecessary media scrutiny and criticism.

The full reports may be read here.