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18 maltatoday EXECUTIVE EDITOR Matthew Vella MANAGING EDITOR Saviour Balzan Letters to the Editor, MaltaToday, Vjal ir-Rihan, San Gwann SGN 9016 E-mail: dailynews@mediatoday.com.mt Letters must be concise, no pen names accepted, include full name and address maltatoday | SUNDAY • 15 JULY 2018 16 July, 2008 Gatt offers compensation in last ditch attempt to end strike TRANSPORT Minister Austin Gatt has offered thousands of euros to the Motor Hearses As- sociation as a compensation for the decision to liberalise their market, MaltaToday can reveal. The offer was made behind the scenes in the ongoing backdoor negotiations between the min- ister and the association through the intervention of an unnamed mediator. According to the President of the Federation of Public Transport, Victor Spiteri, the minister was offering €60,000 to the association to be distrib- uted among its 10 members. "After deciding on his own and against a previ- ous agreement to liberalise motor hearses, the minister has now offered to pay compensation to the association," Spiteri said yesterday night, at the end of the second day of the nation-wide strike ordered by the federation. "While it's true the agreement with the previ- ous minister was unsigned, it was put into effect, so much so that the motor hearses association bought the new vehicles on the understanding that no new licences would be given. To me, Gatt's offer is a clear admission of a political blunder, a big political mistake, even though he deliberately failed to tell the public that he made the offer," Spiteri added. A spokesman for the minister confirmed that an offer was made to the association but said the amount quoted by Spiteri was wrong, without divulging the correct amount. "I confirm that when the minister was ap- proached by a mediator, one of the offers was to give a one-time payment to the association to be able to organise itself and face a liberalised mar- ket," the spokesman said. "It is not yet a decision, it is only an offer, but the fact that Victor Spiteri is speaking about this in public and to the media is totally wrong. This is not the way to keep mediation going; it harms all mediation attempts." In fact, the minister made no mention of the offer in a press conference he gave yesterday evening, just limiting himself to confirming that a mediator between him and the federation was involved. … The second day of the drivers' strike started with dramatic clashes early in the morning yes- terday, when demonstrators targeted the emer- gency services offered by unarmed AFM soldiers and transport authority officials. Within an hour since the service was launched at around 6am, mobs were forcing passengers to get out of the education division buses, destroying windscreens and even removing and seizing the keys of the vehicles. By 7:30am, the service was called off by the minister. MaltaToday 10 years ago Quote of the Week Responsibility has to be shouldered IT comes as no real surprise that the European Bank- ing Authority (EBA) has established that Malta's Financial Intelligence Analysis Unit had breached money-laundering rules in relation to its supervision of Pilatus Bank. The EBA report may confirm suspicions raised publicly on the compliance visits carried out by the FIAU at Pilatus Bank, although it is important to clarify that the financial regulator's recent suspen- sion of the Pilatus banking licence was unconnected to the money laundering suspicions but due to the unsuitability of bank chairman Ali Sadr Hashemine- jad in the United States on charges of having evaded US sanctions on Iran. Back in 2016 after the FIAU's compliance visit to Pilatus Bank in March, all the ingredients were al- ready in place for the matter to be dealt with locally, especially after then-director general Manfred Galdes penned a letter of complaint to the Commissioner of Police in April about the preliminary findings of the FIAU at Pilatus. The MFSA too was copied in the findings of the FIAU in May. A month later, Pilatus Bank made its representa- tions with the FIAU, through the support of audi- tors KPMG and the Camilleri Preziosi law firm, and in a meeting held in early July with the FIAU, the agency agreed on a second compliance visit. After Galdes resigned, the FIAU found that the matters it had flagged earlier on had been dealt with by Pilatus Bank. The most regrettable aspect of the EBA's findings is that they come as an indictment of institutional failure across the board in Malta. On closer scrutiny, the report details a number of serious deficiencies within Malta's financial regula- tory infrastructure. The EBA said the FIAU does not have sufficient records of the specific files and documents: "In particular, no record was made of any request for documents that the institution did not provide. Furthermore, during the second on-site visit, the FIAU did not establish a detailed list of the documents examined by reference to the first visit." This lack of records contributed to the FIAU's inability to defend itself against the institution's chal- lenges, the EBA said. It also said discussions in the Compliance Moni- toring Committee Meetings, the FIAU's decision- making body on supervisory matters (CMC), were not adequately reasoned or documented with the result that it is not possible to understand what led to the closure of the Pilatus Bank case without further supervisory measures or sanctions. "It is not possible to establish whether the decision was well founded." Perhaps more worrying still is the conclusion that "The FIAU did not effectively monitor and take the necessary measures with a view to ensuring compli- ance with the requirements of the [European Direc- tive] [...] the FIAU failed to ensure that the institution put in place adequate and appropriate policies and procedures [...]; and the FIAU neither imposed effec- tive, proportionate and dissuasive sanctions nor any other supervisory measures to correct the shortcom- ings it had identified to ensure the institution's com- pliance with [the Directive]." What this suggests is a reluctance to abide by the provisions of European Law. And yet, "notwithstand- ing the serious nature of its initial findings, the FIAU has not documented, or otherwise provided clear reasons and compelling arguments why it considered it appropriate not to impose any sanctions or other supervisory measures." Those are not questions that can remain unan- swered. Nor can the EBA's findings remain ignored. In the course of the time period during which the FIAU carried out its compliance visit of Pilatus in March 2016, right up until the September commu- niqué to the bank, the agency felt that – having ac- quiesced to a second compliance visit – no sanctions were to be issued. This is a matter of policy which is also employed by regulators such as the MFSA, whose administrative penalties to financial institu- tions are always subject to appeal. The FIAU has expressed disappointment at the EBA's findings. Arguably, the agency will defend its modus operandi, not least because it feels it has been the victim of leaks which could have misrepresented its ongoing investigations. But it is equally clear that 'politics', to some degree, can account for the general negligence, and reluc- tance to pursue investigations vigorously. Even the fact that things were allowed to come to this pass, clearly indicates that a form of state capture inside an agency such as the FIAU is itself a danger to democ- racy; that the FIAU's approach could have allowed it to keep Pilatus Bank in business… when only a few months later, after the arrest of Hasheminejad, an in-depth transaction-by-transaction analysis started being carried out by the FIAU and the MFSA. Surely, Prime Minister Joseph Muscat has to re- spond. It must be made clear that responsibility for this state of affairs will be shouldered, and that – if nothing else, for the good of Malta's reputation as a financial centre – Malta will take all steps to fully comply with European regulations. The one option which is not available to Muscat, is the one his government has consistently taken to date: i.e., to ignore the problem, and hope that it will go away on its own. Nor can it escape notice that the Prime Minister's chief of staff, Keith Schembri, had made use of the bank, and is indeed now also the subject of a magiste- rial inquiry dealing with payments and transactions carried out through Pilatus. Once again this raises suspicion over the degree of influence this bank en- joyed (not least, because both the Prime Minister and his chief of staff had travelled overseas to attend the wedding of the Pilatus Bank chairman the previous year). The Attorney General, who chairs the FIAU's governing body, this week told MaltaToday he would not comment on whether he should resign that posi- tion or not. It has been a torrid week for the FIAU, and yet nobody appears to want to shoulder any responsibility. Editorial "I had said Brexit might not happen and everybody laughed at me back then…" Prime Minister Joseph Muscat muses on the resignations of UK ministers David Davies and Boris Johnson