Issue link: https://maltatoday.uberflip.com/i/392875
maltatoday, SUNDAY, 5 OCTOBER 2014 4 News CONTINUED FROM PAGE 1 One of the MFSA's major critics, stockbroker Paul Bonello, who is still demanding full compensation from Bank of Val- letta for the loss of some €50 million in investors' savings in a property fund, said the MFSA's lackadaisical approach to the Maltese Cross case was disconcerting. "It's a relatively small case but its im- plications for the investment services sector are very serious. It is indeed of grave concern that this case has been allowed to happen, dealing yet anoth- er blow to retail investor confidence. It is disconcerting to note that the suspected lack of any MFSA on-site inspections at Maltese Cross has in- deed been the case," Bonello said. "Properly effected inspections, also consisting of the verification of exist- ence of assets and their reconciliation to client portfolio statements, would have unearthed the fraud six years ago. "To add further cause for concern, the MFSA has not considered it op- portune – in the two months since this case came to light – to under- take an industry-wide exercise to give comfort to the public that what hap- pened at Maltese Cross is not hap- pening elsewhere. And the question is inevitable: why has the MFSA chosen to be so imprudent in the circum- stances and failed to undertake this health-check and verify that there are no similar cases? Why is MFSA – with its 237-man workforce – putting its head in the sand? Is it afraid of the result?" Questions put to the MFSA as to whether it had conducted any new inspections since the Maltese Cross case, were not answered. "Supervision is a complex undertaking, particularly in a sector that is dynamic and which has experienced significant growth," the MFSA spokesperson said. "On-site inspections are just one as- pect of the MFSA's supervisory mech- anism for investor protection, which has various components including off-site supervision, the monitoring of trading in financial instruments and the investigation of suspicious trans- actions." The MFSA said its supervisory processes aim at identifying potential risks to investor protection, and to mitigate such risks through regula- tory intervention. On a number of occasions the MF- SA has taken regulatory action against licensed entities for breaches of regu- lation, which breaches had been iden- tified as a result of supervision. Maltese Cross saga Jean-Claude Bugeja – who owns 85% of the firm's shares – has now been ordered to resign from his post by the MFSA. The financial watchdog also sus- pended the company's operations and banned Bugeja from providing any financial services and prohibited him from accessing the company's records, IT system, or offices. In 2008, Bugeja invested €1 million in a BNP Paribas Fund, raising just under €700,000. Bugeja proceeded to liquidate €300,000 in clients' assets without informing anyone, an invest- ment that actually generated a profit €8,730. But a subsequent €1 million invest- ment in another BNP Paribas fund lost €250,000, and in a bid recover the losses, Bugeja continued to make more investments, opting for more risky investments which could yield a higher profit. Eventually, by 2014, the total loss- es stood at €6.2 million, and only €500,000 remained of clients' funds. mvella@mediatoday.com.mt MATTHEW AGIUS THE hunters' association, FKNK, has told the Constitutional Court that a referendum to ban hunting in spring should not take place because Malta is 'doubly' obliged by the EU's Birds Directive and the Bern Con- vention to both conserve the envi- ronment, and ensure that "other needs, amongst them, cultural and recreational" are respected. In a 21-page application submit- ted by FKNK officials Joseph Perici Calascione and Lino Farrugia, the FKNK said the application was be- ing made in the name of over 10,000 members, and insisted that a dis- tinction be made between "hunting, legally exercised" and "the illegal killing of birds", roundly condemn- ing the killing of any protected spe- cies at any time of the year. However, in spite of initially em- phasising the many thousands of people in whose name the applica- tion is being submitted, and a later mention of a pro-hunting petition that it had organised garnering "more than 104,000 signatures", it insists that hunters are a minority group that is entitled to protection. "A referendum about an issue that affects an activity practised by a mi- nority group could have serious re- percussions and may also set a prec- edent on democratic issues… the governance by the majority must always be carried out in a manner that respects minorities." Other grounds argued by the federation for its objection to the proposed abrogative referendum include: That the Referenda Act does » not provide for the abrogation of an entire law, but only par- ticular sections of it; That the Coalition to Abolish » Spring Hunting did not identify the referendum's proponents, making it impossible for the court to identify whether the actual number of proponents are within the parameters laid 'MFSA afraid to carry out health check' Hunters: we're a Hunters' lobby FKNK tells Constitutional Court to stop referendum and safeguard minority group "Properly effected inspections... would have unearthed the fraud six years ago" – Paul Bonello Maltese Cross director Jean-Claude Bugeja has now been ordered to resign from his post by the MFSA