Issue link: https://maltatoday.uberflip.com/i/405994
10 Business Today maltatoday, WEDNESDAY, 29 OCTOBER 2014 Increase in arrivals, nights spent in collective accommodation in August Total arrivals in collective accom- modation establishments during Au- gust 2014 numbered 174,435, while total nights spent surpassed 1.1 mil- lion. All hotel categories recorded increases in total nights spent, except 3-star hotels. The largest share of guest nights was reported in 4-star hotels, with 508,382 nights, or 45.3 per cent of the total. The average length of stay in collective accommodation establishments went down from 6.7 nights in August 2013 to 6.4 nights during the month under review. The net use of bed-places stood at 87.2 per cent, up by 4.4 percentage points when compared to the corresponding month last year. Total arrivals in Malta numbered 163,480, up by 6.8 per cent over August 2013. Additionally, a rise of 2.3 per cent was recorded in the number of nights spent. Meanwhile, the average length of stay edged down by 0.3 of a night to 6.6, when compared to last year. The net occupancy rate advanced from 82.8 per cent to 87.3 per cent. Total arrivals and nights spent in Gozo and Comino increased by 2.0 and 2.9 per cent when compared to last year, reaching 10,955 and 47,462 respectively. On a national level, there were 166 active collective accommodation establishments during August, with a net capacity of 18,670 bedrooms and 41,506 bed-places. On average, each establishment had 2.2 beds per room. Total arrivals during the first eight months of the year amounted to almost 1.1 million, an increase of 8.4 per cent over 2013. Total nights spent went up by 3.4 per cent, reaching 6.0 million. The net use of bed-places advanced by 2.9 percentage points to 64.3 per cent Maltese Cross clients may sue Financial Services Authority over €7 million losses Matthew Vella Investors who lost some €7 million in savings they invested with Maltese Cross Financial Services are challeng- ing the right to statutory immunity which the financial regulator, the Mal- ta Financial Services Authority, enjoys under the law. In a judicial protest filed yesterday, the investors are threatening the regulator with legal action. The claimants are holding the MFSA responsible for all damages suffered in the huge loss of capital and income resulting from the actions of Maltese Cross, due to the failure of the MFSA as Maltese Cross's regulator to perform its statutory duties, including fiduciary duties in terms of the Civil Code, with due diligence. "Indeed the claimants consider MFSA as having been grossly negligent, particularly in the period prior to August 2014 when the supervision by the MFSA of its licensee appears to have been virtually inexistent," according to the protest by 40 clients against the MFSA, the Investor Compensation Scheme, and the Registrar of Companies. The action is unique in challenging the MFSA's right to statutory immunity which it enjoys in terms of the MFSA Act. The claimants are asking the MFSA to state whether it is prepared to renounce its immunity and judicially defend the claimants' accusations on the basis of merit and substance. The MFSA's immunity is not applicable "if the act or omission is shown to have been done or omitted to be done in bad faith", and the claimants are arguing that the authority acted with gross negligence. "Claimants reserve the right to prove bad faith in circumstances of gross negligence… also finding confirmation in judicial precedents in other European Union States involving regulatory breakdowns and failures." On September 5, 2014, the MFSA wrote to investors in Maltese Cross about a shortfall of between €6 million and €7 million due to an alleged misuse and manipulation of clients' assets. Maltese Cross directors Robert Cutajar and Stephen Spiteri said that it was another director, Jean Claude Bugeja, who had admitted with them that there was a shortfall in clients' assets of about €6 million not reflected in the company's books. On September 17, 2014, the police accused Bugeja of money laundering and fraud between 2008 and 2014. The claimants say that the sale of Island Brokers to Bugeja, who subsequently renamed the company Maltese Cross, should have given rise to investigations by the MFSA. The claimants have demanded information and documentation from the MFSA on the 2013 share transfer agreement, and the complete set of financial statements of Maltese Cross for the financial years 2007, 2008, 2009, 2010, 2011, 2012, and possibly 2013, rather than the abridged financial statements filed in the public records of the Registrar of Companies. The claimants also said that there appears to be "sufficient evidence that the due diligence expected from MFSA in the exercise of its duties in the seven years during which the manipulation, misappropriation and fraud that took place at Maltese Cross, was missing, and indeed the illegal activity remained uncovered. "MFSA only acted when it was far too late to be of any practical assistance towards the safeguarding of the capital of the general investing public, including the claimants; during this seven-year period, it appears that no MFSA site visits or inspections at Maltese Cross, whether on a scheduled basis or surprise visits, took place, especially between 2009 and 2014." They have further accused the MFSA of having acted on revoking its multiple approvals to the director of Maltese Cross, Jean Claude Bugeja, only after he was charged in court. "This necessarily means that the respondent MFSA had years before, acting without due diligence and against the norms of prudential supervision, permitted, or rather authorised, multiple, sensitive and conflicting functions to be all concentrated in one company officer… "This lack of segregation of duties made possible the misappropriation, manipulation, fraud and other illegal activity that took place at MFSA- licensed Maltese Cross and which caused the loss of capital of the claimants, some of whom losing the entire voluntary early retirement lump sum or lifetime savings." Investor Compensation Scheme The claimants' judicial protest is also directed at the Investor Compensation Scheme, which under current rules pays out 90% of all claims made by such investors, up to €20,000. "Those claimants whose value of investments and bank balances under the control of Maltese Cross do not exceed €20,000 are unaware whether their holdings have been misappropriated, in part or in full, or if indeed their assets are still unimpaired… "Therefore there is a real question as to whether, when a claimant makes an application to the Investor Compensation Scheme, he would be subrogating the Investor Compensation Scheme with all his rights, or else whether this subrogation can be limited to the amount of actual compensation paid."