Issue link: https://maltatoday.uberflip.com/i/689748
4 maltatoday, WEDNESDAY, 8 JUNE 2016 News 'Nemea Bank debacle dealt severe blow to Malta's reputation' MATTHEW VELLA CONTINUES FROM PAGE 1 "The reputation of the financial sector in Malta has suffered severely in recent years. The Panama Papers uncovered a large number of en- tities which have been set up by operators in Malta. In addition, the Nemea Bank debacle raises doubts about the performance and efficiency of the MFSA's su- pervision of the banking sector," Giegold said of recent financial events taking place in Malta. The MEP cited the example of the failure of Setanta Insurance, headquartered in Malta, which left 75,000 policyholders without cover. "This again indicates that the MFSA supervision is weak, particularly because the author- ity reacted too late to the warn- ings of the Irish Central Bank." Giegold complained that the MFSA's failure on supervision was raising "questions and seri- ous concerns" at European level on its operational independence. "Within the European System of Financial Supervision, con- f licts of interest and bad govern- ance of national financial super- visors cannot be ignored, as such failures will always damage the European financial system as a whole and undermine the cred- ibility of its institutions," Gie- gold said. The MEP said that it was le- gally incumbent upon the Euro- pean supervisory authorities for checks to be carried out on the independence and good govern- ance of all national financial su- pervisors. "So far however, these national supervisors have hardly ever come under critical scrutiny in this regard. It is for this reason that I have written to the Euro- pean Supervisory Authorities to request for explanations on how conf licts of interest, such as those of Professor Joseph V. Ban- nister, can be addressed and op- erational independence properly ensured. This is what the Euro- pean public expects from the Eu- ropean Supervisory Authorities for the proper safety of the Euro- pean financial system." Kairos Fund controversy It was already made public that Joseph Bannister had been a non-executive director of Kairos Fund in 2012, when the MFSA chairman had to deny claims of favouring a co-director's com- pany for consultancies worth €463,000 with the MFSA. Bannister was director of the umbrella collective investment fund since 2005, together with Ray Bugeja, a former PN candi- date for the party leadership and for MEP. Bugeja's name appeared in a clients' list of HSBC Privée Ge- neva leaked to the International Consortium of Investigative Journalists, in connection with a number of hedge funds domi- ciled in the Bahamans and the Cayman Islands. Longtime critic Evarist Bar- tolo, the education minister, has been adamant that Bannis- ter give up his role as chairman of the Malta Financial Services Authority, the post he has held since 1999. "I'm not saying this because I am supporting anyone else but because it is simply unaccepta- ble that a regulator spends more than 10 years in his position. It is simply not healthy," Bartolo insisted. "I have criticised Bannister be- cause he's a public person with huge responsibilities and I be- lieve that he has failed in fulfill- ing his duties," the minister said. Bannister has repeatedly de- nied any conf lict of interest as director of Kairos Fund. He has denied holding any funds in the Cayman Islands and insisted that "the matter was closed" fol- lowing talks between then Prime Minister Lawrence Gonzi and Joseph Muscat, then leader of the opposition, five years ago. Independent MP Marlene Far- rugia has said that Bannister should be summoned to a parlia- mentary committee to discuss the objections that Evarist Bar- tolo has raised. "It is too serious a situation to be ignored any fur- ther," she said. Green MEP Sven Giegold called for a peer review of the MFSA's independence The MFSA's failure on supervision 'is raising questions and serious concerns' Trojan attack shuts down financial services watchdog for six hours PAUL COCKS A malicious computer pro- gramme, known as a trojan at- tack, last month infiltrated the IT system of the Malta Finan- cial Services Authority, leaving it in the dark for six hours, Fi- nance Minister Edward Sciclu- na has confirmed. In reply to a parliamentary question raised by PL back- bencher Joe Farrugia, Scicluna confirmed that the cyber at- tack led to a six-hour cancella- tion of services at the MFSA on Wednesday, 18 May. An online customer had noti- fied the MFSA at 10.07am that he could not access the online services. The authority's IT Unit was notified immediately and – having determined that the system was under a trojan attack – ordered after 30 min- utes that all MFSA staff close any open documents. Speaking in parliament, the minister said that the unit then proceeded to isolate some sys- tems while the entire IT system at the MFSA was being scanned until the PC on which the tro- jan had originated was identi- fied. Backup files were restored and the system went back online at 4.15pm. Scicluna said that the proce- dures followed by MFSA staff were in line with the MFSA's laid-out emergency procedures. He confirmed the authority deployed sophisticated anti-vi- rus software across its IT sys- tem. The MFSA was currently in contact with its providers to determine how the trojan made it past its safeguards and to en- sure that it would not suffer an- other such attack.