MFSA rewrites the rulebook to provide a €1 million direct order

The Malta Financial Services Authority (MFSA), with the consent of Finance Minister Clyde Caruana, has invented new rules to bypass public procurement regulations so as to be able to award a new direct order worth over €1 million.

Following revelations by The Shift last July that the MFSA, under the chairmanship of university professor and former businessman John Mamo, issued a €1.1 million direct order for the lease of offices next to its headquarters in Mriehel, Minister Caruana justified the use of the competition- restricting procedure for “technical reasons”.

Pressed by Opposition MP Jerome Caruana Cilia to explain the massive direct order, the finance minister said that this was necessary as the building stands adjacent to the MFSA’s current headquarters and it is already being used by the Authority.

According to the minister, the building, The Fort Business Centre, leased through a five-year contract in 2017, has been leased for another three years at a rate of €400,000 a year.

The new lease was done instead of issuing a new call inviting all those interested in participating.

“Since the building is adjacent to the MFSA’s original building, no tender was necessary as a negotiated procedure would suffice. This is because according to the rules, the Authority could do this since competition is absent according to technical reasons,” the minister said.

Sources at the MFSA told The Shift that the minister’s reply was merely a “puerile excuse” to bypass the rulebook and that “it is only a figment of his imagination that no competition exists”.

“It is unbelievable that the finance minister came up with this justification, as there are tens of thousands of square metres of available office space even on the same road – the Mriehel Bypass – that could be rented out to the MFSA at a much lower price than that to which the MFSA has committed,” the sources said.

Sources speaking to The Shift explained that the real reason behind the bending of rules is that certain individuals at the MFSA are “very comfortable” with the owners of The Fort Business Centre and the generous lease payments.

“If one had to use the minister’s weak argument, then all buildings currently being leased out by the government or its authorities could be leased again through a direct order without the tendering system ever being used,” the sources added.

“This is another massive abuse of public funds, and an investigation would lead to a breach of public procurement regulations.”

The Fort Business Centre, occupied mainly by Evolution Gaming, is owned by Tal-Lira Investments Ltd, which also controls other large businesses such as the JB stores, the Tal-Lira chain, the Galleria Shopping Complex in Fgura and various hotels.

The MFSA has been rocked by a number of scandals under Mamo’s chairmanship, including the wanton abuse of funds by its former CEO Joseph Cuschieri, yet the government has insisted on retaining Mamo as the financial services watchdog’s chair.