MFSA CEO resisting calls to take legal action against Joseph Cuschieri

The CEO of the Malta Financial Services Authority (MFSA) is resisting calls to initiate legal action against his predecessor, Joseph Cuschieri, despite recent damning conclusions by the Industrial Tribunal.

The Shift is informed Kenneth Farrugia is under pressure from senior members of the regulator’s top management and members of the Board of Governors to sue Cuschieri for his transgressions, costing the MFSA more than €400,000 in compensation to a top officer fired by Cuschieri.

The sources said Farrugia was advised to take action against Cuschieri since he was personally liable for his actions as the MFSA’s former boss.

A member of the Board of Governors who gave evidence during the Industrial Tribunal case lost by Cuschieri told The Shift that many in the board did not agree that the MFSA should pay such a high compensation for Cuschieri’s irregularities.

“We (governors) were not even informed about the sacking of the then top official and only got to know after Cuschieri decided, alone, to fire Reuben Fenech. Now we believe that taxpayers should not bear the brunt of such unprofessional and abusive conduct,” he told The Shift on condition of anonymity.

Farrugia’s decision on whether to take action against Cuschieri is further complicated since the regulator’s top legal advisor, Edwina Licari, a close friend of Cuschieri, was involved in the Las Vegas trip with her boss. The trip was paid for by businessman Yorgen Fenech, while the two occupied posts at the regulator.

Sources said Farrugia sought further advice from a top legal firm in Malta about whether to sue Cuschieri. Farrugia did not reply to questions on the subject by The Shift.

MFSA sources also questioned whether Cuschieri was ‘fit and proper’ to continue working in the highly regulated field. In addition to sacking Fenech, Cuschieri abused good governance rules and breached ethics.

MFSA officials are zooming in on Cuschieri’s recent appointment as a director of two financial services companies owned by a UK-registered holding company – Koala Money Ltd and QBSG Ltd. The holding company is based in the UK, but the owners are Chinese investors and the companies’ secretary is Jean Carl Farrugia who is currently facing accusations of money laundering in court.

No decision has been made so far. Edwina Licari also sits on the MFSA’s Executive Committee, the regulator’s top decision-making body.

Cuschieri resigned from the MFSA in 2021 following the Las Vegas scandal. The MFSA also found that he was paid allowances that he was not entitled to and asked him to refund the Authority.

Prime Minister Robert Abela has not taken any action against Cuschieri, now CEO of Project Green, despite calls for his dismissal.

In January, notwithstanding the scandals surrounding the son-in-law of former President George Vella, Cuschieri was appointed to the top position of Project Green.

Minister Miriam Dalli, an old acquaintance to whom he had given a job many years ago, pushed him for the job.  Dalli also employed Cuschieri’s daughter, Katrina, as her consultant as soon as she graduated.

The Office of the Prime Minister did not reply to questions on the lack of action against Cuschieri.