Former MFSA chairman Joe Bannister testifies in public inquiry

Former Chairman of the Malta Financial Services Authority Joe Bannister distanced himself from the responsibility of having had to take action on Pilatus Bank. Testifying in the public inquiry, he said it was the responsibility of the supervisory council to revoke the licence of banks, which worked autonomously from the board.

Asked by the inquiry board whether he had received any reports on Pilatus Bank during his tenure, Bannister said the law provides a distinction between the board and the supervisory council. He never received such a report. Also, the council does not report to the board. He added that specific queries on Pilatus should be asked to the supervisory council head Marianne Scicluna. Scicluna will be called to testify next week.

Bannister said that his reaction following the Panama Papers expose was that he made sure work was being carried out. “I had no doubt in the staff,” he said.

Bannister said that he agreed to carry out advisory work for former prime minister Joseph Muscat after his resignation, after Muscat said he needed advice about Brexit. Advice was given to Muscat on a pro bono basis.

Prior to Bannister, former police commissioner Michael Cassar testified for the second time to “clarify a point”. The media were asked to leave the room during this testimony, on the request of Cassar.

16:20: The sitting ends. Marianne Scicluna will testify next week and former FIAU investigator Jonathan Ferris will be testifying on Wednesday.

16:18: Bannister says that Nexia BT had no licence during his tenure, explaining that they fell under the accountants’ corporate providers list.

16:15: Asked whether, in hindsight, the law could have been improved, Bannister says “hindsight is everything”. He does not have his own opinion on this, however, and the situation “needs to be studied”. “There needs to be another study to see how the Maltese law needs to improve in comparison to laws in other countries,” he says.

16:12: Pressed again about the investigations following the Panama Papers, Bannister insists that the investigations “were done well”. “The buck did not stop with me at the MFSA,” he says. The board asks him how he can be certain of this if he claims to never have had access. Bannister says that he could not guarantee this entirely and insisted that the supervisory board kept its independence. “There was a consensus written by former minister John Dalli and former opposition spokesperson Lino Spiteri that no one should influence the board,” he adds.

16:10: Asked about his resignation, Bannister says that he had asked to retire, not to resign, and left four or five months before the end of his term. Muscat asked him to be an advisor on Brexit. “I told him that it must be pro bono and that I don’t want any payments from anyone,” he says. Although he was an advisor under Muscat, he is now unsure what his role is under Prime Minister Robert Abela. 

16:05: Asked about his communication with former Prime Minister Joseph Muscat, Bannister says that Muscat would consult him on international situations and how these would affect Malta, such as Brexit.

16:02: Pressed about whether he spoke to anyone about the Pilatus Bank following the Egrant allegations made by Caruana Galizia, Bannister replied that the only conversation he had was Juanita Bencini, from KPMG, who said the FIAU had found some deficiencies with Pilatus Bank and an internal investigation then took place. “And then it was reported that the FIAU sent a letter and said that everything was in order,” he says. He adds that he did not ask to see the report.

16:00: Asked about his reaction to the Panama Papers scandal, Bannister says “that day I made sure that work was being carried out. I had no doubt about the staff. I called Dr Marianne Scicluna, but unfortunately, the law was very restrictive (with what he could do).”

15:51: The board asks Bannister about the supervisory reports from on-site supervision for companies licenced by the MFSA. Bannister explains that every licenced company had to have supervisory reports drawn up intermittently. Asked by Borg Cardona whether there were enough resources to work on these reports properly, Bannister replies that there were resources, but “business expanded more than the MFSA could expand”. “That was always the issue,” he says. Bannister adds that specific queries on Pilatus should be asked to the supervisory council head Marianne Scicluna.

15:45: The inquiry board says it was the MFSA who revoked the licence of Pilatus Bank. Bannister insists that it was the responsibility of the Supervisory Council and not the board of which he was chairman. “All I was told was that the licence had been withdrawn, but mostly because of Ali Sadr’s American sanctions,” he says.

“So not because of what was happening in Malta?” the board asks.

“In Malta, the investigations were ongoing,” Bannister replies.

15:34: Asked by Caruana Galizia family lawyer Andrew Borg Cardona what action MFSA had taken following the Panama Papers, against namely Konrad Mizzi, Keith Schembri and Nexia BT, Bannister replies that they were not entities licenced by the MFSA.

When it was highlighted that Pilatus Bank was licenced by the MFSA, Bannister says they were monitored by the supervisory team. “We were just agents of the FIAU,” he says.

15:29: Bannister explains that the licence of Pilatus Bank was given by Dr Andre Camilleri, who was then Head of Supervisory. Bannister insisted that he was not linked with the supervision of banks.

15:25: Bannister is asked by the board if he received any report about Pilatus Bank. Bannister replies that the law provides a distinction between the board and the supervisory council. He says that he never received such a report and that supervisory council does not report to the board.

The supervisory council was linked with the enforcement body, which fell under him but had “a measure of independence too”.

“It is a bit complicated,” Bannister said.

15:24: Media is called back in time for Former MFSA Chairman Joseph Bannister to testify. Bannister takes the stand.

14:35: Former Police Commissioner Michael Cassar was called to testify again today in order to “clarify a point”. It is his second time testifying. Media have been asked to leave the room. The testimony will be held behind closed doors, at the request of Cassar.

In his testimony last week, former director of the Financial Intelligence Analysis Unit (FIAU) Manfred Galdes said he passed on documents about politically exposed persons, including information on former chief of staff Keith Schembri, directly to Cassar.

Galdes confirmed he had collaborated on investigations together with Cassar. “There were cases which we worked on in tandem, including with the Secret Services,” he had said. However, Cassar had told the board in a previous sitting that in April 2016 he was aware of the FIAU investigations into potential kickbacks between Nexia BT’s Brian Tonna and Schembri, and said that since the financial unit was working on it the police were not required to investigate the matter.

Bannister left the MFSA in March 2018. He had served as the authority’s chairman between 1995 and 1997, and between 1999 and his final departure in 2018. There was strong criticism against Bannister came over the MFSA’s lack of action on Pilatus Bank and Nexia BT following the emergence of serious allegations on their behalf. 

In the previous sitting, Head of Malta Security Services Joe Bugeja testified, mainly behind closed doors.