Fenech accuses Muscat of interference over Bank of Valletta property fund saga

Finance Minister Tonio Fenech has accused Opposition leader Joseph Muscat of attempting to crowbar into the regulation of the banking sector, after comments made Thursday morning on the Bank of Valletta chairman.

Speaking on the recent decision by the Malta Financial Services Authority to fine BOV for the breach of regulations on the sale of the La Valette property fund, Muscat said politicians would have to be held accountable for the decisions taken by the government-appointed chairman of the bank, Roderick Chalmers.

"The chairman of the bank is appointed by the government and it is not enough to say he was a good person. Somebody has to assume responsibility. If nobody assumes responsibility it will be the politicians who made the appointments who will be held accountable," Muscat said at rally in Rabat marking the Sette Giugno commemoration.

In a statement, finance minister Tonio Fenech accused Muscat of not respecting the rule of law, and of threatening to take the law in his hands by bypassing the financial regulator's powers.

"Muscat shows he cannot distinguish between shareholders and directors, or the responsibilities of managers. The decision as to who takes responsibility lies with the board of directors and shareholders during an annual general meeting, and not with the government," Fenech said.

The government owns a substantial share in Bank of Valletta.

"The MFSA has safeguarded consumers' interest and Muscat should know the bank's management is accountable to shareholders. No politician can take the powers of shareholders."

Fenech also accused Muscat of betraying his financial policies, and of endangering investment in the financial services sector by threatening the independence of the financial regulator.

"Labour's policies are the same as they ever were, when the rule of law was not respected. These same people are on Muscat's frontbench today. In the light of Labour's past when it came to banking, namely the National Bank saga, Muscat's declarations today are of great concern."

The National Bank was the precursor of the Bank of Valletta, shortly before its nationalisation in 1973, when the National and Tagliaferro Banks (Temporary Provision) bill was passed through all stages by both sides of the House.

The Malta Financial and Services Authority fined BOV the maximum fine available under the applicable legislation of €203,150 for breaching license conditions when selling units in the fund to its clients.

The authority also issued a directive which requires the bank to cooperate with a review by an independent professional services firm, engaged by the MFSA at the expense of the bank, that will prepare a list of ineligible investors to whom the bank should offer the further compensation.

BOV will have to notify investors of their compensatory payment to them, which must also include investors who had already accepted the bank's conditional compensation, and which the MFSA said will amount to €1 per unit.