Central Bank deputy governor was Labour consultant on energy tariffs report

A Central Bank employee who in the past was accused of being disloyal to former governor Michael C. Bonello, has been appointed deputy governor.

The Prime Minister yesterday appointed Sandro Demarco as deputy governor of the Central Bank. Demarco had carried out a review of a report prepard by the Laboru party in 2008 on the impact of higher energy tariffs.

The five-year appointment is backdated to 1 January, 2014. As second deputy governoer, Demarco is expected to focus on financial stability.

The appointment was announced in a circular to Central Bank employees.

This is the first time that the Central Bank of Malta has two deputy governors, the other being Alfred Demarco.

Demarco had been at the centre of controversy when former CBM governor Michael Bonello had filed a counter protest in the Maltese courts rebutting allegations made by Demarco.

Demarco was the subject of an internal bank investigation which however had exonerated him of claims that he had leaked information to the Labour Party. Demarco said the outcome of the investigation had been kept secret and he requested publication of the report.

In a counter-protest, Bonello said the bank had instituted two internal proceedings against Demarco after the latter carried out a review of a report prepared by the Labour Party involving the impact of the increase in energy tariffs. The report was published by the PL in November 2008.

Bonello claimed that Demarco had contravened the bank's internal rules governing confidentiality and its code of ethics.

However, internal proceedings on a possible violation of the bank's anti-fraud policy and a disciplinary board hearing, concluded that Demarco was not guilty in not seeing the CBM's clearance beforehand.

The disciplinary board however said Demarco should have exercised more caution and prudence before accepting to review a report on a matter which had all the ingredients for a public controversy.