Despite Labour criticism, Bannister reappointed MFSA chairman

The chairman of the Malta Financial Services Authority, Prof. Joseph Bannister, has been reappointed to his post by the government.

He will serve at the helm of the financial regulator despite having been under severe criticism by Labour when it was in Opposition, due to his handling of the investigation in the La Valette multi-manager property fund.

The property fund lost over €50 million in investors' savings due to investments made in its underlying funds whose overseas property assets lost value, and led to a protracted investigation on Bank of Valletta's role in the way it sold the fund to retail clients who were not experienced investors.

He was recently asked to mediate between the Labour government and the Opposition in talks on the Individual Investor Programme, the controversial sale of Maltese passports.

Bannister, whose salary heading the very important regulator is over €82,000, was reappointed by Prime Minister Joseph Muscat.

He is considered to be the architect of Malta's financial services regime, which today employs close to 7,000 and commanding average gross annual salaries of over €48,000. Financial observers say that under Bannister, Malta turned into a financial services powerhouse.

But he was also taken to task over consumer protection rules. One of Bannister's main critics was education minister Evarist Bartolo, who said the MFSA had failed to protect consumers, describing Bannister as a man who "boasts of enjoying total immunity and that he has enough contacts through his network to survive and perpetuate his reign for ever".

Bartolo also accused Bannister of dismissing complaints by stockbroker Paul Bonello, who represented hundreds of La Valette property fund investors who lost their savings in the fund.

Bonello claimed that almost €500 million worth of investments made by the Maltese retail public in professional investor funds and order complex instruments, had been suspended or gone bust, accusing the MFSA of ineffective regulation.

In the past, Bartolo had also accused Bannister of failing to declare a directorship in a Cayman Islands company in the Malta Financial Services Authority's annual report. Bannister denied any conflict of interest as director of Kairos Fund.

Bartolo claimed that another Kairos director, Peter Astleford, received a €463,000 direct order from MFSA in consultancies to his firm Dechert LLP.

The MFSA had said Bannister's involvement was declared, and that Bannister's international involvement had been "utilised by both the MFSA and various practitioners to solve complex problems in the funds sector".

The regulator said Astleford had resigned from Kairos in early 2007 and that Dechert LLP had helped MFSA develop its Professional Investor Fund [PIF] regime.