BOV saga: Simon Busuttil already fails to deliver

The long list of Bank of Valletta clients who filed a misselling complaint in respect of Lehman and other perpetual securities and whose claim was upheld by the Malta Financial Services Authority are still waiting for compensation. BOV was asked by the MFSA to reinstate clients to their previous financial position by paying the capital and interest. 

In many cases, more than a year has passed from these decisions which remain defiantly ignored by government appointee Frederick Mifsud Bonnici (PricewaterhouseCoopers) and by Charles Borg, the BOV CEO who achieved the unenviable record of seven MFSA Administrative Sanctions and Penalties in 13 months. Since 12 May, 2011 BOV has been sanctioned by MFSA at least seven times and fined a total amount of €726,140 for letting down pensioners and small inexperienced investors by luring them into investing in schemes designed for professional investors.

Last May, Simon Busuttil had considered the case of these complainants. According to Union Press journalists present at a press conference given by Paul Bonello last October, Busuttil wrote a missive to Lawrence Gonzi and Tonio Fenech to tell them that he had heard enough in the meetings he had been having as Special Delegate of the Prime Minister with BOV clients who lost all their life savings to start empathising with these claims. 

Busuttil told them he found it bizarre that a bank partly owned by the government that also appoints its Chairman would not respect MFSA's rulings even if they were non-binding.  Even worse, it was unacceptable that MFSA did not use its legal powers to enforce its recommendations when otherwise small elderly investors are left in the unenviable situation of having to take the bank to court themselves and wait endlessly for a judgement.   

Is this the real remedy when MFSA is supposed to be there to protect citizens, Busuttil asked the Prime Minister? Busuttil ended the memorandum by stressing that his main concern, as a politician, is that small investors, such as elderly people, are not left defenceless in the face of mistakes or irregularities committed by enterprises. Eight months later, and now a Deputy Leader of the Nationalist Party in government, and these investors remain callously abandoned to their fate not only by BOV, MFSA, Tonio Fenech and Gonzi, but by Simon Busuttil as well.

It is not the first time and the only case where MFSA has failed to protect consumers without the PN government batting an eyelid. On the contrary: Joe Bannister, who runs MFSA, boasts that he enjoys total immunity and that he has enough contacts through his network to survive and perpetuate his reign for ever.

Meanwhile, the investors in the TEP fund, sold by Global Capital, have been waiting for more than three years to receive compensation. MFSA has failed to deal decisively with a number of other cases which affect hundreds of helpless investors that have lost over €80 million as a result of scams (CECA, EURUS Safe Investments, Denmark; ARM Assets of Luxembourg and Ireland) and other investment products that should never have been allowed to be distributed in Malta, especially to vulnerable and unsophisticated retail investors (TEP Funds; PATF Funds).

The MFSA had issued a Media Release on 24 October 2012 to try and justify its dragging of feet in taking judicial action in terms of its statutory powers when a licence holder is found to have breached investment regulations and refuses to abide by its recommendations. The MFSA said that the Authority believes that it is right to first exhaust all possible avenues to achieve restitution, including an insistence that BOV shoulders its responsibilities towards these investors before going to the Courts. What are Chairman Bannister and Director General Andre Camilleri waiting for now that another three months have passed without any positive action taken by Bank of Valletta? 

While haughtily ignoring hundreds of vulnerable consumers, Bannister is busy giving promotions to his cronies before the election.

Paul Bonello has been defending the rights of small investors, mostly pensioners who lost up to 80% of their capital and interest payable in the La Valette Multi Manager Property Fund run by Bank of Valletta.

Bannister dismissed an email Bonello sent him on the 2,230 investors who want to be compensated after they were mis-sold La Valette Fund schemes designed for experienced investors.

In his email, Bonello told Bannister: 'In its Media Release, the MFSA confirms that it sent the list of investors eligible for further compensation to Bank of Valletta on 4 January, and this without advising the complainants. This behaviour goes against the basic rules of natural justice, and coming from what is supposed to be the competent authority entrusted with the mission of investment protection and that claims to be the promoter of the highest corporate standards, transparency and accountability, I am of the firm opinion that the Director General of the MFSA should resign fortwith.'

But others explain MFSA's behaviour differently. Without any concrete answers, what are we to speculate about as to the reason behind the delay in paying further compensation? Is the MFSA being held hostage by certain influential players in banking and financial services? And if so, is this the reason the MFSA has not advised investors of the result of the investor review, so if need be it can reverse its decision without the relative investor ever knowing?

The Labour Party has promised that MFSA awards relating to perpetuals will be honoured in full. It also stated that it would open serious negotiations with investors' representatives with a view to compensation, irrespective of whether one had US$50,000 of investment transactions (and hence for BOV and MFSA, an experienced investor) or not, as the breach of prospectus of the Fund by the La Valette Sicav and VFM and the false Custodian Reports by BOV (confirmed by MFSA in June 2011) affected all investors.

Evarist Bartolo is shadow minister for education