Finance minister silent on Henley’s ‘hidden’ commission on government stocks

Finance minister Edward Scicluna refused to answer why Henley and Partners – the concessionaries of Malta’s sale of citizenship scheme –  earn a 4% commission on the sale of government stocks to passport buyers.

The commission was recently made public by the regulator of the Individual Investor Programme, who said in his annual report that Henley are not just making money from the standard 4% they are paid on the €650,000 that applicants pay for a Maltese passport, but also another 4% every time applicants purcahse the madatory €150,000 in government stocks – the investment elemenr of the citizenship scheme, together with a €350,000 property or annual €15,000 lease.

Speaking in Parliament during a debate on a Bill to transpose an EU directive aimed at preventing financial market abuse, Debono took the opportunity to question Scicluna why Henley is being paid this commission when it is not even a licensed stockbroker.

Moreover, she noted that the standard commission paid by the Treasury to brokers on Malta government stocks at IPO stage is 0.3% - ten times lower than that granted to Henley.

Invoking George Orwell’s famous quote that “all animals are equal but others are more equal than others”, she warned that the news – which was made public by the regulator of the Individual Investment Programme in his recent annual report – has “shocked” the financial sector.

“It has become the order of the day for the government to remain silent on serious allegations that are shocking the sector,” she said.

In his response, Scicluna did not even refer to the revelations, instead choosing to urge the Opposition not to sow doubt in the financial services sector.

He said that he had been handed totally false information by MEPs – such as that the Maltese tax authorities are not cooperating with their German counterparts, and that the Maltese government is refusing to publish a report drafted by the former head of the Financial Intelligence and Analysis Unit (FIAU) Manfred Galdes

“I’m not pointing fingers at anyone but damage is being done,” he warned.

Labour MP Charles Mangion accused Debono of trying to sow doubt into the financial services sector, and urged the Opposition to take a clear and definitive stance on the IIP.

“First they were vociferously against it, then they agreed with the amended version, now they are saying that they will not renew it once the 1,800 quota has been reached…they should take a clear stance on the scheme or stop talking about it.”

In total since the launch of the IIP, over €26.7 million in stocks were acquired, which left approximately just over €1 million in Henley’s pockets. Henley has so far pocketed an additional €5.8 million in commissions on the passports sold since 2014.

The Opposition has also accused justice minister Owen Bonnici of lying to Parliament – noting that he had told a parliamentary committee in 2015 that Henley did not receive any commissions over and above the standard 4%.

No set date for Galdes’ successor at helm of FIAU

Elsewhere, Scicluna refused to give a set date as to when the FIAU will appoint a director-general to replace Manfred Galdes, who resigned the post in August.

Debono said it is “unacceptable” that a successor has not yet been appointed yet, arguing that the unit must send out a message of zero tolerance against money laundering, bribery and criminality.

Manfred Galdes resigned as FIAU director general in August

However, Scicluna argued that the FIAU is an autonomous unit and that he did not want to impose pressure on them.

“I have been informed that they recently concluded their first round of interviews for the vacant role. A person is currently serving as acting director general, and the FIAU is functioning as usual.”

Galdes had been chief of the FIAU since 2008, but resigned in August to join the legal advisory firm Fenech Farrugia Fiott. However, Oppostion leader Simon Busuttil has questioned whether his resignation was in any way related to the Panama Papers scandal, which his office was investigating.