Malta 'golden handshake' storm further rocks financial services in region

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Malta 'golden handshake' storm further rocks financial services in region

A public quarrel between the chief executive of the Malta Financial Services Authority (MFSA), Joseph Cuschieri, and the chief operating officer Reuben Fenech which has led to a legal challenge by an MFSA director, has rocked Malta's financial services industry.

According to various local reports the row, which led to the dismissal of Fenech and a subsequent unprecedented judicial letter (sent on Monday) where MFSA director Joe Brincat warned the MFSA CEO, that any golden handshake payment was a breach of the rule of law that brought shame upon the government's administration of the country.

In the judicial protest, The Times of Malta reports that Dr Brincat, a former justice minister, told Cuschieri to "desist from offering a golden handshake," insisted that there was no approval for the use of such funds to terminate the contract of an employee.

Addressing Cuschieri directly, Brincat charged that "this is a crime, as the public funds which you are administering should have been used for specific purposes and not as a blank cheque for you", the report said. 

In his protest, Brincat did not specifically mention the dismissal of the COO but made it clear that this is a new case and not related to another similar controversial golden handshake scandal recently revealed by The Sunday Times of Malta.

MFSA sources told Times of Malta that last week, that Cuschieri asked the regulator's COO, who had been in the job for less than two years with a salary of €100,000, not to report for work any longer. 

The MFSA was also asked about the value of the golden handshake, whether the CEO had asked the board for permission to negotiate it and whether Cuschieri would now step down.

According to the report, the MFSA said it "refuted all allegations made" and that it would officially respond "in due course". Any reference to the COO on the MFSA's website was deleted, with his post in the executive committee marked as ‘vacant'.

The MFSA is now expected to reply to the judicial protest, but did not comment to The Times of Malta or at time of going to press had issued any statement on the matter on its website.

The row is perhaps particularly embarassing for the authority after recent calls, earlier this month, by the MFSA and its CEO to clamp down on financial crime.

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