An internal ethics probe into former Malta Financial Services Authority CEO Joseph Cuschieri has determined that he infringed both the MFSA's and the European Central Bank's guidelines by going on a trip to Las Vegas with businessman Yorgen Fenech. 

In October 2020, Times of Malta revealed that Cuschieri had travelled to Las Vegas on Fenech's invitation, with the latter footing the bill for their flights and accommodation. The pair stayed at the luxury casino hotel Caesars Palace in May 2018. 

The trip came about a month after Cuschieri had moved from his position at the helm of the Malta Gaming Authority to take up the top spot at the MFSA. 

Fenech stands accused of orchestrating the murder of journalist Daphne Caruana Galizia. Previously, when he held directorship of the Tumas Group empire, Fenech was a casino owner in his own right. 

Considering Fenech's vast commercial interests, the report found that several of his companies could indirectly stand to be regulated or probed by the MFSA. 

The MFSA published the full report of the ethics probe, authored by former chief justice and now standards commissioner Joseph Azzopardi and lawyer Mark Simiana.

Publication followed a decision handed down by the Data Commissioner on the outcome of a Freedom of Information request, with the authority deciding not to exercise its right to appeal. 

The board came to the damning conclusion that Cuschieri had indeed breached both the MFSA's hospitality guidelines, which dictate that is it "not appropriate" to accept "expensive or exclusive" hospitality invitations.

He also breached the ECB's Code of Conduct for high-level European Central Bank Officials, which are also applicable to Malta. 

"Regarding the Las Vegas trip... the Board has no doubt that Mr Cuschieri infringed both the Guidelines above mentioned and the ECB Code of Conduct," the report concludes. 

"The Board furthermore feels it should submit that the Board of Governors should be in a better position to scrutinise actions or decisions of a Chief Executive Officer especially before certain such actions and decisions of major importance are taken."

Pointing to a similar review that the board had conducted into the behaviour of the MFSA's general counsel Edwina Licari, who went on the same trip, the report points out that Licari had always declared her friendship with Fenech and on at least three occasions had abstained in decisions that centred around his business interests. 

"A person of Mr Cuschieri’s undoubted intelligence ought to have realised this," they said. 

"The Board, therefore, does not agree with Mr Cuschieri that there was no possible conflict of interest in accompanying Mr Fenech and advising him."

On other claims of wrongdoing raised on Cuschieri's involvement in the expression of interest for the relocation of the MFSA's offices, the number of trips abroad he made as CEO as well as the recruitment of Licari with the MFSA, the board cleared him of any fault. 

The board's probe into Licari also cleared her of wrongdoing or unethical behaviour, primarily because she was employed at the MGA at the time of the trip and therefore fell outside the scope of review. 

They also concluded that her appointment to the FIAU board was not improper, noting that Licari had always declared conflicts of interest, including with Fenech. 

Cuschieri 'never felt conflicted' 

In reaction, Cuschieri said in a statement that he had "reservations" on the conclusion reached that he had breached the financial regulator's code of conduct, claiming that the interest of Tumas Group and its subsidiaries did not fall under the MFSA's oversight. 

Key decisions at the MFSA, he said, were taken by groups of people and management collectives and very rarely unilaterally by the CEO. 

While the board had found that the scope of Tumas Group's commercial interests raised the possibility of a conflict of interest, Cuschieri said that these could be "managed and declared". It is not "uncommon" for conflicts to arise in "a small country like Malta", he added. 

Cuschieri nonetheless stressed that he never felt conflicted and would have declared any conflict should it have arisen. 

"I would like to make it clear that at no point in time (throughout my tenure) I felt conflicted or prejudiced where I had to formally declare a conflict," he said.

"Having said that, if I ever felt conflicted, I would have immediately declared the conflict in line with the MFSA's accepted procedures."