A corporate services provider seeking to overturn an MFSA fine has blamed Nexia BT and the COVID-19 pandemic for a delay in submitting audited accounts.
In an appeal before the financial services tribunal, which was turned down, CSB International argued the delay was outside its sphere of influence and control, making the authority’s €3,000 fine “unjust”.
Nexia BT, an advisory firm since charged with money-laundering, was engaged by CSB to carry out an audit in 2020 on the company’s accounts from the previous year.
Deadline problems at Nexia BT
CSB said that throughout the course of the audit, it started to become obvious Nexia BT would not be respecting the deadlines set.
The company said Nexia was facing “staffing issues” leading to considerable resignations “in light of the negative media that started to surface”.
Nexia BT, of Panama Papers fame, first hit the headlines in 2016 for setting up secretive offshore structures for former government officials Keith Schembri and Konrad Mizzi.
A change in auditor is a ‘serious and sensitive matter’ that takes time – Tribunal
CSB International said it complained to Nexia BT about the delays but was in a bind because removing them as auditors and engaging someone else would create even more delays.
The MFSA in turn argued that the onus was on the company to act on any “suspicions and concerns” surrounding Nexia BT.
This line of argumentation was firmly rebutted by CSB, who said any failures by the authorities to act should not be shifted onto “innocent third parties”.
CSB International said innocent third parties cannot take all media reports as fact and take action without any reliable information or actual convictions, even prior to the MFSA taking action itself.
The MFSA maintained that CSB International should have taken on a new auditor or sought guidance from the authority.
It also dismissed the company’s claim about failing to take the onset of the COVID-19 pandemic into consideration as another factor behind the delayed account submissions.
Tribunal's judgment
In handing down judgment, the tribunal noted that the fine imposed by the MFSA for the breach was minimal, and CSB International was at fault for not communicating its difficulty to submit the audited accounts on time.
The tribunal, however, pushed back at the authority’s assertion that CSB International should have removed Nexia BT due to the negative media attention, saying that a change in auditor is a “serious and sensitive matter”, that takes time.
Corporate filings show CSB removed Nexia BT as their auditors in April 2021, after the firm and its top officials were charged with money-laundering.