Updated at 3.30pm, adds PN statement
A quarrel between the chief executive of the MFSA and the chief operating officer led to the unceremonious dismissal of the latter and the unprecedented judicial letter on Monday where MFSA director Joe Brincat warned the CEO not to use money which was not his on a golden handshake.
The issue is connected with the unceremonious dismissal of Reuben Fenech, the financial services authority's Chief Operating Officer, last week, following a public quarrel with CEO Joe Cuschieri, informed sources said. Mr Cuschieri is offering Mr Fenech an undisclosed sum as compensation for leaving.
In his hard-hitting judicial protest, Dr Brincat, a former justice minister, told Mr 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 Mr Cuschieri directly, Dr 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”.
Making it clear that in his capacity as a governor of the MFSA he would not shoulder any responsibility for Mr Cuschieri’s “illegal” actions, he warned that he would take further legal steps if the golden handshake offer went ahead.
In his protest, Dr Brincat did not specifically mention the dismissal of the COO but made it clear that this is a new case: it is not related to a similar controversial golden handshake revealed by The Sunday Times of Malta.
Dr Brincat said that even in the latter case, Mr Cuschieri allowed “the newspapers and politicians to attack the government” unjustly.
MFSA sources told Times of Malta that last week, Mr 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.
Mr Fenech, a former head of the National Statistics Office, was recruited by the MFSA a few months before Mr Cuschieri. He was not eligible for an early retirement scheme used to let go other top members of staff.
Asked to state whether Mr Fenech had resigned after a quarrel with the CEO and to explain the reason behind it, a spokesman for the MFSA confirmed that Mr Fenech did not work at the regulator any longer.
“Mr Reuben Fenech is no longer in employment with the MFSA. The MFSA does not issue comments or statements in relation to staff members,” was the spokesman’s reply.
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 Mr Cuschieri would now step down.
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.
Efforts to reach Mr Fenech proved unsuccessful. Mr Cuschieri did not reply to questions.
The Sunday Times of Malta had revealed that a former HR director at the MFSA, George Spiteri, was encouraged to retire from his job by Mr Cuschieri in exchange for an early retirement package worth €150,000.
However, only a few weeks after receiving his golden handshake, Mr Spiteri was re-employed as senior HR manager with the Registry of Companies, an offshoot of the MFSA.
This case has now been referred to the National Audit Office for investigation.
Other top MFSA officials, among them experienced directors, have also paid handsomely to leave under an early retirement scheme.
PN to call for PAC debate
In a statement, the Nationalist Party said it will be calling for an urgent debate on these cases within the Public Accounts Committee.
It condemned the way the MFSA was "squandering public funds", against the principles of good governance.
Political responsibility should be shouldered for the sake of accountability, it said.