MFSA pays €3.4 million in direct orders to consulting firm embroiled in US controversy

Last Updated on Sunday, 6 December, 2020 at 9:04 am by Andre Camilleri

The Malta Financial Services Authority spent €3.4 million in direct orders to engage a firm called FTI Consulting which has been under the spotlight for less than ethical practices in the United States, with a spokesperson for the authority saying that their engagement was temporary but critical to the authority’s financial compliance set-up.

A recently published list of direct orders showed that the MFSA spent a total of €3.4 million across three separate direct orders in the space of a year to engage FTI Consulting with the authority.

Two of the direct orders – worth €1.81 million and €675,00 respectively – were for the provision of “regulatory expertise including training”, while the remaining direct order, dated 16 June this year and worth €920,000, was or “legal and management consultancy”.

FTI Consulting was recently under the spotlight after an investigation by the New York Times last month exposed how it had run a number of operations for international oil groups in the United States.

The campaigns, according to the investigation, included creating a fake Facebook profile to monitor the plans of environmental activists and to back pro-fossil fuel campaigns with the intention of creating the impression that these were grassroot community initiatives led by citizens.

The campaigns came on the back of increased political pressure over climate change in the US, especially now with President-elect Joe Biden pledging to reverse various anti-environmental stances that his soon to be predecessor Donald Trump had favoured.

In an article which the New York Times said is based on interviews with former FTI employees, the newspaper details how FTI employees also “staffed two news and information sites, Energy In Depth and Western Wire, writing pro-industry articles on fracking, climate lawsuits and other hot-button issues.”

The first direct order granted by the MFSA was on 2 February 2019, with another being on 5 June of that year, and the last being on 16 June 2020.

Asked by The Malta Independent on Sunday what the exact role of FTI Consulting was within the MFSA, and how the MFSA chose FTI Consulting for the above services, a spokesperson for the authority said that “FTI Consulting were engaged to act as a temporary but critical transition device, providing not only immediate resources and expertise augmentation but also on-the-job coaching  to create a stronger permanent Financial Crime Compliance (FCC) setup at the MFSA.”

The spokesperson referred to a report carried by this newsroom in June last year which announced the engagement of FTI with the MFSA.

In that announcement, then CEO Joseph Cuschieri – who has since resigned under a cloud of scandal after it was revealed that he travelled to Las Vegas with alleged Daphne Caruana Galizia murder mastermind Yorgen Fenech – said that “this project is a perfect fit with our AML/CFT strategy published earlier this year. This partnership with FTI Consulting will undoubtedly strengthen our AML/CFT supervisory capabilities and help the MFSA raise its standards of compliance.”

The MFSA spokesperson continued, saying that “this initiative enabled the Authority to increase the number of inspections and reach unprecedented quality in the investigative work, which it carries out as part of its enhanced approach to combatting money laundering and terrorism financing, with the FCC team now engaged throughout a licensed entity’s life cycle.”

The direct orders to FTI were by far the largest out of a total of around €12 million in direct orders handed out by the authority since the beginning of 2018.

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