Joe Bannister’s term as chairman of the Malta Financial and Services Authority has been extended by five years after his contract expired in December.

The decision was taken around the same time that Prof. Bannister was asked to mediate between the government and the Opposition on the controversial Individual Investors Programme. The scheme offers Maltese citizenship to foreigners in return for a financial contribution and investment in property and bonds.

Prof. Bannister, considered to be the architect of Malta’s modern financial system, which has grown into one of the country’s most thriving sectors, had been the target of severe criticism in the last legislature by the Labour Party over the MFSA’s handling of the La Vallette Property Fund. Belonging to Bank of Valletta, the fund went bust taking with it the life savings of small time investors.

The saga surrounding the fund, which ended with the bank having to pay out in excess of €50 million, saw then Opposition MP Evarist Bartolo – now Education Minister – lambast the MFSA and Prof. Bannister in particular for being too soft with the bank.

Mr Bartolo had also accused Prof. Bannister of looking the other way when faced with claims by stockbroker Paul Bonello that the watchdog had failed to act on the fact that Maltese investors had lost more than €500 million in complex funds that they should not have been sold in the first place.

Mr Bartolo and Labour’s electronic newspaper, Maltastar, had also accused Prof. Bannister of failing to declare a directorship in a Cayman Islands financial institution in the MFSA’s annual report. Prof. Bannister denied having a conflict of interest.

Questions sent to the Office of the Prime Minister and the Finance Ministry on Prof. Bannister’s re-appointment remained unanswered. They were asked to explain his appointment in light of the criticism levelled at him by a Cabinet member.