The company’s office in Fleur-de-Lys. Photo: Matthew Mirabelli

The police are investigating the disappearance of possibly millions of euros invested with Maltese Cross Financial Services.

The Malta Financial Services Authority is working with the police authorities to investigate the “material shortfall” in clients’ assets – which sources said could run into millions.

The authority said that the shortfall “appeared to have arisen from the possible misuse and manipulation of the assets” and that the investments “which belonged to clients but which were held by the company, may have been lost”.

The investigations will also look into whether the irregularities could have started prior to the setting up of the company two years ago.

The MFSA recently suspended the operations of the Fleur-de-Lys company, and took regulatory action against one of the three directors of the company, Jean Claude Bugeja. He has had to resign as a director and to stop providing any advice. He was also banned from accessing the company’s records, IT systems and offices.

Mr Bugeja, 42, was the managing director of Island Financial Services, part of the Island Insurance Group. He got his licence as a financial adviser in 2004.

The audit report had no qualifications – no red flags about the soundness of this relatively small company

In early 2013, the majority of the shares were sold to Mr Bugeja, with his wife, Robert Cutajar and Stephen Spiteri each acquiring five per cent. Mr Bugeja, Mr Spiteri and Mr Cutajar are directors of the company.

At the time of the acquisition, Island Financial had around 150 to 200 clients, according to informed sources. Its auditors, PwC, filed abridged financial statements for the year ended December 2012 in which it reported total assets of just €198,747, down from €291,382 the year before. The audit report had no qualifications – in other words, no red flags about the soundness of this relatively small company.

Directors halted firm’s activities

Mr Spiteri and Mr Cutajar informed The Sunday Times of Malta through their legal representatives that they “recently discovered what appeared to be irregularities in the affairs of the company which they duly and promptly brought to the attention of the Malta Financial Services Authority”, also suspending all the company’s activities – a move the MFSA immediately confirmed.

Mr Spiteri and Mr Cutajar said they also wrote to Maltese Cross’ clients on August 8 and offered their full cooperation to the MFSA.

Sources familiar with the investigation said that the amounts invested by many of the individual clients could surpass the €20,000 compensation to which they are eligible from the Investment Compensation Scheme.

The investigations are also understood to be “looking into the period when the irregularities took place”, according to the legal representatives of Mr Spiteri and Mr Cutajar – implying that these may have started before the acquisition.

The MFSA has said that the investigations would take some time to conclude.