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Gaming Authority's costs rising much faster than sector's growth

Malta Gaming Authority executive chairman Joseph Cuschieri

Malta Gaming Authority executive chairman Joseph Cuschieri

Administration expenses related to the running of the gaming regulator have more than doubled in the past three years.

According to the published accounts, the Malta Gaming Authority last year spent€8.6 million in administrative expenses, compared to €3.2 million in 2012.

The increase was mainly due to the recruitment of new staff members, who have more than doubled in the period under review.

Consultancies and direct orders reached €1.2 million in 2015.

Gaming industry observers pointed out that the regulator’s increased expenses were not proportionate to the sector’s expansion.

While between 2012 and 2015, the industry registered 25 per cent growth, with the number of licences reaching 542, revenue growth increased by 16 per cent, to €8.2 million, over the same period.

Asked about the higher administrative costs, a spokeswoman for the MGA said it was necessary, due to the “right sizing” of the watchdog.

The board felt there was a need to ‘right size’ and strengthen the authority’s capacity, mainly in enforcement

Confirming that staff had increased from 60 in 2012 to 137 last year, the spokeswoman said this had to be done because “in 2013, the MGA was operating with a critically low level of internal resources, which were insufficient to effectively supervise and monitor such a large sector”. The spokeswoman added: “The board felt there was a need to ‘right size’ and strengthen the authority’s organisational capacity, mainly in enforcement, compliance, authorisations and support services such as revenue assurances, finance, information management legal and other administrative support.”

On the €1.2 million spent in consultancies in one year, mostly awarded by direct order on the authorisation of the regulator’s executive chairman Joseph Cuschieri, the spokeswoman said these were related mostly to work given to various audit firms.

Earlier this year, Mr Cuschieri denied any conflict of interest in the amount of direct orders given to Ernst and Young, a firm where he previously worked, even though the latter was the largest beneficiary of direct orders.

He pointed out that he had also authorised direct orders to other firms, such as Deloitte, Grant Thornton, KPMG, PWC, RSM and Nexia BT.

According to an analysis carried out by the Times of Malta, Ernst and Young topped the list of direct orders, reaching €331,137 worth of business.

Audit and accountancy firm Nexia BT was second highest on the list of direct orders, winning €213,000 worth of business.

Mr Cuschieri said direct orders were necessary given the nature of the MGA’s business. “MGA needs to draw up the right package of expertise, experience and technical knowledge to fit particular projects and tasks. You have to understand that were we to issue a tender, it would have to include a considerable amount of information which could be sensitive or would have an impact on our competitiveness, tipping off other jurisdictions to what we have in mind,” Mr Cuschieri said.

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