The misuse and manipulation of clients’ assets by Maltese Cross Financial Services Ltd was predominantly in respect of investments held by the company on a nominee basis, an investigation commissioned by the Malta Financial Services Authority has found.

Last August, the Malta Financial Services Authority (MFSA) established that Maltese Cross Financial Services was not in a position to meet its obligations to customers and the shortfall was subsequently found to be around €6-7 million.

MCFS director Jean Claude Bugeja is currently in court on the matter, charged with fraud and misappropriation. His assets have been frozen and the court has allowed him a basic allowance of €14,000 a year on which to live.

The MFSA said its investigations into the affairs of the company were on-going.

It appointed an audit firm as a technical expert to assist it with certain aspects of the investigation.

From these investigations to date, it resulted that the misuse and manipulation of clients’ assets was predominantly in respect of investments held by the company on a nominee basis.

The authority established that as at the August 11, the total value of investments held by the company on a nominee basis on behalf of its 222 clients should have amounted to just above €6,950,000. However, the total value of investments still intact and which, therefore, remained held under nominee as at August 11 amounted to just below €475,000. There was, therefore, a shortfall of just above €6,475,000.

In March, an application for the winding up (liquidation) of the company was submitted to the court by the directors of the company. The Authority, as regulator of this company, requested the court’s permission to intervene in the case, which request was acceded to by the court.

As an interim measure and pending the court’s decision on whether the company should be dissolved and wound-up, on May 28, the court appointed the official receiver as provisional administrator of the company to take control of the company and all its assets and to administer the company’s affairs instead of the directors.

The provisional administrator is not empowered to sell or dispose of any assets of the company in order to pay any debts or liabilities of the company.

If the court decides that the company should be dissolved and wound-up, a liquidator will then be appointed.