The accountancy profession watchdog has decided not to probe the conduct of two warranted auditors implicated in the Panama Papers scandal pending the outcome of a magisterial inquiry, the Times of Malta is informed.
Sources close to the Accountancy Board said Finance Ministry officials advised not to formally investigate Nexia BT’s Brian Tonna and Karl Cini before the magisterial inquiry was concluded.
“Since both auditors are under an ongoing magisterial criminal investigation in connection with allegations of money laundering and other criminal activities, the government has advised us to put on hold any investigation on our part until the related proceedings are over,” a board member said.
He said the board accepted the advice because the two auditors’ warrants would be revoked if the allegations proved to be correct.
Efforts to contact Accountancy Board chairman Peter Baldacchino were unsuccessful.
According to the law, the Accountancy Board can recommend the revocation of an accountant’s or auditor’s warrant. However, the final decision is made by the Finance Minister.
The Accountancy Board was informed about an investigation by the Malta Institute of Accountants to establish whether both Mr Tonna and Mr Cini had acted in breach of its code of ethics and, therefore, brought the accountancy profession in disrepute.
They had insisted with the institute to stop the investigation pending the magisterial inquiry and when the request was turned down they resigned their membership. The probe was thus stopped.
Read: Professional probe ends as Panama auditors resign from institute
A spokesman for the Institute of Accountants strongly denied claims by the two auditors they had been discriminated against.
Insisting that, among other things, it had to maintain the highest professional standards, the spokesman said the institute would have failed to honour its commitment to its members had it not mandated the investigating committee to look into the matter.
According to the Panama Papers, Mr Tonna and Mr Cini had assisted Tourism Minister Konrad Mizzi and the Prime Minister’s chief of staff, Keith Schembri, in the opening of secret companies in Panama.
After a report by the government’s anti-money laundering agency was leaked, Mr Tonna said a transaction of €100,000 to Mr Schembri was the repayment of a personal loan and not ‘kickbacks’ connected to the sale of Maltese passports, as the FIAU had suspected.
According to international accounting standards, it is unethical and unprofessional for auditors to take a loan from clients.
The magisterial inquiry in progress is looking into the contents of the FIAU report.