The cross border financial services provider decided to take the Gibraltar Financial Services Commission (GFSC) to court after it sought extra powers to further investigate short comings at STM.
The GFSC visited STM subsidiaries and at its centralised compliance centre in April, June and March and found deficiencies in compliance, governance and controls and the provision of professional and trustee services.
Under the appointment of inspectors power the GFSC can question employees under oath and access documents.
However, in addition to blocking these powers STM has placed a privacy order on GFSC preventing the reporting on details of the investigation including withholding the names of subsidiaries involved.
A spokeswoman for GFSC said the appointment of inspectors was a reasonable step to protect the public, saying it was a “standard tool”.
“Whether a company appeals this decision is their prerogative and a decision for them,” she said.
“Obviously our preference is always to work together with any company to find a solution for the benefit of shareholders, staff and consumers.”
STM’s defence
Justifying their actions STM has said it has a “strong case” for a successful appeal against the probe.
“Subsidiaries are in ongoing dialogue with the GFSC in relation to establishing a collaborative route forward and hopes to reach a resolution through this route,” the firm has said.
The Gibraltar Supreme Court, which has granted a temporary block on the GFSC inspectors, will decide on the merits of the case on 20 November.
Police investigation
Lawyers for STM have also asked for a Supreme Court judicial review into a separate investigation into STM by the Royal Gibraltar Police.
A date for this hearing has not been set and International Adviser understands the police have yet to receive notification of the action. STM said they placed it with the court on 9 November.
STM have said chief executive Alan Kentish “continues to cooperate fully with the RGP whilst they conclude their investigation” following his release from police bail without charge.
Kentish and a second unnamed employee had been arrested on suspicion of failure to disclose.
STM’s board has been advised that the “documentation lodged to support the judicial review robustly defends that there is no merit to these allegations”.
The group, which has backed Kentish throughout, said the RGP probe relates to a tax dispute between two other jurisdictions and should not involve Kentish.
A spokesman for RGP said officers have informed Kentish he may be questioned further and their investigation continues.
