Below follows a summary of part 2 of the address to Parliament used by the Chief Minister regarding the debate on the Motion on the former Principal Auditor’s 2018/2019 Report:

This document summarises part 2 of the Chief Minister’s address, which gave a detailed analysis of some areas of concern identified by the former Principal Auditor, the Government’s response, and  a qualitative assessment of the matters regarding the Gibraltar Savings Bank.  

The Gibraltar Savings Bank Accounts 

The Chief Minister highlighted that the former Principal Auditor’s Report is in direct conflict with the clear wording of the Gibraltar Savings Bank Act, which sets out that audited accounts are to be  submitted to the responsible Minister and published in the Gazette, not laid before Parliament. 

This is not a matter of policy interpretation, but of statutory law. The Report improperly advances the former Principal Auditor’s own view of what the law “should” be, contradicting both legislation  and established case law. 

The Report goes beyond questioning Government policy and instead directly challenges the Speaker’s independent ruling. In truth, the Speaker correctly upheld Parliamentary procedure. 

The Chief Minister highlighted the Report’s factual inaccuracies, including a back-dated letter  claimed to have been sent by the former Principal Auditor on 30th May but in fact transmitted late  on 31st May, just hours before his departure from office. The Chief Minister stressed that back dating communications is unacceptable, undermines transparency, and further erodes the Report’s  credibility. 

The Chief Minister concluded that these errors are fundamental and damage confidence in the  integrity of the Report itself.

Legal Assessment 

While the Constitution empowers the Auditor to report on public accounts, the Savings Bank  accounts are not “public accounts” within that meaning, but are governed by a specific statutory  regime. The claim that the Auditor could table them directly is therefore unsupported in law. 

The Chief Minister pointed out that the Standing Rules of Parliament reinforce this position, as only  Ministers may present papers, except for the Auditor’s Annual Report. He noted that the Speaker’s  ruling accurately reflected both Westminster practice and long-established legal precedent, which  confirm that only Parliament itself decides its internal procedures and agenda. 

Referencing landmark cases such as Bradlaugh v Gossett and British Railways Board v Pickin, the Chief  Minister underlined that external officers cannot dictate Parliamentary procedure. Even though  the Auditor is an Officer of Parliament, he cannot override the authority of the House or its Speaker. 

The Chief Minister concluded that the Report is plainly wrong in law, that its criticism of both the  Government and the Speaker should be withdrawn, and that his amendment to the motion will  make clear that this section of the Report is rejected by Parliament. 

The Gibraltar Savings Bank – Proceeds of Crime Audit 

This is the most serious issue raised in the Report. It is important to remember that the former  Principal Auditor’s own 2021 report had found the GSB met its anti-money laundering obligations  “effectively and efficiently”, with only minor areas for improvement. 

The Chief Minister stressed that the former Principal Auditor had no statutory or constitutional  mandate to carry out compliance audits of the GSB unless formally invited to do so. This has always  been the position of successive Financial Secretaries, Directors of the GSB, and even the former Principal Auditor himself. 

To illustrate the point, the Chief Minister read from a 2022 letter in which the former Principal  Auditor himself had admitted that Proceeds of Crime Act (POCA) audits were “not my statutory  function” and could only be carried out if the GSB Director appointed him. In that correspondence,  the former Principal Auditor had even warned that having both his office and PwC conduct the same  audit would be “a waste of time and resources” and poor value for money. Yet, just three years later,  he accused the Government of unconstitutional conduct for following precisely that position. 

The Chief Minister said this blatant contradiction exposes the allegation as “baseless and  defamatory”. Such claims are not merely political attacks but risk serious international  repercussions, given Gibraltar’s past scrutiny by the Financial Action Task Force. 

The most striking and damaging accusation in the Report collapses under the former Principal Auditor’s own words and should therefore be rejected in its entirety.

Principal Auditor’s Attempted POCA Audit was Beyond his Lawful Authority 

The Chief Minister stressed that the refusal to allow the former Principal Auditor permission to  conduct an AML compliance audit of the Gibraltar Savings Bank was based on clear legal advice and  the consistent view of senior officials. The core legal point was that neither the Gibraltar  Constitution nor the Public Finance (Control and Audit) Act 1977 confer any power on the Principal  Auditor to conduct POCA compliance audits. That role, he explained, is set out in POCA 2015 itself. 

By contrast, section 74 of the Constitution and sections 60–62 of the 1977 Act limit the Principal  Auditor’s remit to auditing public accounts and certain statutory bodies funded by public money.  Nothing in those provisions extends to AML compliance under POCA. 

The Chief Minister supported his arguments with R (Public Law Project) v Lord Chancellor [2016] AC  1531, where the UK Supreme Court held that even wide statutory powers cannot be used to  introduce functions Parliament never intended. The attempt to shoehorn a POCA audit into the  Auditor’s constitutional remit was equally outside the scope of his lawful authority. 

The Chief Minister said this legal analysis was supported by independent advice from Leading  Counsel in the UK, who confirmed that the Principal Auditor’s claim was baseless and that the  accusation of unconstitutional interference on the part of the Chief Minister was therefore  unfounded. 

Conclusion  

He warned, however, that despite this legal clarity, the use of such language in the Report risks  severe reputational damage to Gibraltar, particularly after its recent removal from FATF grey listing. Baseless suggestions of constitutional obstruction, he said, could have real economic  consequences—from restricted banking access to reduced investor confidence. 

In closing, the Chief Minister noted that the Report itself acknowledged that the GSB was “generally  compliant” with POCA. It’s allegation of constitutional obstruction, by contrast, were legally  unsupported, contradicted by the former Principal Auditor’s own earlier admission, and held the  potential for dangerous economic consequences from restricted banking access to reduced  investor confidence. 

For these reasons, the Chief Minister’s amendment to the motion will propose that Parliament  expressly reject this section of the Report. 

The Chief Minister will resume his detailed analysis at 10am tomorrow (Thursday) morning.