Gibraltar Savings Bank scandal - explosive 2025 Principal Auditor’s report

It has been reported that there is a scandal brewing in Gibraltar.

• The Gibraltar Savings Bank scandal centres around allegations of government interference, lack of transparency, and potential misuse of public funds,
• As revealed in the explosive 2025 Principal Auditor’s report.

From open-source information, here is a summary of the key issues reported:

Audit Obstruction & Constitutional Concerns

• Chief Minister Fabian Picardo was accused of acting unconstitutionally by preventing Principal Auditor Anthony Sacramento from conducting a compliance audit of the Gibraltar Savings Bank (GSB).
• Sacramento claimed this obstruction was part of a broader pattern of blocking scrutiny of public finances, including anti-money laundering processes at the GSB.
• The government responded by asserting that the Principal Auditor lacked statutory authority to conduct such audits, and that PwC, a private firm with relevant expertise, was already auditing GSB.

£50.5 Million Loan Note Controversy

• The Gibraltar Social Democrats (GSD) raised alarms over £50.5 million in loan notes issued by the GSB to finance a previously unknown entity linked to the government’s National Economic Plan.
• Critics described the transaction as opaque and complex, with concerns about whether it was disclosed correctly or justified.
• The government defended the investment as strategic and beneficial, claiming it had invested adequately in national infrastructure projects.

Transparency & Governance Issues

• The Principal Auditor’s report also highlighted:
• £13 million in ex-gratia payments made without adequate explanation.
• Unusual transfers of police officers to other public sector roles, possibly linked to the McGrail Commission of Inquiry.
• Obstruction of access to information by senior officials, including the Chief Secretary and Director of Personnel.

Government's Defence

• The government dismissed the report as politically biased and claimed Sacramento acted outside his remit.
• It emphasised that GSB undergoes regular audits by PwC, and that the Auditor’s criticisms were factually and legally incorrect.

Implications

• Public trust in Gibraltar’s financial governance has been shaken.
• The scandal may impact Gibraltar’s international reputation, especially after its recent removal from the money laundering high-risk list.
• Calls for reform include establishing a Public Accounts Committee and updating outdated audit legislation.

Legal Implications - Constitutional Breach:

The Gibraltar Constitution states the Principal Auditor must be independent and not subject to government control. Blocking the audit may violate this principle

• Audit Authority Dispute:
• Government claims the Auditor lacks statutory power to audit GSB under POCA, citing reliance on PwC for AML audits.
• Sacramento disputes this, citing constitutional and legislative authority
• Transparency Failures:
• Allegations of ex-gratia payments, opaque financial transfers, and politically motivated appointments raise concerns about public finance mismanagement
• Potential AML Breaches:
• Blocking an AML audit could undermine Gibraltar’s AML framework, especially given the £10 million court settlement indirectly funded by GSB.

References

• CM accused of acting 'unconstitutionally’ over Savings Bank audit, Govt ...https://www.chronicle.gi/cm-accused-of-acting-unconstitutionally-over-savings-bank-audit-govt-rejects-extraordinary-claim/
• Silencing the auditor: How Gibraltar's government blocked scrutiny of ...https://www.transparency.org.uk/news/silencing-auditor-how-gibraltars-government-blocked-scrutiny-its-public-finances
• Former Principal Auditor knew he had no power to carry out compliance ... https://www.gibraltar.gov.gi/press-releases/former-principal-auditor-knew-he-had-no-power-to-carry-out-compliance-audit-of-gsb-5402025-11079  
• GSD Questions £50.5M Gibraltar Savings Bank Loan Notes https://www.yourgibraltartv.com/politics/31400-gsd-questions-gbp50-5m-gibraltar-savings-bank-loan-notes
• GSD raises alarm over £50 million Savings Bank loan deal https://www.gbc.gi/news/gsd-raises-alarm-over-ps50-million-savings-bank-loan-deal