Almost four years ago, Pilatus Bank was shuttered by the European Central Bank, a decision upheld by the General Court earlier this year. But evidence of wrongdoing began emerging as early as two years before that, during which time the Maltese authorities bent over backwards to defend the bank.
Almost four years after Pilatus Bank lost its licence, eight of nine people suspected of crime have not been charged by the police or held to account in Maltese courts.
There is a new complication. In 2021, Ali Sadr Hasheminejad, the former bank’s Iranian owner and a citizen of St Kitts and Nevis, used a Hong Kong company to bring a complaint before the International Centre for Settlement of Investment Disputes (ICSID). Hasheminejad argues that his treatment in Malta was not fair and equitable.
The tribunal, as a preliminary measure, has stayed any criminal proceedings against Pilatus Bank’s companies. The process is obscure. But now the conduct of the Maltese government will be considered by the arbitrators. The governance and behaviour of the Labour administrations has now become relevant in ensuring justice against an institution allegedly set up to launder money for Azeri and Maltese politically exposed persons. We are right to be nervous.
This means that criminal proceedings are stalled yet again. Yet, the case before the ICSID is only a fig leaf. The case was brought in 2021, three years after the bank was shuttered. There was already ample evidence of wrongdoing. During that time, there was only unshakeable inaction.
In 2016, the Financial Intelligence and Analysis Unit (FIAU) raised red flags in a report detailing breaches of money laundering rules by Pilatus Bank. Its client base, predominantly politically exposed persons in Azerbaijan, had been allowed to make risky transactions with inadequate scrutiny by Pilatus Bank, a clear and serious breach of anti-money laundering regulations. Monitoring by the bank was “practically inexistent”.
Just a year later, the FIAU, under new leadership, claimed that the voluminous shortcomings of the prior year “no longer subsist”.
It was an incredible cover-up attempt. Every level of government was covering up its wrongdoing, from the attorney general, to the FIAU, the police commissioner and his deputy. All did their best to stall any investigation or action into Pilatus Bank.
It would have been the end of it but the public deserved to know the truth. It was an arduous campaign, for which the Maltese press and I were incessantly targeted by both the bank and the Muscat administration. I personally sent over 50 letters to financial intelligence units around the world, outlining evidence in the public domain and warning of suspicious transactions that Pilatus Bank might try to enter into.
Later that year, Hasheminejad was detained and charged in the US and the European Central Bank revoked the bank’s operating licence.
This was a saga that bludgeoned Malta’s reputation like nothing else- David Casa
The FIAU would later find that 97 per cent of the bank’s activity was determined to be riddled by failures. Further evidence was documented tying the bank to suspected kickbacks from passport sales involving Keith Schembri and Brian Tonna.
All those who played their role were consistently defended by the Labour government. Former attorney general Peter Grech was blamed by former police commissioner Lawrence Cutajar for advising former deputy police commissioner Silvio Valletta that there were no grounds to raid the former bank. Valletta was since implicated by convicted murderer Vince Muscat for leaking confidential information. All were forced to resign in disgrace.
This was a saga that bludgeoned Malta’s reputation like nothing else. Despite being so reliant on financial services, Labour dragged us onto the grey list.
The question is why the state was bending over backwards to protect Pilatus Bank from the laws that it should have been upholding.
In May 2014, the US was warning of financial crime by Iranian nationals holding Caribbean passports. Instead of being vigilant, Joseph Muscat and Schembri attended Hasheminejad’s Venetian wedding a year later. They refuse to be held accountable.
Four years after its licence was revoked by the European Central Bank, a year after it was fined €4.9m for breaches of anti-money laundering laws and a year after an inquiry recommended charges against nine Pilatus Bank officials, only one has been forthcoming.
The fact that no proceedings were ever brought against most of those identified in the magisterial inquiry attests in no small part to the fact that impunity and corruption are far from eradicated. What the public inquiry into the assassination of Daphne Caruana Galizia warned of is still present: a culture of impunity and institutional takeover that played a heavy role in the Pilatus Bank case.
It should not have to be a non-governmental organisation to press the judiciary into doing its job. That the Pilatus Bank inquiry conclusions are a point of contention shows that there is still ongoing pressure to bury, rather than address, the corruption scandals of the Muscat administration.
If justice is stalled in criminals’ favour, it is always at the expense of Maltese citizens.
David Casa is a Nationalist Party MEP.