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Casa asks ECB to withdraw Pilatus licence over money-laundering claims

MEP reports allegations to European Central Bank claiming money laundering for Azeri oligarchs is part of Pilatus business model

matthew_vella
Matthew Vella
25 November 2017, 10:51am
Seyed Ali Sadr Hasheminejad
Seyed Ali Sadr Hasheminejad
The Nationalist MEP David Casa has filed a report on private bank Pilatus with the European Central Bank, calling for the withdrawal of its licence and to be taken under control by the ECB.

Casa had earlier in the week called on the Maltese financial regulator to revoke the bank’s licence, in a letter to chairman Joseph V. Bannister.

The private bank was implicated in the Egrant investigation, when a magisterial inquiry was kick-started on a complaint by the Prime Minister, into allegations by Daphne Caruana Galizia that the bank had processed a $1 million transaction to his wife.

The bank is chaired by Iranian-born Seyed Ali Sadr Hasheminejad, who holds a St Kitts & Nevis passport which was even put into question by Casa in his letter to the ECB’s supervisory board.

“The fact that the evidence directly links the Office of the Prime Minister of Malta to Pilatus Bank suggests that this money laundering outfit will continue to operate within the European Union with impunity unless the ECB uses the legal powers it has at its disposal to intervene,” Casa told Danièle Nouy, the chair of the ECB supervisory board.

“The fact that the evidence directly links the Office of the Prime Minister of Malta to Pilatus Bank suggests that this money laundering outfit will continue to operate within the European Union with impunity unless the ECB uses the legal powers it has at its disposal to intervene,” Casa told Danièle Nouy, the chair of the ECB supervisory board.

The bank has denied hosting any accounts for the Muscat family, and provided the inquiring magistrate with its core banking platform and IT system for the investigation.

Casa told the ECB that the banking licence for Pilatus was issued in January 2014 after “an alarmingly short review process” by the Malta Financial Services Authority. He also flagged a report by the US Department of Treasury of May 2014, in which its financial crimes enforcement network believed that Iranian nationals were still obtaining St Kitts and Nevis passports despite being suspended from the citizenship-by-investment programme.

Casa said Hasheminejad is the son of one of Iran’s richest men, banker Seyed Mohammad Sadr Hasheminejad.

Pilatus Bank was thrust into the spotlight after Malta’s FIAU (Financial Intelligence Analysis Unit) carried out compliance visits in 2016. The visit prompted a preliminary report to the Commissioner of Police by the FIAU’s then-director, Manfred Galdes, over suspicions of money laundering. But police commissioner Michael Cassar resigned after two weeks of receiving the letter in April 2016, and the investigation was never taken up.

In 2017, the classified reports of the FIAU were leaked to the press, revealing a suspicious €100,000 payment from an offshore company owned by Nexia BT partner Brian Tonna, to the chief of staff of the OPM Keith Schembri. A magisterial inquiry is now underway on allegations by former PN leader Simon Busuttil that the payment was a kickback by Tonna after rendering corporate services to three successful applicants of Maltese passport under the Individual Investor Programme.

More seriously, it was the allegation by Caruana Galizia that a former bank employee, Russian national Maria Efimova, had seen a declaration of trust purporting to show Joseph Muscat’s wife as the owner of an offshore Panamanian company, Egrant. The company originally was named in the Panama Papers as being set up by Brian Tonna’s Nexia BT.

Caruana Galizia had claimed that a Dubai-registered company, Al Sahra FZCO – reportedly owned by Leyla Aliyeva, daughter of the Azerbaijani President – had made a single payment transaction of US$1.017 million to Egrant in 2016 through a bank account in Dubai. She also claimed to have seen a declaration of trust related to Egrant, but the document was never presented to the inquiring magistrate by either her or Efimova.

“The bank’s clients are predominantly PEPs from Azerbaijan, including President [Ilham] Aliyev’s two children and his minister for emergency situations [Kamaleddin Heydarov]. Former EU commissioner John Dalli… Michelle [Muscat], and… Keith Schembri were also revealed to be clients of Pilatus by Caruana Galizia’s sources,” Casa said. Casa sent the leaked FIAU reports to the ECB, which were carried out before Pilatus sent the FIAU its reply and the final reply from the FIAU, this time after Galdes’s departure, that the bank’s outstanding issues had been rectified.

“The bank was used in two instances by Schembri and his associates to launder the proceeds of corruption, namely from the sale of Maltese passports, as well as to corrupt certain individuals, such as the former managing director of Allied Newspapers,” Casa said, referring to Adrian Hillman.

Both Hillman and Schembri’s offshore companies were joint shareholders in another offshore company. Schembri, who supplied Allied with newsprint and won a tender for the company’s Mriehel printing plant, was said to have paid large sums of money into a pensions plan held by Hillman.

“In another egregious case, Cheng Chen, an Accenture Strategy employee who negotiated on behalf of China’s state-owned Shanghai Electric to buy Malta’s power station and a large stake in Malta’s state electricity company, Enemalta, was also revealed by Daphne Caruana Galizia’s ‘Panama Papers’ reporting to have an offshore company with an account at Pilatus Bank,” Casa wrote.

The company was also set up by Nexia BT, the same audit firm which opened Schembri’s and minister Konrad Mizzi’s offshore companies in Panama in 2013.

Then in April 2017, the Malta Independent published leaked notes from an unfinished FIAU investigation alleging that Cheng was expected to receive a €1 million pay-off from the Enemalta deal.

The FIAU had later said the investigation had been incomplete, and eventually one of the FIAU investigators – former police inspector Jonathan Ferris – was sacked during his probationary period, ostensibly over the data leak.

“The evidence is overwhelming and in many cases conclusive. The anti-money laundering violations by the bank, as uncovered by the FIAU, are shown to be so extensive that they likely form the basis of the bank’s business model,” Casa told the ECB.

“The fact that the evidence directly links the Office of the Prime Minister of Malta to Pilatus Bank suggests this money-laundering outfit will continue to operate within the European Union with impunity unless the ECB uses the legal powers it has at its disposal to intervene.”

Casa had already requested the revocation of Pilatus Bank’s licence by the MFSA, in a letter to chairman Joseph Bannister – who has been implicated in the Paradise Papers for holding directorships in offshore companies.
  
“As chairman of the MFSA you have been made aware of the results of investigations carried out by the FIAU. I refer in particular to those investigations that took place under former director Manfred Galdes and before the political capture and emasculation of this institution.”

matthew_vella
Matthew Vella is executive editor at MaltaToday.
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