Judge orders Pilatus Bank nolle prosequi case to continue in public

The judge hearing Repubblika's case for judicial review of the Attorney General’s order not to prosecute senior officials at Pilatus Bank, has revoked a previous order to hear the case behind closed doors.

At the start of the sitting, the court, presided by Madam Justice Doreen Clarke revoked a previous order and decreed that the case continue in public.

In November 2021, Judge Christian Falzon Scerri, who was later reassigned to other cases, had ordered the proceedings to  temporarily take place behind closed doors due to separate ongoing proceedings abroad before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), binding the lawyers and parties present during the sitting not to  reveal what was said.

But in a decree handed down on Tuesday, Madam Justice Doreen Clarke implied that the government’s lawyers had misled the court. Quoting from the letter sent to the Maltese authorities by ICSID, the judge said the letter “appeared to be a clarification about how, and from whom, the tribunal’s eventual award… should be given publicity.”

The judge noted that the letter was not a decision by the ICSID tribunal and neither was it binding on how the Maltese courts should hold hearings.

“Once the order given by this Court, presided differently on 8 November 2022, appears to have been tied to the alleged obligation of secrecy imposed by the aforementioned tribunal, and once no evidence of this obligation has been brought, it does not appear that the continued hearing of this case behind closed doors can continue to be justifed,” the judge ruled.

In a previous sitting Repubblika’s lawyer Jason Azzopardi had accused the State Advocate of wanting to derail proceedings at the eleventh hour by misleading the court with a false allegation about the ICSID ruling. 

Pilatus director instructed staff to ‘minimise interactions with BOV’

Repubblika’s president, notary Robert Aquilina was then called to the witness stand. He told the court that he had received documentation that showed how the crimes identified in Magistrate Ian Farrugia’s Pilatus inquiry had taken place “with the active participation and complicity” of senior officials. The officials had also been identified as culprits in the inquiry and included the bank’s owner, Ali Sadr Haseheminejad, its operations supervisor Luis Rivera, director Ghambari Hamidreza, supervisor Mehmet Tasli, chief risk officer Antoniella Gauci and its money laundering reporting officer Claudanne Sant-Fournier.  

“This leads to the logical conclusion that there was a criminal conspiracy and that Pilatus Bank and the individual’s behaviour formed a criminal organisation,” Aquilina said.

He added that the expert financial investigators engaged by the magisterial inquiry, Duff and Phelps, had established that “not only had these individuals failed to carry out their duties but had gone to great lengths and gone out of their way to undermine the checks and balances in the bank.”

This process had been done “collectively and in a coordinated manner to sabotage these checks and balances.”

Duff and Phelps had concluded that these malpractices were the bank’s standard procedure, stated the witness. “Duff and Phelps had identified two ringleaders - Sadr and Ghambari. They would show [their underlings] what was expected, knew what was going on and actively participated in the criminal activity,” Aquilina said.

This criminal activity included onboarding clients without first carrying out the background checks required by Maltese law, the approval of high value transactions without verification and the making of false declarations, in particular to correspondent banks, he said. 

“In Pilatus Bank’s London branch it’s Money Laundering Reporting Officer (MLRO) had realised the criminal intentions behind the bank and tendered her resignation. The bank had then arranged for her to be replaced while concealing the reason for her resignation from MFSA, all the while pressuring the former MLRO to change her account of events.”

The witness was interrupted by lawyer Fiorella Fenech Vella, representing the Office of the State Advocate in today’s sitting, who objected to Aquilina’s testimony on the grounds that he was basing it on “formal documents which could not be exhibited,” namely the magisterial inqiury.

The judge replied that she would decide on this point after hearing all of Aquilina’s evidence.

Aquilina resumed his testimony, giving a long list of transactions and alleged misrepresentations made by the bank to the Maltese authorities. “Everything I am saying, I have evidence of and have seen with my own eyes,” he assured the court.

One of the incidents described related to a compliance enquiry, which Mehmet Tasli had circulated amongst Pilatus Bank staff, received from Bank of Valletta in 2014 on behalf of the National Bank of Abu Dhabi about a proposed payment between two companies.

Bank of Valletta had asked Pilatus whether the individuals in question had any connection with Sudan, Iran, Syria or North Korea, all of which are blacklisted due to international sanctions. The forensic experts from Duff and Phelps had clearly indicated that the ownership of one of the companies in question was Iranian and had also established a link between Sadr and three Iranian individuals involved in the companies.

The bank was obliged to point out this fact to BOV, as a subject person for the purposes of Anti Money Laundering legislation. But this step had been blocked before it could happen, Aquilina said. “Sant Fournier had circulated an internal memo with a categorical ‘no.’”

The witness described several other instances highlighted by the inquiry’s experts, including false information Gambari gave BOV when it queried about one of the corporate clients.

Fenech Vella raised an objection, pointing out that the inquiry report had not been exhibited in this case. “It is not even exhibited legally,” remarked the lawyer, prompting opposing counsel Jason Azzopardi saying the alleged illegality was solely the fault of the State Advocate, who had blocked the exhibition of inquiry report in other ways.

Aquilina continued to testify, telling the court that Pilatus Bank’s owner Ali Sadr Hasheminejad used to operate another bank in Switzerland named Parse Suisse, through which he would serve the same clients that would later use Pilatus Bank. “In 2011/12 Sadr had understood that he could not continue to use the Swiss bank for his criminal intentions and so had set up the Maltese bank, which was described as a “carbon copy” of Parse Suisse.”

Pilatus Bank would change its correspondent banks to evade scrutiny, the notary said. After BOV had questioned a suspicious transaction, Ghambari had emailed Tasli, Gauci and Rivera instructing them to minimise Pilatus’ interactions with BOV as much as possible, and ordered that communications with the Maltese Bank should first be approved by him.

Background to the case

In December 2020, a magisterial inquiry conducted by magistrate Ian Farrugia had recommended criminal charges be pressed against Pilatus Bank owner Ali Sadr Hasheminejad, bank operations supervisor Luis Rivera, director Ghambari Hamidreza, supervisor Mehmet Tasli, chief risk officer Antoniella Gauci, money laundering reporting officer Claudanne Sant-Fournier, and Pilatus Bank as an entity.  

Repubblika, through its lawyer Jason Azzopardi, says that AG Victoria Buttigieg had issued what is known as a nolle prosequi - an order not to prosecute - all the officials except Sant-Fournier and the bank itself. 

By filing this case, the NGO is requesting a judicial review of this decision by the AG - essentially asking the court to look into whether the AG had made correct use of the discretion granted to her by law in deciding not to pursue the other officials as recommended by the inquiring magistrate.

The case continues in July.