US sanctions no obstacle to HSBC funds held by Darren Debono, court rules

Magistrate orders release of HSBC funds belonging to suspected fuel smuggler Darren Debono, which were frozen over US sanctions

Darren Debono
Darren Debono

US Treasury Department sanctions against former professional footballer and suspected fuel smuggler Darren Debono cannot stop a locally registered assurance company from releasing funds to him, according to a ruling by the First Hall of the Civil Court.

Debono is the subject of investigations over alleged fuel smuggling. The US had imposed sanctions against Debono and three other Maltese in February 2018.

As a result, HSBC Life Assurance (Malta) had refused to release funds held on behalf of Debono with them under a Savings Plan and a Private Retirement Plan.

The bank argued that since its parent company's shares are listed on the New York Stock Exchange, it was therefore prohibited from releasing the funds, as its parent company is regulated by US law.  

HSBC had also argued that the Malta Financial Services Authority had urged local companies to observe the US sanctions, citing the wide-ranging applicability of the measures and the risk of “significant financial actions which may have serious implications on their business activities."

In a judgment handed down yesterday, First Hall of the Civil Court, presided by Mr Justice Grazio Mercieca, said it agreed with a previous court judgment in favour of Debono that had authorised the release of funds to a company in similar circumstances. The judge in that case had ruled that sanctions imposed by another country did not have an effect on Malta, being a sovereign country.

The judge said that this case was rather different in that the request was being made for the release of funds by an assurance company controlled by a parent company listed on the New York stock exchange, bringing with it the risk that the company could incur large fines and its directors held criminally responsible in the United States.

Despite the differences, however, the court said, this did not change the fact that the life assurance company was established under the laws of Malta and was therefore subject to the laws of Malta, not another other country's.

Mr Justice Mercieca said he also agreed with the reasoning of the court in the prior case that the sanctions situation was not part of the contractual relationship between the client and the bank, and now the assurance company.

He noted the assurance company had not demonstrated that the sanctions had been incorporated into Maltese law.  

The court however also noted that Darren Debono's assets were under a freezing order issued by a Maltese court on November 25, 2020.

The freeze was ordered as part of criminal proceedings against Debono and others over allegations of money laundering and smuggling.

As a result, the court ruled that the funds requested by Debono must be released by the life assurance company - but only once the local freezing order is revoked.

READ MOREBOV told to release Debono cash bank withheld under OFAC sanctions