Bank of Valletta must show judge due diligence manuals in art fraud case

A judge has ordered Bank of Valletta (BOV) to exhibit manuals containing its anti-money laundering procedures in a case filed by an international art specialist over a scam which funnelled some €6 million into a non-existent Libyan company set up by former Labour Party treasurer and candidate Joe Sammut.

The commercially sensitive documents will be kept under lock and key by the judge, who will limit access to the lawyers of the parties and will not allow copies to be made.

In court proceedings which began in 2013, art expert Pierre Amrouche is accusing Bank of Valletta of being negligent in its client due diligence after his manager Henri Baudet, used €6 million from a fund intended for art transactions, to invest in a ‘Libyan project’ run by Belgian national Dirk Borgers and Tunisian national Maher Mellouli.

The cash eventually passed through BOV accounts held by a host of companies set up in Malta by auditor Joe Sammut, for Mellouli.

Baudet was later convicted of forgery and breach of trust by a Geneva court. A Maltese court also ordered him to return €750,000 processed via Maltese bank accounts.

The court hearing the Amrouche case, presided by Mr. Justice Robert Mangion, was requested by the plaintiffs to order BOV to exhibit its manuals on client onboarding, client monitoring and suspicious transaction reporting which were in force between 2007 and 2015.

The action for damages was filed after the bank allegedly failed to honour its statutory obligations and report suspicious transactions, as well as allowing bank accounts to be opened without carrying out the necessary due diligence.

The court, in a decree dated 21 June, noted that the request for the documents was “specific and did not appear to be aimed at carrying out a fishing expedition.” During sittings, it was clarified that only specific relevant sections of the manuals were being requested.

“In the case at hand, this court feels it is necessary that it has all the relevant information before it in order to be able to arrive at a decision which is in the interests of all the parties to this case.” It also said that the documents were relevant evidence to the case at hand.

The court ordered that only the evidence relating to the period 2009-2011 be brought before it.

With regards to safeguards relating to the protection of the commercially sensitive documents from publicity, the court ruled that all of the documents in question be sealed and made accessible only to the court and the lawyers of the parties, without the facility of making copies. The court would return the documents to the bank after court proceedings were concluded, it said.

Testimony by bank officials in this case would also be sealed and protected in the same manner, as well as being heard behind closed doors, added the judge.

Lawyer Matthew Paris is representing Pierre Amrouche.