Bank of Valletta reaches settlement in Amrouche art fraud allegations

BOV reach settlement with international art expert after court ordered bank to exhibit internal manuals documenting its anti money laundering procedures

Pierre Amrouche (inset, left) says Bank of Valletta was not thorough in its due diligence on Joe Sammut’s clients
Pierre Amrouche (inset, left) says Bank of Valletta was not thorough in its due diligence on Joe Sammut’s clients

An action for damages filed against Bank of Valletta by the international art expert Pierre Amrouche, in which Amrouche accused the Maltese bank of lax due diligence on an alleged €6 million fraudulently siphoned off from an art fund, has been settled out of court.

Although the amount paid out under the settlement agreement was not disclosed due to its confidential nature, MaltaToday understands it to be far less than the value allegedly defrauded by third parties.

The case began in 2013, when Amrouche accused 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 court in Geneva. A separate case filed before the Maltese courts also ended with him being ordered 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.

In July last year, the judge had ordered Bank of Valletta to exhibit internal manuals documenting the bank’s anti money laundering procedures. “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.”

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.

But in the next, sitting held last November, the court minuted that it had received a joint note signed by lawyer Dominic Cassar for BOV and lawyers Matthew Paris and Ann Marie Cutajar for the plaintiff, informing it that the parties were exploring the possibility of reaching an out of court settlement.

Court records show that in the subsequent sitting, on 22 February, Cutajar had read out and exhibited a note, ceding the case. In view of this, the judge declared the case closed.