Company sues Satabank, MFSA over 'abusively' frozen account

A finance company has filed a court case against Satabank and Malta’s financial services regulator, demanding the release of deposits currently frozen in the suspended bank.

Juanafil Finance Ltd representative Adrian Chetcuti De Carlo filed a sworn application in the First Hall of the Civil Court today against Satabank, Ernst and Young (EY) and the Malta Financial Services Authority demanding the return of some €62,864 frozen amongst the bank’s assets.

The bank was placed under the guardianship of auditors EY as a competent person last October after a joint inspection and audit by the MFSA and the Financial Intelligence Analysis Unit found shortcomings in the bank’s anti-money laundering procedures, according to reports.

The MFSA had ordered all monies held by the bank be placed in the possession of Ernst and Young as competent person at law.

Juanafil Finance said it had used Satabank’s services as it had been a bank licenced by the MFSA “presumably after all the necessary checks required by law were carried out” and had relied on this fact in entrusting its money to the bank,

The company said it had never been notified directly or through public means stipulated in the law that there were any reservations about the operations of the bank that would have caused it to be alarmed.

Therefore the directive to freeze the bank’s assets, imposed from one day to the next by the MFSA had a prejudicial effect on the company “which could have easily been avoided by giving the company adequate time to make alternative financial arrangements,” it said.

In November, the company had requested the bank release the full sum of the relevant deposits by means of a judicial letter, but the bank is saying that it cannot comply due to the MFSA directive.

“There is no legal reason for which the plaintiff should not be allowed full and free access to its funds,” argued the application, describing the freezing as “a blatant abuse of power by the defendant Authority, in the best case scenario an irresponsible and irrational measure, therefore illegal apart from being a manifest breach of the right to property and free movement of the same.”

EY had been placed in possession and control of the assets appertaining to Satabank, a measure in itself described as “abusive and illegal” in the application.

The end result of this, said the company, was that it was suffering material and moral damages and could well be placed in a position where it is unable to honour its obligations towards dependants, through no fault of its own.

The court application asked the court to declare the directive as abusive and illegal and condemn the bank or EY, or both, to pay the company the €62,864 which belonged to it, as well as declare the responsible parties to be liable in damages and to liquidate and pay the damages as required.

Lawyers Anthony P Farrugia and Luke Grech signed the application.