PILATUS BANK
Malta Banking Association terminates membership of bank at centre of corruption storm
The membership of Pilatus Bank in the Malta Bankers’ Association has been terminated with immediate effect, the association said yesterday.
In a statement, the Malta Bankers’ Association noted with concern the events leading to the regulatory actions announced by the Malta Financial Services Au- thority (MFSA) on 21 and 22 March in relation to Pilatus Bank.
The association’s board has considered the position and has determined that in the circumstances, Pilatus Bank’s membership of the Malta Bankers’ Association is to be terminated with immediate effect.
On 21 March, then-Pilatus Bank chairman Ali Sadr Hashemi Nejad was arrested in the US and was accused of circumventing sanctions against Iran. He is accused of facilitating the transfer of US$115 million in Venezuelan money to Iran via the US banking system to build 7,000 housing units. In addition, he has also been charged with money laundering and fraud.
Sadr has pleaded not guilty to the charges brought against him, while the US court has denied him bail.
He was the chairman of Pilatus Bank, Ta’ Xbiex, which was at the centre of a major scandal when it was alleged that illicit funds were transferred to a Panama-based company, claimed to belong to Prime Min- ister Joseph Muscat’s wife, through the bank. All those involved have vehemently denied the accusations and a magisterial inquiry is still underway.
Since the news of his arrest, the MFSA has banned Sadr from his roles at the bank, as well as Pilatus Bank from carrying out transactions, including withdrawals or deposits by the shareholder, members of the bank’s board of directors and senior management officials, or any connected persons or related persons thereto, whether direct or indirect. The bank was also ordered to obtain the MFSA’s prior approval before effecting any movement of the bank’s assets.
In effect, this has prevented the bank from carrying out any transactions for the time being.
Further to the MFSA’s action, the European Banking Authority has also stated that it has carried out a preliminary inquiry into the MFSA itself. The EBA’s remit is to ensure that national regulators are carrying out their duties as watchdogs appropriately and line with EU law.