Malta urges revoking license of bank that fought murdered journalist
Financial regulator links its recommendation to bank owner’s legal problems.
Maltese financial regulators urged the European Central Bank to revoke the license of Pilatus Bank, which had been accused of money laundering and other crimes by investigative journalist Daphne Caruana Galizia, who was murdered last year.
The Malta Financial Services Authority announced its recommendation to the ECB in an unusual Saturday night press release, with no explanation for the timing. The recommendation was not linked to Caruana Galizia but to other legal problems of the bank’s owner, Ali Sadr Hasheminejad, who is facing criminal prosecution in the United States.
Caruana Galizia had accused Pilatus Bank of various crimes, and also of connections to fraud involving the family of Maltese Prime Minister Joseph Muscat. Her assassination in a car bombing last October and the separate allegations of official misconduct have badly marred Malta’s reputation, as well as Muscat’s personally, and his government has insisted that it is committed to bringing justice in the case.
Muscat has denied any wrongdoing, including allegations that his wife received $1 million from the daughter of Azerbaijan’s president through a company set up by Mossack Fonseca, the law firm at the heart of the Panama Papers scandal.
Pilatus Bank had taken legal action against Caruana Galizia before her death, including a lawsuit filed in the US that she reportedly did not know about.
Three men have been charged in the killing, but Caruana Galizia’s family has raised doubts about the investigation and alleged that the Maltese government may have had a role in her death, but it was covered up.
The recommendation to revoke the bank’s license made no mention of Caruana Galizia’s killing and instead cited the legal troubles of Hasheminejad, who was arrested and indicted in the US in March on charges of financial crimes, including violating economic sanctions against Iran, money laundering and bank fraud.
Prosecutors said Hasheminejad “created a network of front companies and foreign bank accounts to mask Iranian business dealings in Venezuela and evade US sanctions” and “allegedly funnelled more than $115 million of a nearly half-billion-dollar Venezuelan construction contract through the US banking system, using entities in Switzerland, Turkey and the British Virgin Islands to conceal Iran’s identity.”
Hasheminejad was released on bail last month but cannot travel outside the US. Immediately after his arrest, financial regulators in Malta put Pilatus Bank under investigation and froze its assets.
In its press release on Saturday, the regulatory agency also cited liquidity concerns about Pilatus Bank. Referring to the American charges, the MFSA stated: “As a result of this indictment, the MFSA is no longer satisfied that the UBO [ultimate beneficial owner, Hasheminejad] is a suitable person as required by the Banking Act.”
The statement added, “The MFSA has been monitoring the bank closely and notes that the bank has been persistently breaching the liquidity coverage required by law since the indictment of the UBO.”