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MT 22 July 2018

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17 maltatoday | SUNDAY • 22 JULY 2018 INTERVIEW far from perfect. Regardless what pressures were applied, or what resources the EBA may have, when they looked into the Pilatus Bank case, they identified serious shortcomings... These [shortcomings] were all created here in Malta, and exported to them. MEPs Anna Gomes, Sven Giegold and David Casa pushed them, and pushed them and pushed them. [...] So the EBA [...] was asked by the Commissioner to come to Malta, specifically to look at the FIAU; but only vis-a-vis Pila- tus. They didn't look at Nemea, which had bad governance, and people of certain political lineage as directors. They didn't look at the Swedish Falcon Fund, where hundreds of Swedish pension- ers lost their pensions. They only wanted to look at Pilatus. Fine. And what they found was not money laundering, like they found in Estonia... all they found is that, according to them, cer- tain procedures were [flawed]. But these procedures were not found hidden in a drawer. The FIAU told them that, yes, with Pilatus they had a case that goes back to 2014. They were visited by the MFSA, and things were found not to be in order in terms of AML regulations. The bank was therefore given a warning. Pilatus then engaged two con- sultants – KPMG in the auditing field, and Camilleri Preziosi Ad- vocates on the legal side – and asked them how to conform with the regulations. Which they did. The bank wrote back to say that things were now in order, and the MFSA carried out a sec- ond visit and they found that this was the case... There is another context, however: the Prime Minister's chief of staff held an account at Pilatus, and the PM himself attended its chairman's wedding. We also know that Pilatus held deposit accounts for Azerbaijani PEPs. Do you exclude that there was political interference in the supervisory efforts of the FIAU? We don't know anything as yet about the source of those ac- counts in that bank. I look for- ward to that report, and when it emerges we will see what per- centage was from Azerbaijan, against other European coun- tries. They are going through the accounts, one by one; and when they find money laundering, we will know. So far, they haven't found any money laundering. And yet Pilatus' chairman now faces criminal charges which include money laundering... No. When I said AML is im- portant, it's because the source of the funding is crime. But there are crimes and crimes. Drug ped- dling, or armament transactions, smuggling, etc., is one thing. In this case, however... we have to put this into context... the mon- ey came from the proceeds of a contract for social housing in Venezuela. The [Pilatus chair- man] knew there was a law say- ing he couldn't channel that money through his own home country, Iran; and he broke that law. It's serious enough – he was 'dealing with the enemy', from the perspective of the USA. I'm not trying to minimise it. But for me, I say: ah, it's not drugs; it's not smuggling, it's not tax evasion – at least, from what we know so far... But it's still a crime that went undetected, and the issue here is precisely the lack of proper supervision of this one bank... with all its political connections... From me, you will not hear a single word in defence of any case that is currently under in- vestigation. But I feel that our regulatory authorities are under enormous pressure... which is quite unfair... and because of the European politics that I have just described, I feel that the proce- dures carried out by the EBA did not conform with the rules of procedure. They refused to meet with the institution, for example. Since when can you refuse to do that? I do it all the time... with the Commission, when we have an issue: on the yachting taxation, on the refund system, on the tax- ation regime... we have so many meetings. Why did the EBA re- fuse to meet with the institution? That's one. Then, there were all the recommendations they is- sued: half of those recommenda- tions have already been imple- mented, before this judgment came out. And the other half are part of the plan. Now: you break the law when someone refuses the respect the law... who does it with a certain flourish, and who refuses to implement a plan. But not when someone does imple- ment the plan... But do you exclude that the FIAU may have been reluctant to take action because of the bank's political connections? This is after all a rule of law issue here... When I say that the board of the MFSA was not changed by the government [when it came into power]; or that the head of the FIAU had been appointed by the PN administration; I'm not trying to shirk responsibility. But if you try to say that I or the PM interfered in that decision, it's not the case. Yesterday, for instance, the Nationalist media said that 'I gave Pilatus its li- cence'. I didn't. It was the board of the MFSA, and they were not even appointed by me. The same for the FIAU; when they visited [Pilatus], then revisited and closed the case... it was not under the new director, but the previous one who later reigned. So this attempt to inject a doubt that 'government is interfering'... it is not the case. But this doubt did not suddenly emerge with the EBA report. In May 2016, former FIAU director Manfred Galdes sent a dossier, copied to the MFSA, describing the bank as 'a threat to the Maltese financial system'. Galdes had also written to Commissioner of Police Michael Cassar, who resigned shortly afterwards. So did Galdes. How can you not add this all up, and conclude that there is something seriously wrong here? On the contrary: this is what I'm concerned about. People are being pressured, until they either resign, or end up in hospital. I repeat: they either resign, or end up in hospital. The pressure is enormous... and it's not coming from the government. I know what I'm saying... But there doesn't have to direct pressure from the government. It could also be that the institutions – seeing that there was high-level political involvement – simply rolled out the red carpet for Pilatus, no questions asked. [...] I don't know what it is, but I think we have exceeded all lines of civility. I mean, we're being made a laughing stock, not just in Europe but around the world... should we be happy about it? I don't think so. Especially when I look at other countries regu- latory authorities... when you have the German equivalent of the FIAU, admitting in public – that they have 40,000 cases for which they don't have enough resources to investigate. They said it, because they wouldn't ex- pect the opposition to tear them to pieces, to take them to the Eu- ropean Parliament... to send for the Chancellor, to go to Berlin. They didn't do any of this. They wouldn't do it with a big country anyway. So... we've brought it on ourselves. We expect the FIAU to respond instantaneously, when it has taken a magisterial inquiry more than a year... and they are still investigating. I can understand that. It's not an easy thing. Even the US authorities took five years to come out with the indictment of Al Sadr. [...] I know enough, from my own experience, to understand that these things take time. [...] At the same, there has been a seriously damning report, but nobody has shouldered responsibility. Are we to understand that everything will just carry on as normal? Should we go for lynching? For the court of public opinion? If so, [the FIAU] would be judged and condemned [without fair trial]. Is this what we want? Is this what you're pushing for? The question is, nothing seems to be happening at all. Why are you rushing? The FIAU disagrees [with the EBA report]. They have a right to de- fend themselves [...] The rules of procedure give them 10 days to reply. Even, then they have two months to appeal. Let's be fair: we have to let the institutions do their work.

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