Issue link: https://maltatoday.uberflip.com/i/1345126
NEWS 9 maltatoday | SUNDAY • 28 FEBRUARY 2021 MATTHEW VELLA AN American expert engaged by the Maltese financial regu- lator to oversee the shuttered private bank Pilatus after the suspension of its licence, is opposing a request to produce in an American court informa- tion pertaining to his role. Pilatus's owners want Law- rence Connell to provide it with all the information in his hand since being installed by the MFSA, so that Pilatus can file proceedings against the European Central Bank, which cancelled its bank licence after Hasheminejad's arrest in Feb- ruary 2018. Connell was appointed in March 2018 to take over Pi- latus as its 'competent per- son' after the arrest of Pilatus owner Ali Sadr Hasheminejad in Washington D.C. that year. Hasheminejad, a naturalised American and St Kitts & Ne- vis citizen, has since been ac- quitted of charges of money laundering and breaching US sanctions in Iran. Replying to the summons, Connell – who has since re- signed his MFSA position – told the US courts that Pi- latus's contemplated damages action was speculative. An ongoing action in the European Court of Justice could still find that the European Central Bank had appro- priately revoked Pilatus's license. "It follows that the contem- plated damages action – sup- posedly based on the wrongful license revoca- tion and regu- latory 'takeover' of Pilatus – would be inapt." Pilatus's German lawyer, Otto Hendrik Behrends, claims the ECB revoked the bank's licence on the prompt- ing of the MFSA after the wrongful arrest of Hasheminejad. He accused both the ECB and the MFSA of shuttering the bank because of falsely alleged crimes that predated the bank's existence. "At the time of the indictment, the MFSA and Malta's politi- cal leaders were besieged by international accusations of 'looking the other way' while Malta's banks enabled money laundering and global sanc- tions violations." But Connell said in his reply to the summons that should the ECB and MFSA action be verified as having been prop- er, then Pilatus's requests as they stood were nothing but a fishing expedition. Pilatus filed an applica- tion for discovery in the US courts – that is, for doc- uments and testimony regarding ECB's and MFSA's motives and justifications for their regulatory actions concern- ing Pilatus. But Connell replied that these are pro- tected by privileg- es under EU and Maltese law. "ECB and MFSA, the holders of the applicable regulatory privileg- es, have expressly instructed Mr Connell to maintain their privileges and not to disclose the documents and informa- tion sought," Connell's lawyer told the court. Connell's appointment al- so included a confidentiality agreement with MFSA under which he is not permitted to disclose information regarding his appointment. His lawyer questioned why Pilatus had not filed their discovery claim against the ECB or the MFSA, who would be the actual par- ties to their contemplated le- gal action for damages. "The inescapable conclusion is that the application is an improp- er attempt by the applicant to circumvent applicable privi- leges that would preclude dis- covery of these matters before the appropriate tribunals in the EU and Malta." He said that although Con- nell had to take charge of the Pilatus assets to safeguard the interests of depositors, "it does not follow that Mr Con- nell was in an agent-principal relationship with [Pilatus] for purposes of any applicable privileges, or that such a rela- tionship would effect a waiv- er of privileges vis-à- vis the bank. Mr. Connell served in a contractual relationship with the MFSA, a banking regu- lator, in connection with the MFSA's regulatory supervision of Pilatus." Pilatus Bank, owned by Ali Sadr Hasheminejad, largely dealt with millions in reserves owned by the Azerbaijani rul- ing family and oligarchs. His bank was implicated in the Egrant affair, when the late journalist Daphne Caruana Galizia claimed the bank had processed a $1 million pay- ment from the Aliyevs of Azer- baijan to the wife of former prime minister Joseph Muscat. The allegation was disproven by a Maltese magisterial in- quiry. But by then, the bank's other dealings for Azerbaijan had come under the lens of financial investigators. When Hasheminejad was arrested in Dulles airport in the United States in February 2018, the Maltese financial regulator shut down the bank and start- ed an investigation. mvella@mediatoday.com.mt Pilatus controller tells court bank is on 'fishing expedition' Ali Sadr Hasheminejad was acquitted of charges of money laundering and breaching US sanctions in Iran after the US district attorney filed a nolle prosequi due to a failure to disclose all evidence against the Pilatus owner "The application is an improper attempt to circumvent privileges that would preclude discovery of these matters before tribunals in the EU and Malta"