Issue link: https://maltatoday.uberflip.com/i/959046
maltatoday WEDNESDAY 28 MARCH 2018 News 6 THE arrest of the Pilatus bank chairman in the USA may well have exposed the greatest paradox of present day Mal- tese politics, that the messier things become on the good governance front, the greater the temptation for the Opposi- tion to look the other way and for the government to contin- ue ignoring the ramifications of the moral question which continues to haunt it. Ironically the ambivalence on both sides can be squarely attributed to their actions be- fore the 2017 general election; the inaction on panamagate on Muscat's part continues to feed doubts on anything connected to its protagonists while the PN now wary of over reaching again after hav- ing allowed 'Egrant' to eclipse other claims based on more factual evidence, before being trounced in the polls. The 'just ignore' strategy Muscat's standard response to bad news on the good gov- ernance front has become that of ignoring it by shifting the focus to good news on the economic front. No mention of the arrest of the Pilatus Bank chairman was made in his Freedom Day speech and during Sunday's political meeting in Mqabba. Muscat's reaction consisted in passing the buck to the fi- nancial services regulator (MFSA) and turning the tables back on the Opposition by in- voking the rule of law argu- ment to shoot down calls to immediately revoke the bank licence. "We were asked why we don't suspend the licence. Be- cause the rule of law, a phrase this Parliament has heard for months, prohibits an EU gov- ernment from taking those decisions, and that an autono- mous and independent insti- tution takes those decisions," Muscat told parliament. The problem for Muscat is that judging from the facts at hand, Pilatus was not behaving just like any other private bank in Malta. It also offered per- sonalised services to Maltese and Azeri PEPS and its chair- man is now facing charges which could see him serve 125 years in prison if found guilty. It now also turns out that Unit- ed States investigators probing the activities of Pilatus Bank's chairman Ali Sadr Hashem- inejad were in Malta to speak to officials at the Financial Intelligence Analysis Unit in late 2017. Moreover, this must be seen in the light of previous FIAU reports which also cast a shadow on the bank's modus operandi. Muscat should not be held to account for the actions of the owner of a private bank found in breach of US sanc- tions before even setting foot in Malta. But he cannot ignore the perception of some degree of familiarity between his ad- ministration and the bank chairman. Neither can he shift respon- sibility for licensing the bank on the previous administra- tion. For although exploratory talks took place in 2012, Pila- tus Bank was registered in De- cember 2013 and was given a licence to operate as a bank in January 2014 under the watch of a Labour government. The regulatory process fell upon the MFSA chaired by Joe Ban- nister, who had served under consecutive PN-led adminis- trations and was retained by Muscat despite his director- ship in companies registered in the Cayman Islands and re- vealed in 2012. A question of familiarity The cherry on the cake was Muscat's attendance in the Pil- atus Bank chairman's wedding in Venice in 2015, well before the storm erupted and only a year after the bank started its operations here. Judging this wedding invita- tion in hindsight as proof of collusion between Muscat and Ali Sadr may be a step too far. Neither can one expect the PM in 2015 to anticipate what was to happen in 2017 and 2018. It is also normal for pol- iticians to attend weddings of businessmen – which may well turn out to be perfect occasions for networking with potential investors. But two factors distinguish this wedding from others. Ali Sadr was not an estab- lished Maltese businessmen with a track record which jus- tifies the presence of Malta's PM in his personal wedding. The second factor is that this wedding did not take place in Malta but in Venice. In fact, the PM claims that he had to include the wedding in the itinerary of a "personal holi- day." This suggests a greater sense of familiarity than a simple acquaintance. The problem for Muscat is that he can't ignore that the US arrest casts a dark shadow on the modus operandi of a busi- nessman who is perceived to have been close to himself and his government. This must be seen in the con- text of an account held in the bank by his chief of staff. Still, this does not in any way sug- gest criminal collusion and is not necessarily related to the more serious allegations re- lated to Egrant. But it has now become im- possible not to see the latest episode in the light of previ- ous events, simply because the perception of impunity has grown thanks to Muscat's lack of action before 2017. Future proof Malta Muscat's logic may well be that voters have elected him despite their doubts on his track record on governance and therefore he should focus on those matters which have earned him the electorate's trust. This may underline his fo- cus, on Sunday, on his ambi- tion to make Malta "future proof " by turning to new eco- nomic sectors like fintech and block-chain on the premise that unlike financial services these "do not depend on the country's tax regime which is under attack". In this way Muscat seems to suggest that the problem with the financial sector is not lax regulation on our part but the attacks of oth- ers. The pitfalls of risk taking By hinting at the need of future proof investments, he may be addressing one major criticism, that with the excep- tion of Crane currency, his government has failed in at- tracting any new major eco- nomic investment to Malta. Moreover, much flaunt- ed investments like the American University and Vitals have not fulfilled their prom- ise while much of The political aftermath How are Delia and Muscat reacting to the arrest of Pilatus Bank chairman Ali Sadr Hasheminejad and what are the stakes for the two leaders? JAMES DEBONO evaluates the fallout in Malta. But he cannot ignore the perception of some degree of familiarity between his ad- ministration and the bank Neither can he shift respon- sibility for licensing the bank on the previous administra- tion. For although exploratory talks took place in 2012, Pila- tus Bank was registered in De- cember 2013 and was given a licence to operate as a bank in January 2014 under the watch of a Labour government. The regulatory process fell upon the MFSA chaired by Joe Ban- nister, who had served under consecutive PN-led adminis- trations and was retained by Muscat despite his director- ship in companies registered in the Cayman Islands and re- The cherry on the cake was Muscat's attendance in the Pil- atus Bank chairman's wedding in Venice in 2015, well before the storm erupted and only a year after the bank started its Judging this wedding invita- tion in hindsight as proof of collusion between Muscat and Ali Sadr may be a step too far. Neither can one expect the PM in 2015 to anticipate what was to happen in 2017 and 2018. It is also normal for pol- iticians to attend weddings of businessmen – which may well turn out to be perfect occasions for networking with But two factors distinguish have been close to himself and his government. This must be seen in the con- text of an account held in the bank by his chief of staff. Still, this does not in any way sug- gest criminal collusion and is not necessarily related to the more serious allegations re- lated to Egrant. But it has now become im- possible not to see the latest episode in the light of previ- ous events, simply because the perception of impunity has grown thanks to Muscat's lack of action before 2017. Muscat seems to suggest that This may underline his fo- cus, on Sunday, on his ambi- tion to make Malta "future proof " by turning to new eco- nomic sectors like fintech and block-chain on the premise that unlike financial services these "do not depend on the country's tax regime which is under attack". In this way Muscat seems to suggest that criticism, that with the excep- tion of Crane currency, his government has failed in at- tracting any new major eco- nomic investment to Malta. Moreover, much flaunt- ed investments like the American University and Vitals have not fulfilled their prom- Muscat seems to suggest that fulfilled their prom- ise while much of JAMES DEBONO