Pilatus Bank Chairman Seyed Ali Sadr Hashemineja remained tight-lipped when faced with many questions surrounding the serious allegations that his bank was used as a vehicle for corruption and kickbacks during an interview with The Malta Independent, still refusing to confirm or deny whether OPM Chief of Staff Keith Schembri, or the Aliyevs even have an account with his bank.

The Chairman was interviewed yesterday morning, and faced a number of questions, including why he is not willing to deny whether the Aliyevs, Keith Schembri or Brian Tonna have accounts with the bank, when they had released a press release stating that Egrant as well The Prime Minister's family do not hold accounts with Pilatus bank.

Pilatus Bank Video 1 from The Malta Independent on Vimeo.

While stating that he is unable to provide information about possible clients, he did say that the regulators have all the information, as the banks are not subject to confidentiality from regulators.

During the interview, he revealed that Pilatus does not offer online bank transfers, and states that transfer requests go through "rigorous compliance process" before being approved.

Daphne Caruana Galizia published a transcript of a document which would prove Michelle Muscat has an account at this bank. Is this true?

I think you need to check with the source, and check where she got the transcript from. But I leave that up to you... What is important right now is that the Magistrate is going to determine that.

Does Michelle Muscat have an account with the bank?

We said from day one that Michelle Muscat and her family have never had an account with Pilatus Bank.

What about Egrant?

We don't know of this company, we've never held an account for this company, we've never transacted with this company.

Does Keith Schembri have an account?

The press release we issued, mentions certain companies which we don't have accounts for. The reason why we came out and mentioned those names was because of the magisterial order. We don't go beyond that and deny or confirm anything else. Everyone else is entitled to their own opinion.

If for example, hypothetically, Keith Schembri were here, he can tell you whatever he wants to tell you. But I'm bound by confidentiality of law not to disclose anything else to you.

That is if they have an account with you, not if they don't...

The reason we came out to say we don't have those accounts was because of the magisterial order that was called upon on those certain accounts that we said we don't have. If there is a future magisterial order of that nature, then we will go out and make a statement.

The regulators are open to all this data. They ask whatever they want and we provide them with whatever documents we have. We are not bound by confidentiality with regulators and are bound to provide any documents they request. So they have all the data of all our clients.

The inquiry also incorporates certain Azerbaijan transactions, so then you can answer whether there are any accounts belonging to the Aliyev family...

We are bound by confidentiality. But I can tell you this. Nearly every private bank are approached by PEPs and have relationships with PEPs. 

Pilatus Bank Video 2 from The Malta Independent on Vimeo.

It is worth noting that we turn down many PEPs who don't fit the risk appetite of the bank and who we are not comfortable dealing with. So it's important to note that while I can't disclose client specific data, I can say that we have a tight and strict process in establishing relationships, especially with PEPs.

Would the bank take on the Aliyevs if they requested accounts?

Let's not get into hypothetical situations. What I will say is that anyone can approach the bank, and they would have to go through a rigorous KYC process (a know your customer process). That establishment of a relationship with the client is a very rigorous process and is very document heavy. That applies for everyone who would approach a private bank.

People approaching private banks would need to provide a lot of information in order for the bank to reach comfort levels.

The questions surrounding the Aliyevs are well known and quite public. Again, would you even consider them?

Whether or not a bank considers a client is decided after a rigorous compliance process. The result of that would be known to the decision making body. If the notion and suggestion is 'what do we do with PEPs', I want to go back and say what it takes to on-board a PEP... enhanced due diligence. If you have a rigorous process, if you monitor transactions live, if you are demanding of your clients to provide evidence and documentation, then that is what we need to put the focus on.

This is the very first private bank. If we were sitting in Switzerland we would probably have had this conversation many years ago. We are at it now and we are committed to Malta. I believe Malta will be the next major private banking hub. Malta is ripe for that. Malta is made out of the very stuff one needs for such a hub. 20 years ago, Barclays looked at Malta to setup a major private banking hub. Why? You have amazing geography, are not landlocked, you speak and write in English, regulations are published in English. You have the right resources. You have a highly educated society and everyone is either a doctor or an accountant etc. I believe this is about to take a different course and believe this will go onto an exponential path.

Why private banking? Retail banks will deal with depositors in Malta, and there is a limited amount in Malta. The only way to expand this pot is to bring in foreign money into this pot. The only way to do that is through private banking. The way the Swiss have done, the way the people in Luxembourg have done...

Luxembourg had the Lux Leaks, Switzerland the Swiss Leaks and was a secretive jurisdiction...

Malta is not like that. Comparing Malta to Switzerland in terms of secrecy, we don't have that. We are subject to many requirements and regulations. Secrecy aside. Don't forget they are going through their own learning curves. But the ultimate question is not whether we need to change the secrecy laws, it is if we are ready for private banking. My goal is to get Malta on the private banking map.

The PN Leader made a number of allegations, stating he has evidence of funds transferring from two accounts in your bank from Brian Tonna's account (through Willerby Trade Inc.) to Keith Schembri. The issue has resulted in allegations of money laundering and corruption. What do you have to say?

I cannot talk about specifics of that, but I can tell you this. Anyone who banks with Pilatus is subject to a rigorous compliance framework and are bound by their relationship with this bank to provide us with as many documents that we request, till such time that we come to a sufficient understanding that sufficient information has been provided. That is the compliance process - as to whether or not  the bank moves ahead with any payments or transfers of that nature.

When the issue broke, you were filmed leaving Pilatus bank with two bags, what was in them?

I arrived at 11.30 am, flying in from Washington DC through Frankfurt. I received the cab message that he was waiting outside. I went outside, got in the car and came straight to the bank. I went into the bank with my case and into the boardroom, as I don't have an office. I kept my luggage near me the whole time. It's a standing luggage so it stands on the floor. That can be seen on the CCTV footage. I had a bag for my suit and two pairs of shoes, and a black bag for my documents and laptop...

You claim you didn't do anything wrong, yet the way you acted that night says otherwise - going out the back door, not addressing the camera crew, as if you were ignoring them. It looked very shady.

I didn't touch any customer related documents that day. The only documents I touched were my chairman's statement for the board meeting we had scheduled the next day. That schedule was made a week prior to that. The chairman statement is a one-pager and the directors' report is around 4 pages, which goes with the audited financials which I was preparing for the next day. I took those documents with me. It was almost around 9pm, and we were told by security that there were camera crews outside.

My first duty is to protect my employees. The suggestion to use the side-door was brought up. It is a longer way, but would allow me to go home without having a frictional conversation with the camera crew to whom we cannot even talk to, to whom we cannot talk about client data.

The judgement call was mine. Had I known what I know now, in hindsight, I would have handled the situation differently. That goes without saying. But we went the longer-way and yes the camera crew asked questions. Our policy is not to get engaged. If there was no magisterial order, this conversation would just go on and on. Us knowing there is such wrong information out there, we cannot come out to confirm or deny any of that. The Prime Minister calling for the inquiry, and it starting, that took a different turn and we had to come out and file that press release.

It could have been handled differently.

Does your bank have any PEP clients and if yes, does your due diligence process go above and beyond in these cases?

PEPs are individuals who have some public office. The regulations state that for PEPs, there needs to be enhance due diligence. Even the FIAU has said that there is nothing wrong with on-boarding PEPs, and there is no law prohibiting banks from dealing with PEPs. You need to ensure you have enhanced due diligence processes in place. For PEPs, the bank goes above and beyond.

Pilatus bank does not allow online transfers, so we can ensure that transfers and requests come through the bank, and the bank can go through a rigorous compliance process before transactions occur.

When it comes to PEPs who have accounts with your bank, do you declare these accounts to the financial authorities?

The PEPs and the bank's conduct are under standard inspections all the time, not only by regulators, but by external auditors, auditors we engage etc., to ensure we are doing the right thing and going above and beyond, implementing recommendations if there are any. This is no secret to any of the parties involved, be them the regulators or auditors.

Pilatus bank is a unique bank in Malta, and is probably the only true Private bank in Malta that mainly caters for foreign clients. It's a Maltese bank so we cannot say no to Maltese individuals, but the main purpose of the bank is that it is a private bank, and most clients are from outside of Malta.

Have you or any of your bank's representatives been questioned by the FIAU on allegations of money laundering either now, or since the establishment of the bank?

Since the establishment of the bank we have been in constant communication with inspectors, both in terms of standard inspections and in terms of one-off questions. To suggest there is a one-off basis exercise, that is always the case. The bank is subject to this all the time and our arms are always open.

Wasn't the bank itself subject to an FIAU investigation?

We cannot discuss any FIAU investigations, but the bank is subject to many standard inspections all the time, and this is the same for all banks.

The overall allegation here is that Pilatus bank is like a quickly put together washing machine to clean dirty money. How do you respond to that?

I came to the island in late 2011, mid-2012. It takes a long-time to put an application process together.  It's not the date you submit the application, which is thousands of pages. A license is given to a corporate body, to its governance, to the qualified people, to the compliance framework and its systems, not an individual. There are so many pre and post-licensing conditions one needs to meet before you can even begin with clients. This process goes back to mid-2011, going to when we got our first clients on-board in late 2014.

The name Pilatus Bank Ltd was established in December 2013. But it's when you get the licence to exercise banking that is important, which came in February 2014...

Did you attempt to open banks anywhere prior to choosing Malta?

No, we conducted our homework to find the right jurisdiction. The geography, language, resources etc, it was right. Malta is an interesting market, and we found it to be the right place at the right time.

The bank, you said, cannot comment on whether it has a certain client or not. Yet why is it that when the Magisterial Order occurs, you come out and make declarations of certain companies (like Egrant)? Shouldn't you only be able to only say that in the court of law?

Obviously anyone can say with whom they do not have a relationship. It was important to put a lot of people's minds at ease, that these claims are not there. That was what the bank attempted to do. It's an important inquiry. We volunteered to that inquiry. We are witnesses in that inquiry. We are not the subject of that inquiry.

But the subject of the inquiry is whether, to a certain extent as well, transactions passed through the bank, whether certain accounts are held by the bank etc. Wouldn't the magisterial inquiry have the right to just take documents? What do you mean by volunteer?

I think the authorities have all the right and powers to act within the law. But the way this case is being handled, the way we have full confidence in and the way it is moving forward, we are the witness. Of course the law enforcement and courts have a wide range of powers to exercise. In this case we are the witness to this exercise. Not only did we come out with a press release stating we don't have these accounts, we fully cooperated with inspectors to ensure we can get to the bottom of this as soon as possible so that we can get on with our lives.

Again, why is it ok for you to come out with a press release stating the bank does not hold accounts for this particular set of companies due to the magisterial inquiry, then in the same breadth do not confirm or deny whether Keith Schembri, Brian Tonna or the Aliyevs have accounts?

For us to disclose the entire client pool of the bank on this basis would not be right. That is not the right argument to be made. That just because the bank came out with the press release within the magisterial order to say we don't have these accounts, then that somehow justifies the bank to go and disclose the whole entire pool, that is not the best argument.

What if you deny if they have an account?

So you and I are going to sit here and go through a list of 2 million names and I have to sit here...

Pilatus Bank Video 3 from The Malta Independent on Vimeo.

No the specific names of those who surround the allegations...

That is exactly why the law is written that way, to protect confidentiality, and to ensure we don't get into this back and forth conversation about a two million list of names.

You've provided the inquiry with 9 hours of CCTV footage...

We didn't just provide nine hours. We provided the whole deck of CCTV recordings, going way past the nine hours, probably for some 20 or some days. Nearly every room in the bank is monitored, bar a few for privacy reasons like the bathrooms. This includes the boardroom I use when in Malta. It was all provided to the inspectors.