The MFSA supervisory council has removed Ali Sadr Hasheminejad from any position he holds at Pilatus Bank, but refrained from revoking the banking licence of the company.
It has also been ordered not to transact any business whatsoever irrespective of the client or the counterparty. The same applies to all deposits and withdrawals and any disposal of the bank’s assets.
The council called a meeting at 8:30 am after Ali Sadr Hashemi Nejad was arrested on charges that he evaded U.S. economic sanctions against Iran by sending more than $115 million from Venezuela through U.S. banks.
In a statement, the MFSA explained it has issued an order to remove Ali Sadr Hasheminejad, with immediate effect, from the position of director of the Bank and any executive roles that he holds within the Bank; suspended the exercise of his voting rights as shareholder of the Bank; and refrain from exercising the legal and judicial representation of the Bank.
The MFSA has also directed Pilatus Bank Limited not to allow any banking transactions, including withdrawals or deposits held with the Bank by the shareholder, members of the Board of Directors and Senior Management officials of the Bank, or any connected persons or related persons thereto, whether direct or indirect, and any other clients.
The Bank has been further directed to obtain the MFSA's prior approval before effecting any movement of the Bank's assets.
The Authority said it was also considering "other supervisory measures that may be applicable in the circumstances".
The Supervisory Council is headed by the Director-General, who is exclusively responsible for licencing, supervision and regulation, and is composed of the Directors responsible for Authorisation, Banking Supervision, Conduct Supervision, Securities and Markets Supervision, Insurance and Pensions Supervision, and Regulatory Development.
In a second statement, the MFSA said the Bank has been further directed to obtain the MFSA’s prior approval before effecting any movement of the bank’s assets.
The MFSA clarified that the content of the afore-said Directive as regards the relative scope stipulates that the Bank has been directed not to transact any business whatsoever irrespective of the client or the counterparty. The MFSA further clarifies that the afore-said Directive applies to all deposits and withdrawals and any disposal of the Bank’s assets.
Action just a media stunt - Zammit Dimech
In a reaction, Nationalist MEP Francis Zammit Dimech put the MFSA's action down to no more than a "media stunt".
Saying he wass "Unimpressed by action taken by MFSA with respect to Pilatus bank following arrest of its chairman," Zammit Dimech said that the action was a case of "too little too late".
"The MFSA has been aware for a long time about the problems related to this bank.
"It should have taken action long time ago and the fact that it acts today in such a limited manner goes to show that it is trying to offer a lifejacket to Pilatus bank - the bank that is putting the reputation of our banking sector, which employs a lot of people and that of our country at risk.
"The least MFSA could have done was to suspend the licence of the bank. This confirms that action taken was just a stunt to give the impression that action has been taken but in reality, no real concrete action has been taken."
Partit Demokratiku slams MFSA decision
In a statement, Partit Demokratiku condemned the decision of the MFSA to order the Chairman of Pilatus Bank to Step down whilst not shutting the bank itself down and ordering the immediate confiscation of all its documents.
PD made the following observations:
1. We would like to remind everyone that when the allegations regarding Pilatus, the Azerbaijani Presidential family and Mrs. Muscat surfaced thanks to Daphne Caruana Galizia; the same man spirited away in full view of reporters (but no police) a suitcase he claimed was full of personal effects.
2. That same night a private jet left Malta to Baku then Dubai and the local authorities did absolutely nothing to stop it despite the fact even an amateur detective would have made the connection between the two. The authorities did nothing but make platitudes and excuses.
3. The chairman of Pilatus Bank on 21 April 2017 denied any link between himself and the Prime Minister as well as the Azerbaijani Presidential family. Can that denial now be taken as trustworthy?
4. On 24 April that same year the MFSA defended its decision to allow Pilatus Bank to keep operating despite overwhelming evidence everything was not above board.
5. The allegations of FIAU suspended official Jonathan Ferris that Pilatus Bank and its Chairman were involved in money laundering involving the Aliyev family and Mrs Muscat can no longer be ignored. Mr. Ferris must be given whistle-blower status and protected immediately if there is to be any semblance of transparency and justice.
6. Why has the bank not been shut down and its documents immediately confiscated? Is this a repeat of last year?
7. In certain jurisdictions where good governance reigns the arrest of a chairman of a board of directors of an operator for a serious offence carries with it the immediate suspension of the operating license. Legislators argue that this measure ensures only law abiding and fit and proper citizens occupy the most responsible post of chairman.
8. The MFSA decision is redundant seeing as the Pilatus Bank Chairman can hardly run a board meeting from behind bars.
It has taken a foreign country and its investigative agencies to expose the true nature of the activities of the Chairman of Pilatus Bank whilst we have probably had similar evidence sitting under our noses. Partit Demokratiku demands that external auditors, preferably from outside Malta given the last year’s goings on, are given immediate and open access to the accounts of the bank and a full and open investigation initiated
Partit Demokratiku would like to emphasise that its primary concern is the preservation of Malta’s overseas reputation as a reliable jurisdiction of good repute for the on-line gaming and financial industries. If we lose that reputation it will take decades to restore. Two of the strongest pillars of our economy, employing tens of thousands of foreign workers, will move elsewhere with the subsequent enormous knock on effect on the rest of our economy. We must do everything to avoid this.