Pilatus Bank was used to “move millions around Europe” by a network of over 50 companies and trusts “secretly owned by Azerbaijan’s ruling elite” according to a consortium of news organisations from around the world forming ‘The Daphne Project’. Sources who spoke to the project have “confirmed” Azeribaijani ruler Ilham Aliyev’s children are clients at Pilatus Bank.

The Daphne Project links news organisations from around the world, including The Guardian, The New York Times, La Repubblica, La Monde and The Times of Malta which have embarked on a project continuing the work of slain journalist Daphne Caruana Galizia. She was brutally murdered on 16 October in a car bomb just metres away from her Bidnija residence.

The Times reports on sources who “gave insight” into how the Azeri elite used the controversial Pilatus Bank and a network of companies designed to hide their true ownership to “transfer cash into Europe and beyond to buy up property, hotels and businesses”.

It continued to report on “sources” who are familiar with the bank’s dealings, saying that they have confirmed the slain journalist’s blog-posts on how Pilatus’ main clients included the Azeri ruler's children.

Pilatus Bank became a household name in Malta after Caruana Galizia introduced it to the local political sphere by reporting , among other things, its role in facilitating €1 million payment to the elusive Panama company Egrant, which she maintained belongs to the Prime Minister’s wife, Michelle Muscat. All involved vehemently deny wrongdoing and a magisterial inquiry into the allegation has been ongoing since 20 April 2017.

Pilatus Bank former chairman Seyed Ali Sadr Hasheminejad, who was forcibly removed as chairman by the Malta Financial Services Authority (MFSA), sits behind bars facing a possible 125 years imprisonment over circumventing US sanctions on Iran, money laundering and fraud. He was forcibly removed as chairman after his arrest became public and pressure from the public mounted.

The Times reports that Azerbaijan’s emergency situations minister, Kamaladdin Heydarov, also has an account at Pilatus Bank based on what the aforementioned sources told journalists from The Daphne Project.

No wrongdoing by the Aliyevs or Heydarovs is being alleged, however Azeribaijan has been considered a high-risk jurisdiction by some western countries. Azerbaijan is a member of MONEYVAL, an anti-money laundering monitoring mechanism under the Council of Europe.

Having said that, an independent inquiry found evidence to suggest corrupt practices by Council of Europe parliamentarians visiting Azeribaijan who were treated to champagne and caviar in an attempt to soften them.

It is being reported that sources came forward following Caruana Galizia’s murder to confirm that the Aliyevs and the Heydarovs are clients of Pilatus Bank.

Reuters journalists, partners of the Daphne Project, were told by sources that “by 2016 more than 60 accounts, holding the majority of the bank’s €250 million deposits, were opened for the benefit of the children of senior political figures in Azerbaijan”.

The Times continues to report that assets connected with these companies include the five-star Sofitel hotel and spa on Dubai’s luxurious palm island, two London townhouses with a combined worth of €18 million, a €26 million Spanish property portfolio and a €10 million investment in French factories making porcelain, bed linen and smurf figurines.

Asked for comment by The Daphne Project, the Aliyev daughters did not respond.

Lawyers for Heydarov’s sons have been reported as saying their client’s business interests are “legitimate” and “lawful”.

In the news report detailing links between Pilatus Bank and the Azerbaijan ruling family, links with the Maltese government have also been highlighted.

Since the Labour Party were elected into power in March 2013, these links include an Azerbaijani state company’s [SOCAR] involvement in the new Delimara power station, the government’s 18-year obligation to purchase natural gas to fuel it from an Azerbaijani state owned entity, the visit Prime Minister Joseph Muscat, his chief of staff Keith Schembri, his communications coordinator Kurt Farrugia and Minister Konrad Mizzi made to the country in December 2014, and the ruler's daughters’ dubious company in Malta that was used to rake in funds from the Azerbaijani telecommunications market.

The Daphne Project reports on audit firm Nexia BT, used by Schembri and Mizzi to set up secret companies in the financially secretive jurisdiction of Panama, began the process of setting up several companies in Malta for “Iranian-Azeri millionaire Manuchehr Ahadpur Khangah”.

Those same companies have reportedly been dissolved just months after they were set up.

Pilatus Bank clients

Keith Schembri, the PM’s chief of staff, was said to be a client of Pilatus Bank by sources, The Times reports. He is the subject of a magisterial inquiry on allegations that he received kickbacks on the sale of passports from Nexia BT’s Brian Tonna. Both heavily deny the claims saying the €100,000 payment found from Tonna to Schembri was to repay a loan.

A report by Malta’s anti-money laundering agency, the FIAU, found Schembri took a “personal interest” in the Pilatus licensing process.

Revelations that Schembri and his wife, together with the Prime Minister and his wife, and lastly KPMG advisor and former partner Juanita Bencini and her husband, board member from Allied Newspapers which owns the Times of Malta had attended the imprisoned Iranian banker’s wedding in Florence in 2015.

Bencini reportedly oversaw Pilatus Bank’s licensing process while also chairing the Malta Institute of Accountants (MIA) anti-money laundering committee.

When this news had surfaced, The Malta Independent sent questions to KPMG about the clear and flagrant conflict of interest and ethical issues that abound. In response, the audit company wrote:

“Maltese law prevents us from commenting for readons of client confidentiality. With respect to your question on Juanita Bencini, I can confirm she has retired from the partnership effective 1 October 2017 whilst still providing her services within our Advisory Department as an independent consultant”.

KPMG had been commissioned to write a report following an FIAU report which found “serious shortcomings” in compliance in anti money laundering procedures at Pilatus Bank.

It transpired that after the FIAU’s 2016 inspection found shortcomings, two independent audit firms were engaged to carry out their own reports. KPMG and Camilleri Preziosi Advocates’ reports were submitted and the FIAU, upon further inspection and access to documents they previously did not have access too, another report was issued to say the shortcomings “no longer subsist”.

The Times reports that the MFSA had initially flagged Pilatus and prompted the FIAU to carry out the first investigation after it found a concentration of activity by Azerbaijani PEPs.

It continues to say that shortly before the Iranian Banker’s arrest, the FIAU “carried out a surprise inspection...during which they seized all of its data, including e-mails as well as other means of communication by the bank. The information is being analysed to establish the precise nature of the bank’s operations”.

The MFSA and the FIAU are subject to a preliminary inquiry by the European Banking Authority into their supervision for Pilatus Bank. PN MEP David Casa had penned an open letter to the EBA over the issue of Pilatus Bank.