The public inquiry into the assassination of Daphne Caruana Galizia resumed today.
The inquiry, chaired by retired Judge Michael Mallia – who is joined by Chief Justice Emeritus Joseph Said Pullicino and Madam Justice Abigail Lofaro – has already heard a number of testimonies over the past weeks.
Most recent was that of former FIAU investigator Jonathan Ferris, who amongst other things implied that the FIAU was less than willing to hand over findings about Konrad Mizzi and his financial structures in Panama to the police for investigation.
MFSA official Marianne Scicluna and FIAY official Alfred Zammit are testified in today's hearing.
17:21 - That question concludes Scicluna's open testimony. The rest of her testimony will continue behind closed doors. The next public inquiry session will take place on Wednesday at 2pm.
17:18 - Commodini Cachia asks whether the MFSA has a register of "business introducers". Scicluna pauses to think, but states that she is not sure what she is referring to. She eventually asks if she can come back to her with an answer as she does not want to give a wrong answer.
17:15 - The questioning turns to Pilatus' efforts to open a branch in the UK. The regulator in the UK interviews the key people behind the bank in this case and then does its own due diligence. Scicluna points out that the application was stopped before these interviews could take place. It was then re-activated after the FIAU gave the all-clear on its money-laundering concerns. Asked what became of the application, Scicluna said that they had not accepted or rejected it. She stated that they were in very close contact with British authorities to see how to manage the situation. "We had our concerns as we wanted to continue investigation the allegations in the media, and they had the same concerns", she said.
17:13 - Asked about the person who resigned, Scicluna states that this person was a banking inspector. She said that the person had wanted nothing to do with Pilatus Bank and did not want to end up in the media. Scicluna states that they were allowed into the bank in November. They had first requested entry into the bank in May.
17:12 - The inspectors were not allowed on-site because of the magisterial inquiry, Scicluna says before adding that the documents were brought to the MFSA instead for examination. A forensic review then followed once the magistrate allowed them access to the building.
17:09 - The conversation turns to the evening when Caruana Galizia claimed that the infamous Egrant account belonged to Michelle Muscat and was at Pilatus Bank. Scicluna says the MFSA was immediately in contact with the FIAU. She says they issued an order to ensure the bank's files would not be deleted. She adds that they had decided to do an on-site inspection, but their inspectors were not comfortable in doing that because of the "media scrutiny" and their unwillingness not to be filmed on site. The MFSA, she said, addressed this internally with the position that this inspection had to be done. One individual, she said, opted to resign instead of carrying out the inspection.
17:04 - The MFSA continued to work closely with the bank on its governance so it could rectify the regulatory issues that had been found.
17:03 - She said that they had instructed the bank to report to the MFSA on a monthly basis as opposed to on a quarterly basis. This report would contain to assets, bank capital, ratios, and other things which would help to monitor the bank's trends.
16:59 - She said that the FIAU had shared with them the findings of their first on-site inspection at Pilatus. At that point, the MFSA stopped the passporting application that Pilatus had to open a branch in the UK and started to monitor the bank in a more intensive manner.
16:58 - She is asked whether it is normal for such information to be passed onto the FIAU, she states that it is their general approach to pass on information to the FIAU if they feel it would apply to their work. Judge Said Pullicino notes that this would presumably have to do with money laundering - to which Scicluna nods silently.
16:55 - A top-down inspection was carried out which identified some shortcomings, but these were not very serious. One issue was the concentration of the businesses which saw the movement of capital from high-risk jurisdictions - jurisdictions which were not part of the business plan that Pilatus had submitted to the MFSA. Our inspectors submitted their findings to the FIAU on the back of which the FIAU themselves carried out an inspection, Scicluna said. The inspection took place around a year and a half after the bank started operations.
16:51 - Scicluna notes that the MFSA had carried out an inspection at the bank after seeing that its operation had begun to expand in terms of the number of transactions. Judge Said Pullicino asks whether they had looked into transactions of the bank, to which Scicluna replies that the MFSA's job is to look into matters of compliance. These visits would generally be advised beforehand, but there are occasions where the MFSA does carry out surprise visits when there are serious concerns about the entity in question but, at this point, this was not the case for Pilatus.
16:49 - She adds that they were worried that Ali Sadr had no experience in the banking industry, but noted that he had a number of people on the board who made up for that in their own experience.
16:46 - The application for the banking license was submitted in February 2013, and the MFSA conducted a nine-month due diligence process of Pilatus. This was because Ali Sadr was coming from a high-risk jurisdiction (Ali Sadr is Iranian). Scicluna states that the MFSA had asked for an intelligence report which resulted in nothing that would have precluded Ali Sadr from opening Pilatus Bank.
16:44 - The discussion now shifts to Pilatus Bank. She states that the bank first asked for a pre-application meeting in September 2012, where KPMG's Juanita Bencini, Ali Sadr, and former MFSA chairman Joe Bannister were present.
16:43 - She states that BT International and BT Management were both the subject of an inspection by the MFSA in cooperation with the FIAU. Certain information was passed on to the FIAU by the MFSA as a result, she said. She said that they had identified some things from this compliance visit which they had asked the company to arrange. Amongst these points were the appointment of an additional director, certain governance issues, and the businesses they were bringing to Malta.
Asked to clarify the latter point, Scicluna says that they were open to "risky jurisdictions", but states that she must check the details to know exactly which these are. "I know that the FIAU continued their work, and we are still in contact with them", she states. "Did they conclude any reports?", Commodini Cachia asks. "As far as I know, they are continuing with their work", is the reply.
Commodini Cachia asks whether the information they had passed onto the FIAU was related to money laundering, to which Scicluna replies that the information passed on was information which they felt could "help the FIAU in their work". Asked for a clarification, Scicluna states "we saw certain things which may be relevant for the FIAU to do their work, which is compliance with the laws relevant to them."
16:34 - In the case of Panama Papers, to date, no action has been taken by the MFSA. Commodini Cachia mentions Keith Schembri, Konrad Mizzi, Brian Tonna, Karl Cini, and Nexia BT. Schembri and Mizzi were not connected to any MFSA-licensed entity, she said before noting that Nexia BT is not licensed under the MFSA as it is an auditing firm. Tonna and Cini however are connected with an MFSA-licensed entity owing to their involvement in two other companies: BT International and BT Management Ltd.
16:29 - The supervisory council meanwhile doesn't exist anymore, she states, but notes that its role was to take any regulatory decision that there needed to be - be it on licensing or enforcement for instance. The council was chaired by the director and made up of the heads of each unit. Scicluna explains that she has been in her present role since August 2014 and had sat on the council while it existed. Andrea Camilleri had chaired the council for a long while, she said.
16:27 - Commodini Cachia rises to begin the questions. She asks to explain what the role of the supervisory council of the MFSA is, and what the MFSA's role is in terms of compliance with money-laundering directives. Answering the latter, Scicluna states that the MFSA is the agent for the FIAU as money launder is under their jurisdiction. There were periods, she said, where inspections would be carried out by the MFSA, but they would be carried out for the FIAU.
16:25 - Marianne Scicluna, Chief Officer for Supervision within the MFSA, now takes the stand. She has been with the authority since July 1995. Scicluna's lawyer, Kris Borg, points out that there are certain questions where it would be best for Scicluna to answer behind closed doors as the answers could prejudice other cases which Pilatus Bank has against the MFSA.
16:00 - Zammit's testimony now continues behind closed doors.
15:57 - Zammit points out that he would like to make a final remark before the session continues behind closed doors. He refers to Ferris' testimony from last week, where Ferris had stated that he still does not know why he was sacked from the FIAU. "I was a bit surprised to read that Ferris said that, to date, he is not aware why we dismissed him. On 2nd July 2018, the FIAU submitted a note to the Tribunal with over 25 bullet points on why we dismissed Mr. Ferris", he states. "There were lots of reasons. We employed him as a manager and we made a mistake because he did not perform as a manager. He was a terrible manager. It was brought to our attention by the whole team and in the end we had to take action because the team was deteriorating."
15:52 - Judge Said Pullicino asks a question with regards to the Panama Papers. "The FIAU has done everything it can do on the Panama Papers. We made mistakes and can improve. But we open cases on our initiative, we forwarded cases to the police, we send reports to international partners", Zammit explains. He admits that the supervisory side of the FIAU lacked resources at the time, but notes that this has since been addressed.
15:47 - Commodini Cachia asks what she says is her last question: how long the FIAU had known that 17 Black belonged to Yorgen Fenech. "I am not going to answer that question at this stage, in an open hearing", he replies. He is asked whether he will answer the question behind closed doors. Zammit seems to nod in reply, which Madam Justice Lofaro takes as an affirmative answer. Zammit points out that he did not actually say "yes". "Let's have this conversation behind closed doors", he adds.
15:45 - Zammit is asked whether the FIAU used Daphne Caruana Galizia's blog as open-source for investigations. "All the time", he answers. He says the FIAU open dozens of cases that don't relate to suspicious transaction reports. The FIAU started investigations because of Caruana Galizia's stories, he states.
15:43 - He asks point blank whether he met with Abdilla on the eve before they submitted documents to the magisterial inquiry. "On that day I can't remember," he said. He states that there is a picture of him holding a red file which was leaked to the media, but notes that this file did not - as has been said - contain the report into Konrad Mizzi. The picture was extracted illegally from the FIAU's CCTV system, Zammit states. Jonathan Ferris had testified that the red file had contained the report into Konrad Mizzi, but Zammit insists that this was not the case.
15:40 - Zammit is now asked about the FIAU board. He states that Silvio Valletta was on the FIAU board, but not in the capacity of police liaison officer or on the FIAU's committee. Ian Abdilla was the Police liaison officer at the time, he said. He is asked whether he met Abdilla to discuss the four reports presented earlier. Zammit replies: "I believe so". He is asked who was present, and replies that it would be himself, the director and the senior manager of the intelligence sector.
15:36 - Zammit is asked whether he was aware that Pilatus was a client of KPMG when it was setting up and trying to get its license. "I do not recall being aware", he states but notes that the FIAU are very minimally involved when banks try get their license. "And KPMG did not flag this situation?", Mallia asks. Zammit replies that as far he knows, they did not.
15:35 - "In the report you said there were significant documents missing. There seems to have been a deliberate attempt to hide something from you," Judge Mallia points out. Zammit points out that the issue was with the source of funds. He adds that the FIAU is still carrying out work on Pilatus, noting that "as part of the process we adopted now, we asked the bank to provide a copy of all data - everything - so the way we are carrying out a visit is very different. This work is ongoing".
15:31 - He notes that there were audits carried out by KPMG and Camilleri Preziosi, and trusted them to do their work diligently. Zammit points out that the two firms were appointed by Pilatus the day after the FIAU's first report was issued.
15:26 - Commodini Cachia now presents a document published by the newspaper Illum and asks whether Zammit can identify it. The article is the full publication of the FIAU report into Pilatus Bank that was written by Zammit.
15:24 - "We had concerns about Pilatus Bank", Zammit explains, before noting that they had told the Bank in writing that they had remained concerned even after the documents which made them compliant had appeared in the second check. "We were not happy with the situation", he said before noting that they would continue to monitor the situation and carry out another check a few months down the line. "We have completely changed the way we handle compliance visits", Zammit states, noting that what they used to do in 2016 is nothing next to what they do today.
15:23 - Commodini Cachia asks about the meeting between the FIAU and Pilatus Bank chairman Ali Sadr and who was present. Zammit states that there was a meeting on 27 June between himself, Galdes, Ali Sadr, and Juanita Bencini and another meeting on 12 July between just Galdes and Ali Sadr.
15:20 - Zammit is asked why he felt the need to point out that Manfred Galdes had resigned in the letter, to which he replies that it was because Galdes had a "number of interactions with Pilatus" and that he therefore saw fit to advise the Bank that he had resigned so he would not be communicating with them anymore. "The onus of showing compliance is on the subject person," he says.
15:15 - Zammit reveals that Pilatus had a dual-filing system, which is used when a bank requires high levels of confidentiality.
15:09 - Zammit points out that Manfred Galdes had not, as far as he knew, resigned due to the Pilatus report. He states that the first compliance check lasted a week - between 15 and 22 March 2016. "In the case of Pilatus Bank, we looked at all the relationships with Politcally Exposed Persons", Zammit stated before noting that the FIAU does not tell a client what documents they would be looking for in a compliance check.
15:06 - The FIAU visited Pilatus the following August, and were provided with more documents which meant that the FIAU did not have sufficient information to conclude that Pilatus had breached the law. Zammit points out that it is impossible for the FIAU to know whether the information in question was always there or whether it was placed there in the interim.
He states that the FIAU's committee determined that there wasn't a strong enough legal basis for action to be taken against them.
15:05 - Zammit is now handed a report into Pilatus Bank. He notes that this is a compliance report, and moves on to address the so called clean bill of health that the FIAU gave to Pilatus, despite the shortcomings initially found in the first report.
That examination took place in March 2016, and the FIAU received feedback three months later. They met representatives of Pilatus Bank and KPMG, where the bank insisted and stressed that independent reports carried out by KPMG and Camilleri Preziosi showed that the FIAU's initial findings did not hold any water and that the bank had all the documents to be in line with the law. Pilatus hence invited the FIAU for a follow-up visit, Zammit explains. In that very meeting, then director Manfred Galdes accepted that they would go on site again, he said.
15:01 - He is asked by Commodini Cachia whether he had any follow up meetings with the police on these subjects. Zammit pauses and states that he is pretty sure there were discussions with the police. He is asked whether he is aware that the police had taken action on the persons named in these reports. Another pause, after which Zammit states "as far as I know, the police have taken action" before citing the magisterial inquiry into the reports. Zammit is asked whether that inquiry was demanded by the police or a third party. "You have to ask the police that", is the reply.
14:58 - He is presented with a third report - into Keith Schembri and alleged passport kickbacks - and notes that the content is familiar but the format is different to how the FIAU present their reports. He states that this too was sent to the police.
14:56 - He is asked whether any further action was taken by the FIAU or the police once the report was submitted. He replies that in terms of the FIAU, they continue to update the police with additional information and reports if new details emerge. The board asks for clarification on this, to which Zammit replies that this was also the case for these reports. Judge Said Pullicino asks whether the new details had changed the report's initial conclusions, to which Zammit replies that while he cannot recall by heart, the conclusions did not really change.
14:54 - Commodini Cachia now presents Zammit with another report - this time in connection with Keith Schembri and Adrian Hillman. Zammit states that the document looks like a report which they had sent to the police.
14:53 - Zammit says that investigations had continued since the document was leaked, and further details emerged which eventually had a major bearing on the conclusions of the final report.
14:52 - The board rules that since the document is in the public domain, then Zammit should continue to answer questions. He states that the FIAU continued their work and a report was subsequently submitted to the police, and then refers to the Egrant report where Magistrate Aaron Bugeja makes mention of how the FIAU had on 26th March 2018 submitted an inquiry for further investigation.
14:51 - Zammit tries to resist further questioning: "Just because things are in the public domain does not mean that I should break the law", he says, raising his voice. Tensions flare as one of the family's lawyers, Andrew Borg Cardona, rises to lambast Zammit; "who do you think you are", he says.
14:49: "At that stage, when someone broke the law and leaked it, this was still a work in progress", Zammit states. He is asked whether a report was eventually drawn up - to which he replies in the affirmative. The document in question is on Konrad Mizzi, his New Zealand trust Rotorua, and his Panama company Hearnville.
14:45 - "It is very familiar. It is an internal document which is not a finalised report; we always refer to it as an internal working document", Zammit states. "This document was not sent to the police as it is an internal document", he adds.
14:43 - Zammit points out that he would rather testify about specific cases behind closed doors, but Commodini Cachia argues that the report, which she would like him to verify, is in the public domain already as it was shared by the media. The argument holds water, and Zammit begins to leaf through the report.
14:42 - Zammit is the deputy director of the FIAU, having served there since 2010. He served as Acting Director between 2016 and 2017, after Manfred Galdes left the FIAU and before Kenneth Farrugia took the role.
14:41 - Therese Commidini Cachia submits a report to the court which she states is some 130 pages long. Zammit points out that this is an 'internal working document', but Commodini Cachia states that they will get to the report later in the testimony.
14:40 - FIAU Deputy Director Alfred Zammit will be the first to testify.