Pilatus controller says shuttered bank is on ‘fishing expedition’ for damages
An American expert engaged by the Maltese financial regulator to oversee the shuttered private bank Pilatus after the suspension of its licence, is opposing a request to produce in an American court information pertaining to his role.
Pilatus’s owners want Lawrence Connell to provide it with
all the information in his hand since being installed by the MFSA, so that
Pilatus can file proceedings against the European Central Bank, which cancelled
its bank licence after Hasheminejad’s arrest in February 2018.
Connell was appointed in March 2018 to take over Pilatus as
its ‘competent person’ after the arrest of Pilatus owner Ali Sadr Hasheminejad
in Washington D.C. that year. Hasheminejad, a naturalised American and St Kitts
& Nevis citizen, has since been acquitted of charges of money laundering
and breaching US sanctions in Iran.
Replying to the summons, Connell – who has since resigned
his MFSA position – told the US courts that Pilatus’s contemplated damages
action was speculative. An ongoing action in the European Court of Justice
could still find that the European Central Bank had appropriately revoked
Pilatus’s license. “It follows that the contemplated damages action –
supposedly based on the wrongful license revocation and regulatory ‘takeover’
of Pilatus – would be inapt.”
Pilatus’s German lawyer, Otto Hendrik Behrends, claims the
ECB revoked the bank’s licence on the prompting of the MFSA after the wrongful
arrest of Hasheminejad. He accused both the ECB and the MFSA of shuttering the
bank because of falsely alleged crimes that predated the bank’s existence. “At the time of the indictment, the MFSA and Malta’s
political leaders were besieged by international accusations of ‘looking the
other way’ while Malta’s banks enabled money laundering and global sanctions
violations.”
But Connell said in his reply to the summons that should the
ECB and MFSA action be verified as having been proper, then Pilatus’s requests
as they stood were nothing but a fishing expedition.
Pilatus filed an application for discovery in the US courts
– that is, for documents and testimony regarding ECB’s and MFSA’s motives and
justifications for their regulatory actions concerning Pilatus. But Connell
replied that these are protected by privileges under EU and Maltese law. “ECB
and MFSA, the holders of the applicable regulatory privileges, have expressly
instructed Mr Connell to maintain their privileges and not to disclose the
documents and information sought,” Connell’s lawyer told the court.
Connell’s appointment also included a confidentiality
agreement with MFSA under which he is not permitted to disclose information
regarding his appointment. His lawyer questioned why Pilatus had not filed
their discovery claim against the ECB or the MFSA, who would be the actual
parties to their contemplated legal action for damages. “The inescapable
conclusion is that the application is an improper attempt by the applicant to
circumvent applicable privileges that would preclude discovery of these matters
before the appropriate tribunals in the EU and Malta.”
He said that although Connell had to take charge of the
Pilatus assets to safeguard the interests of depositors, “it does not follow
that Mr Connell was in an agent-principal relationship with [Pilatus] for
purposes of any applicable privileges, or that such a relationship would effect
a waiver of privileges vis-à- vis the bank. Mr. Connell served in a contractual
relationship with the MFSA, a banking regulator, in connection with the MFSA’s
regulatory supervision of Pilatus.”
Pilatus Bank, owned by Ali Sadr Hasheminejad, largely dealt
with millions in reserves owned by the Azerbaijani ruling family and oligarchs.
His bank was implicated in the Egrant affair, when the late journalist Daphne
Caruana Galizia claimed the bank had processed a $1 million payment from the
Aliyevs of Azerbaijan to the wife of former prime minister Joseph Muscat. The
allegation was disproven by a Maltese magisterial inquiry. But by then, the
bank’s other dealings for Azerbaijan had come under the lens of financial
investigators. When Hasheminejad was arrested in Dulles airport in the United
States in February 2018, the Maltese financial regulator shut down the bank and
started an investigation.
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