Brussels has warned Malta it would face court action over the implementation of anti-money laundering (AML) rules, a day after Finance Minister Edward Scicluna penned a painfully pathetic defence against calls for his resignation.
Malta has two months to get its act together, after the European Banking Authority (EBA) last week found that the Financial Intelligence Analysis Unit (FIAU) breached EU anti-money laundering laws when it failed to conduct proper supervision of Pilatus Bank.
The Opposition on Thursday also reinforced calls for Scicluna’s immediate resignation. PN Leader Adrian Delia said the Finance Minister had blamed everyone but himself for the EBA’s findings.
A day earlier, Scicluna had tried to play down the seriousness of the EBA findings that found general and systemic shortcomings as well as breaches of EU law in the FIAU’s handling of the Pilatus Bank fiasco. The government had already tried to play down the seriousness of the investigation, with his Junior Minister Silvio Schembri referring to the EBA letter on the matter as “routine”.
He tried to play down the issue using the hackneyed line used by Prime Minister Joseph Muscat – that tiny Malta is being pushed around and bullied by large EU countries envious of Malta’s economic prosperity.
The mastermind behind everything, he asserted indignantly, is that infamous ‘enemy of the state’, PN MEP David Casa, to whom he attributes omnipotent influence over the European Commission (EC), the EBA, as well as MONEYVAL (he predicted a similarly negative evaluation by MONEYVAL that will visit Malta in November), as well as media houses and journalists around the world.
This led Casa to hit back: “The suggestion that the issues arose due to some supernatural influence I possess in Brussels is testament to the Finance Minister either being in a state of severe delusion, or an unwillingness or inability to address the real issues”.
In his piece published by The Times of Malta, Scicluna listed the heavy financial investment and human resources he put behind the FIAU, and the various anti money laundering (AML) initiatives he kicked off. Yet, the result shows that the initiatives and the investment were either not enough, or not of the right kind, or that something somewhere is terribly wrong.
In Churchill’s words, “However beautiful the strategy, you should occasionally look at the results.” The European Commission is definitely not impressed with his efforts to combat money laundering.
What Scicluna conveniently omitted is that one journalist working from her home at Bidnija managed to uncover several serious matters about the bank, its owner and the PEPs who banked there, despite not having access to the human resources at FIAU (around 30 people) and other resources costing millions of euro that he boasts about in his piece. There is no reason why the FIAU should not have been able to do likewise.
He bemoans the fact that Pilatus Bank drew so much international attention (again attributing the blame to Casa), failing to realise that one of the reasons for it was that the journalist who conducted these investigations into the bank – Daphne Caruana Galizia – was executed barbarically.
Scicluna argued that “while bigger EU member states and their financial institutions continue being associated with thousands of real and proven AML transgressions, valued at several billion, tiny Malta is singled out for systemic procedural failures related to one bank.”
His statement is a deliberate oversimplification intended to minimise the implications and ramifications of the Pilatus Bank debacle.
There is no denying that money laundering does happen in other countries, and on a large scale, and that very often banks are involved. But the issue in this case is different. Pilatus is not any bank. It is not a bank that was used to commit a crime. It was a bank that seems to have been set up by a criminal using criminal proceeds to serve a very exclusive clientele – mainly, the Azerbaijani ruling elite and Maltese PEPs.
Scicluna, a man of high intelligence, should have taken note of the several signs that were clear from the day it opened its doors, or at worst, soon after. Why didn’t he?
Despite the damning FIAU reports that were leaked, as well as revelations in the press, he continued to bury his head in the sand. Rather than being concerned about their content, he was only concerned about the political damage the leaks would have on the outcome of the 2013 general elections.
At one point, he even questioned whether the reports had been written to be leaked, showing that not only did he actively defend wrongdoing but that he even turned his guns on those trying to do their duty and stop the abuse.
Important points to note, include:
- Pilatus bank was set up by an Iranian with a St. Kitts and Nevis passport. FinCEN signalled that the St. Kitts and Nevis Citizenship-by-Investment programme run by Henley and Partners was being abused by Iranian nationals for the purpose of “evading U.S. or international sanctions or engaging in other financial crime” as early as May 2014.
- The FBI and US Justice Department revealed that Pilatus Bank had been set up using criminal proceeds. Its owner, who was already under investigation in the US when the bank was licensed, is facing 125 years imprisonment in the US , charged with a number of financial crimes. And only a few days ago, another director of the bank was also indicted in the US. Yet the FIAU gave Pilatus Bank a clean bill of health, stating that the concerns it had about the bank no longer subsisted after August 2016.
- Two high ranking officials – Jonathan Ferris and Charles Cronin – were dismissed from the FIAU. No reason was ever given. Both men have outstanding track records, which presumably is why they were hired. Ferris was denied whistleblower status, while a second whistleblower Maria Efimova was hounded and denied protection.
- The Prime Minister’s chief of staff Keith Schembri, who the FIAU recommended the police should investigate, attended the very exclusive wedding of Ali Sadr in Venice, along with the Prime Minister.
- Former police commissioner Michael Cassar walked out of his office a day after the FIAU recommended further investigations into Schembri, and never set foot in there again.
All this happened under Scicluna’s watch.
He cannot shrug all this away and rubbish the EBA report with “u ejja, come on”. There are few possibilities that can account for the failures of the FIAU. There is either a lack of adequate resourcing at the FIAU, or gross incompetence, or political interference. He made it a point to show that the first option is not the case. Either of the other two options warrants his resignation.
Scicluna does not seem to understand that the use of Malta as a hub for money laundering and criminal activities opens a portal for criminals to launder money throughout Europe and for the funding of terrorism. His intransigence allowed impunity.
It is this which tarnishes our reputation on an international level, and not those who the government continues to depict as some kind of ‘enemies of the state’ simply because they fight for what is right. He needs to be man enough to shoulder responsibility.