The Malta Financial Services Authority (MFSA) has stepped in to block alleged fuel smuggler Gordon Debono’s attempt to transfer another one million in frozen funds to his wife’s company in Dubai after The Shift revealed the scam being used by the family to access assets frozen by US sanctions.
Debono was arrested in Sicily, in October 2017, together with Darren Debono (no relation). They are facing charges in Italy on fuel smuggling from Libya. Their assets were frozen as a result, but Gordon Debono and his wife, Yvette, cooked up an ingenious way of moving their money.
The Shift has shown how the family was using the Maltese courts to shift their assets that are the subject of sanctions by the Office of Foreign Assets Control (OFAC), the financial intelligence and enforcement agency of the US Treasury Department.
Gordon and Yvette Debono used a court in Paphos, Cyprus, to get a ruling in their favour and then asked the Maltese courts to enforce it based on an EU Regulation permitting recognition of EU judgments without needing to delve into the merits.
The Debonos managed to shift €1.5 million through a judgment by Judge Francesco Depasquale until The Shift exposed the scam. The investigation also pointed out that the Debonos were seeking to move another €1.3 million in a second case.
In light of its earlier failure and The Shift’s reporting, the MFSA is now taking a different tack. As noted in The Shift’s original report, the EU Regulation being used by the Debonos allows interested parties to object to the recognition of a judgment on limited grounds, including public policy (such as prevention of crime).
The MFSA has now intervened in the second case. Yvette Debono’s Dubai company lawyer has resigned the brief, following the Shift’s exposé. Her husband’s company’s lawyer continues to deny any wrongdoing and is objecting to the MFSA’s challenge.
Between the notoriously slothlike Italian legal system, the lack of any sign of law enforcement in Malta, the case allegedly being used by Castille as a red herring in the assassination of Daphne Caruana Galizia, and even hints of international political intrigue, the fuel smuggling case has been somewhat in limbo for over two years.
Meanwhile, Gordon and Yvette Debono have been active in moving assets below the radar, until exposed by The Shift.
How they did it
The Shift revealed how the Debono family had devised a way of getting its hands on assets frozen on suspicion of illegal trade.
Debono’s wife acquired a shell company in Dubai called International Properties and Investments Ltd in March 2018 and obtained two judgments in Cyprus (Paphos) ruling that a company in Belize owed it €1.5 million (plus 3.5% interest) and a company in the British Virgin Islands owed it another €1.3 million (plus 3.5% interest).
An investigation of court records raised a number of red flags including loan agreements that appeared to have been backdated, and the parties appeared to have “agreed” to the Cypriot judgment and to rush the Maltese proceedings.
Perhaps the most blatant red flag was that the two companies that Yvette Debono claimed owed her Dubai money were each owned and controlled by her husband.
This effectively meant that husband and wife were transferring assets, which they have no legal right to access, through offshore companies with the approval of the Maltese courts.
The Shift has also shown how Debono’s first case against a Belize company, Oil and Ship Consulting Limited, was successful in permitting the Debonos to shift €1.2 million to Dubai beyond the reach of authorities and sanctions.
Contrary to media reports, the bulk of the assets shifted by the Debonos were not balances at shuttered Satabank, but came from an obscure oil trading company, Eninco Trading Limited.
The Shift has also noted that the second case, involving the BVI company Marine Offshore Investments, the indirect owner of the vessel MT Turu, was also being rushed with the lawyers of both sides agreeing to expedite the case.
Citing The Shift’s research, the MFSA’s urgent submissions in court claim that the Cypriot judgment obtained by the Debonos is a sham.
The MFSA points out there “appears to have been collusion” between the Dubai company (owned by Debono’s wife) and the BVI company (owned by Debono) to obtain a judgment in Cyprus and then use it to game the Maltese justice system.
Final submissions are set to take place later this month.