An international body has called on Malta to halt any possible legal action against Ali Sadr Hasheminejad, the owner of the now defunct Pilatus Bank. 

Since July 2021, Ali Sadr has been pitching his case before the International Centre for Settlement of Investment Disputes, an investor-state dispute settlement body.  

He is claiming damages and loss of earnings but has also requested that any legal action planned against him in Malta be suspended.  

The news was first reported by The Shift on Saturday

Suspend all proceedings: ICSID 

In an interim decision this week, the International Centre for Settlement of Investment Disputes recommended a suspension of all proceedings by Malta against Ali Sadr until it decides on the case.

Recommendations by the ICSID are considered binding in the international community, but government sources on Saturday said that the notification received was "being studied". 

What is Sadr arguing?

Sadr, who filed the case through his Hong Kong-based Alpene Ltd, is being represented by US lawyer firm Steptoe & Johnson, is claiming that threats of criminal prosecution against him are tantamount to harassment and that the liquidation of his bank violated his rights. 

Malta is being represented by the office of the State Advocate, along with New York law firm Alston & Bird, and Valletta’s Ganado Advocates. 

Sadr is using his Hong Kong company to argue that Malta is violating a 2009 bilateral treaty with China that deals with, among other things, arbitration of disputes between states and investors. 

Government sources said Sadr’s case was “clutching at straws”.  

They say that investor protection treaties are deemed discriminatory by the European Commission and that Brussels has already called on member states to eliminate them. 

Earlier this year an EU court threw out an attempt by Pilatus to try and get its hands back on a banking license after Malta scrapped it in 2018.   

His Ta’ Xbiex Pilatus Bank was fined a record €4.9 million by Malta’s anti-money laundering unit earlier this year for a “serious and systemic failure” to follow anti-money laundering laws.

Failure to prosecute Ali Sadr

He was among those identified by a €7.5 million magisterial inquiry as being responsible for alleged money laundering at the bank.

The inquiry had recommended criminal prosecution of Sadr along with other foreign directors of the bank, none of whom reside in Malta any longer.

Although the bank itself and its former money-laundering officer, Claude-Ann Sant Fournier, were charged last September, none of the bank’s top brass has yet been extradited to Malta to face prosecution.

Sadr is suspected to have knowingly helped his bank’s clients transfer, convert and conceal the proceeds of crime, according to the inquiry findings.

The inquiry was concluded and handed to the state advocate in December 2020.

Sadr was arrested in the US in March 2018 on money-laundering and sanction-busting charges.

His conviction for breaching US-Iran sanctions was overturned last year over serious evidence disclosure failures by US prosecutors.

Pilatus Bank’s lax money-laundering controls have been on the radar ever since a 2016 inspection of the bank by the financial regulator and the Financial Intelligence Analysis Unit (FIAU).

From Egrant to 17 Black, it has been at the centre of some of the major corruption scandals to have rocked the Joseph Muscat administration. 

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