Pilatus Bank and one of its senior officials have been charged with money laundering, while a magisterial inquiry has recommended criminal action against eight others.
The move comes four years after murdered journalist Daphne Caruana Galizia accused the bank of being involved in corruption and money laundering.
Charges were filed against the Maltese bank on Thursday as well as Claude-Anne Sant Fournier, 41, the bank's head of legal and former money laundering reporting officer.
They were jointly charged with committing offences in breach of the Money Laundering Act on March 21, 2018 and in the preceding years and months.
Both denied the charges.
During the hearing, the defence revealed that a magisterial inquiry, recommended criminal proceedings against nine people linked to the bank.
Magistrate Joe Mifsud urged police to take further action.
"I urge you to continue to investigate and prosecute anyone else involved in this Pilatus Bank scandal," he said. "We are suffering because of those who abused. So continue to investigate, even by asking for European Arrest Warrants."
None of the nine names, besides Sant Fournier were revealed in court. However, Times of Malta understands that one person, Antoniella Gauci, a former risk manager at Pilatus Bank, was interviewed by police and released without charge.
Pilatus Bank opened in 2014 but was closed down four years later after its owner Ali Sadr Hasheminejad, was charged in the US in connection with money laundering and fraud.
The court on Thursday issued a freezing order against the bank and a temporary order against Sant Fournier, who was granted bail against a deposit of €10,000 and a personal guarantee of €40,000.
The Ta' Xbiex-based bank was fined a record €4.9 million by the Financial Intelligence Analysis Unit (FIAU) earlier this week.
AS IT HAPPENED
Court session ends
2.44pm Thank you for joining us for this live blog. The court session is now over and we'll soon have a summary of proceedings above.
Gauci released without charge
2.43pm None of the names of the nine people indicated by the magisterial inquiry, except Sant Fournier, were disclosed in court today.
But sources told Times of Malta that one of them was Antoniella Gauci, a former risk manager at Pilatus Bank.
It is understood she was released without charge earlier on Thursday and so will not face arraignment in connection with this case.
She was assissted by lawyer Roberto Montalto.
Bail conditions
2.20pm Under her bail conditions, Sant Fournier must:
- show up for all hearings;
- not leave the island;
- sign the bail book three times a week;
- not approach prosecution witnesses;
- observe a curfew from 10pm to 6am; (relaxed in case of medical emergency)
- deposit €10,000 and a personal guarantee of €40,000.
Court grants bail
2.18pm The magistrate grants bail. He refers to several previous court decisions and a statement by the Children's Commissioner. In this case, Sant Fournier is the mother of minors.
Why was she 'singled out'?
2.10pm The defence questions why Sant Fournier appears to have been singled out. Lawyer Filletti says a report into the workings of the bank cost over €7 million and yet no one had sent for Sant Fournier.
He also says there is no fear of his client absconding, given she was first interviewed by police in April and has known of the charges for months.
He adds that the accused was not called to testify in the magisterial inquiry and that all other testimonies are preserved so there is no fear of tampering with evidence.
And he points out that she's a mother with a family to care for. If she commits any breach, her two elderly relatives will suffer the consequences.
Magistrate urges European Arrest Warrants
2.05pm The magistrate says he assumes police will take action against the others.
"I urge you to continue to investigate and prosecute anyone else involved in this Pilatus Bank scandal. We are suffering because of those who abused. So continue to investigate, even by asking for European Arrest Warrants."
Nine individuals
2.02pm Filletti gives some insight into the outcome of the magisterial inquiry. He says it directed that criminal action was to be taken against nine individuals in all.
Where is the evidence?
2pm The defence makes submissions. It argues that arrest is the exception, not the rule, and says the prosecution should have brought evidence to justify that arrest.
Attorney General insists
1.57pm After hearing the testimony, the Attorney General's lawyers insist on objecting to bail.
"These are serious charges," the lawyers say. "She was responsible as director, and various witnesses, including civilians, are still to testify."
She says some of the witnesses are former Pilatus Bank officials who are familiar with the accused.
The lawyers call for strict conditions, should bail be granted.
Accused's aunt takes stand
1.54pm Another witness, Victoria Galea, takes the stand, an elderly woman identified as the accused's aunt. Sant Fournier is in tears.
As the witness testifies about some family matters, we won't report the details on the order of the court.
Accused's father takes stand
1.51pm The accused's father, John Zammit, takes the witness stand. We're directed to avoid reporting 'on personal matters'.
He is an elderly man who identifies his daughter in court. He says that he’s prepared to step in as third party guarantor, aware that if she breaches any condition, he will suffer the consequences
'I'll rebut charges in court'
1.48pm Now for bail arguments. Bonello describes Sant Fournier's behaviour during her four interrogations since April.
She refused to answer any questions, insisting “I know you’re taking me to court so I’ll rebut charges in court”.
Decision on freezing order
1.46pm The court upholds the freezing order in respect of Pilatus. But issues only a temporary freezing order in the case of Sant Fournier.
She will get an annual allowance of €13,000 but it is temporary, giving the Attorney General time to appeal.
'Vexatious' request
1.42pm The defence fights back, claiming the state wants to "punish the accused for no reason". Filletti says the law is not mandatory in this regard and describes the request as vexatious.
Prosecution explains
1.37pm The magistrate turns to prosecution for an explanation on why it is insisting on a freezing order against Sant Fournier nothing unusual was found in her account. And don’t just say “because that’s what always happens”, he cautions.
The Attorney General lawyer explains. Her argument is based on the use of the word “shall” in the money laundering act, which indicates it is mandatory.
Objections to freezing order
1.30pm There's an objection to the freezing order on grounds that the bank's licence is already revoked. The inspector says the purpose of the order is cautionary.
And lawyers for Sant Fournier ask why her assets are being frozen given police said no funds were found in her account, besides her salary.
There's a reference here to another case, against Progress Press, where the court had upheld a request not to issue a freezing order against individuals.
Shuttered bank
1.25pm More details about the bank's status now. PwC lawyer Stefan Camilleri says that in March 2018 Laurence Connell was appointed the competent person authoritzed to manage the bank. In November 2018, the bank's licence was revoked and so it cannot operate.
When a bank is under the authority of a 'competent person', it can only pay fines, lawyers fees or make similar payments, the inspector confirms.
No funds to accused
1.21pm Inspector Bonello confirms that investigations did not show that Sant Fournier received any other funds in her account, besides her salary. However, the inspector adds that once an arrest is validated in court, a freezing order is issued.
She also confirms that Sant Fournier is no longer a director and the bank ceased operating in 2018.
Request to freeze assets
1.19pm The prosecution requests a freezing order against both Pilatus Bank and Sant Fournier.
"How will they pay the €5 million FIAU fine if that request is upheld?", the magisrate asks.
The prosecution says such requests will be made to the court
Charges denied
1.18pm Both plead not guilty.
Pilatus charged
1.15pm Fabio Axisa, 48 , from Attard, a partner at PWC Malta appears as the competent person appointed by the MFSA to represent Pilatus Bank, which is charged with money laundering.
It's important to note here that he doesn't face any personal charges.
Who is Sant Fournier?
1.13pm Claude-Anne Sant Fournier was the bank's Money Laundering Reporting Officer, and a director, tasked with ensuing such offences did not take place, the inspector says.
Her first interrogation was April 5
Right to silence
1.11pm She explains that it was decided criminal action would be taken against Claude-Anne Sant Fournier. She was arrested last April and granted police bail. She was interrogated four times but never replied to anything, opting to exercise her right to silence.
Arrest timeline
1.08pm Prosecuting inspector Bonello from the money laundering squad begins to explain what led to the arrest.
She testifies that in November 2018 a magisterial inquiry began gainst the bank. It and a police investigations have both been completed, she says.
Corporate criminal liability
1.05pm There's a informal discussion about corporate criminal liability. Magistrate Joe Mifsud observes that there seems to be no judgment about this under Maltese law. Tabone and Filletti explain that the notion serves to seize the assets of a company.
Price Waterhouse Coopers
1.02pm Accountancy firm Price Waterhouse Coopers (PwC) also appears to have some involvement in this case, although it's unclear at this stage. Lawyer Stefan Camilleri is assisting Fabio Axisa, PWC partner, appointed as competent person to represent Pilatus Bank.
Court gathers
12.54pm Welcome to our live blog. We are waiting in the hall for the case to begin. Claude-Anne Sant Fournier, who will face charges, is in court along with police and a group of lawyers.
For the prosecution there is Superintendent Frank Anthony Tabone and inspectors Claire Borg and Pauline Bonnello. They are assisted by lawyers from the Attorney General's office, cinzia Azzopardi Alamango and Marthese Grech.
Defence lawyers are Stefano Filletti and Kathleen Calleja Grima.