Updated 5.40pm

Malta woke up on Wednesday to read of news that Pilatus Bank chairman Ali Sadr Hashemi Nejad had been arrested in the United States, and within minutes the reactions began pouring in.

The country's financial regulator spent much of the day deliberating before announcing that it was ordering Mr Sadr to step aside as bank director and would be suspending his voting rights as bank shareholder. 

But well before that decision was communicated, many of Malta's movers and shakers had made their views about Mr Sadr's arrest known. 

Paul Caruana Galizia, Daphne Caruana Galizia's son, summed up the development in a two-word tweet - 'One Down.' He and his brothers subsequently issued a lengthier statement in which they said the arrest "ended the impunity with which Hashemi Nejad operated....but comes at a terrible cost." 

Prime Minister Joseph Muscat, when asked by Net News whether Pilatus Bank's banking licence would be revoked, said that was up to the MFSA’s supervisory council, which acted autonomously.

Reacting to various other questions, he said that the bank applied for a Maltese licence in 2012 (under the PN) and although it was granted a licence in 2013 under the Labour government, the MFSA was still composed of people engaged by the former government.

That reaction prompted Opposition leader Adrian Delia to call on Dr Muscat not wash his hands of the matter, in a Biblical play on the name Pilatus. "Suspend Pilatus Bank licence now!" he insisted.

Dr Delia said approval of the bank's licence had been rushed through in four weeks by the government, and that Malta's financial services reputation was being tarnished across the world it. 

Former Opposition leader Simon Busuttil wrote that the wheels of justice have started to turn. 'Pilatus is caught and he can no longer wash his hands in Malta.' 

Nationalist MP Jason Azzopardi said Finance Minister Edward Scicluna had to explain why Pilatus Bank was given a clean bill of health in September 2016 by FIAU Deputy Director Alfred Zammit. "Who bribed whom?" he asked.

Prof. Scicluna was less than forthcoming when asked for a reaction by Lovin Malta, telling a journalist "come on, these are serious things" when asked whether Pilatus Bank's licence would now be revoked. 

Jonathan Ferris, the inspector who was sacked by the FIAU, said this appeared to be 'the beginning of the spring clean'  

MEP David Casa said he had been requesting the revocation of the Pilatus Bank licence since December 2017, and given the developments, it should be revoked immediately.  

“The arrest of the Chairman of Pilatus Bank Ali Sadr Hashemi Nejad in the United States has further exposed this bank as a criminal organisation. It is disgraceful that this bank was ever given a license to operate in Malta. It is even more disgraceful that this bank was allowed to continue to hold that license despite the overwhelming evidence of the bank’s involvement in criminal activity," he said in a statement.

READ: Pilatus Bank chairman arrested in the US

"The FIAU has been aware that Hasheminejad was being investigated by FinCEN since at least 2016. In the report that shows how this bank laundered the kickbacks Keith Schembri received from Brian Tonna for the sale of passports, reference is made to Hasheminejad being investigated for illicit money transfers in another jurisdiction.

"In addition, MFSA representatives sat across from MEPs last December and told us how thorough their due diligence processes were on Pilatus Bank. These institutions are either complicit or so incompetent it beggars belief.

"I reiterate my call on MFSA chairman and its Supervisory Board to desist in the irreparable damage they have caused to Malta’s reputation and to revoke Pilatus Bank’s licence immediately.

His MEP colleague Roberta Metsola asked how, hours after the chairman of  Pilatus Bank was arrested in the US, Malta’s Police Commissioner had not yet directed his force to investigate the bank’s HQ in Malta? 'Has anyone seen him?'

Nationalist MEP Francis Zammit Dimech said it was ironic that the Pilatus Bank chairman, who tried to institute legal proceedings against Maltese media houses and journalists in the United States in an attempt to silence them, had now been arrested on US charges.

He asked why the MFSA took so long to investigate the bank associated with corruption and money laundering involving the Prime Minister’s chief of staff and politically exposed persons from Azerbaijan.

Dr Zammit Dimech called for the bank’s license to be revoked saying the whole issue was damaging the financial sector in Malta which employed thousands of employees.

Political commentator David Thake referred to the time when Mr Sadr was filmed taking luggage out of the bank's Ta' Xbiex offices at night and heading for the airport. At the time the Police Commissioner was interrupted during a fenkata, but took no action.

Mr Thake commented: "Ali Sadr was shocked to see that the NYPD does not eat rabbit while he goes about his dirty business." 

BEDINGFIELD WAITING FOR JUSTICE TO TAKE ITS COURSE

The first reaction from the Labour side was by MP Glenn Bedingfield, a close aide of the Prime Minister's.

Mr Bedingfield wrote on his blog: 'The charges brought against him are not related to his Malta registered bank Pilatus. As the text of the Bill of Indictment itself cautions toward the end, “the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation”. He said he would await justice to take its course. 

The chairman of the Democratic Party, Anthony Buttigieg, asked a series of questions about how the government will react - see his post below.

PD member of Parliament Godfrey Farrugia added his voice to the chorus, noting that although from publicly available information, Pilatus Bank did not yet appear to be directly implicated, the transactions were made via Switzerland where the bank's holding company is domiciled.

"It does not need much to conclude that if the chairman of a bank is alleged to be crooked, it is very likely any organisation he leads may be used as a vehicle for criminal activity," he said.

Dr Farrugia said it was evident that proper due diligence was not conducted by MFSA when Pilatus was given a licence, noting that the developments today have more weight to the FIAU reports which were leaked and more credence to the allegations made by whistleblower Maria Efimova and Daphne Caruana Galizia.

PN SHADOW SPOKESMAN MARIO DE MARCO

Shadow finance minister Mario de Marco called for swift action, saying that Malta's reputation had already been tarnished over the past four years because of inaction. He also pointed out that Pilatus Bank was at the centre of "many if not all of the stories that were leaving dents in the good name of our country".

The reputation of any banker or politician cannot be and should not be protected at the sake of our country’s reputation

"Despite reports by the Financial Intelligence Unit, despite calls by professional bodies, despite reports by the European Parliament, despite substantiated reports in the local and international media, the government of Malta and our institutions remained steadfast in their refusal to take action against those who were damaging Malta’s reputation. That reputation is now facing is biggest threat.

"The reputation of any banker or politician cannot be and should not be protected at the sake of our country’s reputation. Those who were at fault, those who turned a blind eye, those who failed to act now need to shoulder their responsibility. I include Minister [Edward] Scicluna in this list. This is time for a thorough spring cleaning," he said in a statement.

MPs have their say in a rowdy parliamentary session

Lawmakers learnt of the MFSA decision to suspend Mr Sadr as they were debating the day's events, and the financial regulator's statement did not stop MPs from weighing in with their opinions about what to do with the beleaguered bank. 

Finance Minister Edward Scicluna's promise of "significant" measures did not impress Opposition economy spokesperson Kirsty Debono, who said she would have expected Pilatus Bank's licence to be revoked.

Dr Debono said that the financial services sector was very sensitive and depended a lot on reputation and adequate due diligence.

Former Opposition leader Simon Busuttil said Mr Sar's arrest in the US gave the Opposition new hope that justice could be done. 

Dr Busuttil said Prof. Scicluna had pointedly avoided mention of the money laundering charges Mr Sadr faced, adding that he had lost count of how many times this Labour government had been implicated in that same crime.

His question he said, was to the minister - “When will you stop going round in circles, when will you close the bank once and for all, when will action be taken about the FIAU reports, when will you shoulder political responsibility for damage being done to the country?”

Replying, Prof. Scicluna noted that the US had been careful not to mention any of the banks involved in its bill of indictment of Mr Sadr. 

One had to be prudent and that was why the MFSA took its time, he said, saying he was confident that the FIAU had cooperated and would continue to cooperate with law enforcement agencies both within and out of the EU.

He accused the Opposition of intentionally hindering investigations, first leaking documents and then using the leaks to claim institutions were not taking action.