The FIAU report on Pilatus Bank reads “… the Committee could not in any way ignore the Bank’s direct or indirect exposure to a series of connections with figures from the Caucasus region considered to present extreme risks of money laundering”.
It then concludes that “The Bank’s total disregard towards necessary AML/CFT safeguards, led to it allowing millions to pass through the Maltese economy without any consideration of possible money laundering taking place”.
The bank is within its rights to legally contest this. Our jurisdiction, thankfully, allows this freely. It also considers degrees of involvement, lest this turns out to be some travesty with those on the lower levels paying the price for those higher up.
While this legal dimension is kept unprejudiced, the damaging effect on our economy and our national reputation are such that political responsibility simply cannot be ignored if we are to move out and move on.
Who, by act or omission, has allowed this to happen and undermine over 30 years of hard work and huge investment by so many?
Who has failed to act with the first clear warning signs out for all to see? Who benefitted and still benefits from such glaring failure?
Pilatus has been at the centre of controversy ever since leaked financial intelligence reports highlighted suspicion of money laundering and serious compliance shortcomings in 2016, one year before Labour Party supporters celebrated their electoral victory, manifestly crediting the bank for having contributed to the outcome.
It had to be the European Central Bank in November 2018 to have the bank closed down.
Yet, the bank was subject to purportedly a thorough compliance process in 2016. After initial deficiencies were flagged, a second on-site examination was agreed to. This led the FIAU to conclude that these deficiencies, including insufficient documentation to prove the legitimacy of certain funds and the ease with which politically exposed persons transacted without the level of scrutiny required by law, “no longer subsist”.
“No longer subsist.” The questions flow naturally.
Did the insufficient practices which have just resulted in a record penalty emerge after 2016 or were they there before?
If they were there before, exactly what “no longer” subsisted and who assumed the responsibility for this definitive conclusion?
What happened between then and now when the same issues are condemned by the same authority which dismissed them barely four years ago?
It is worth recalling that there was initial reluctance to issue the banking licence in the first place as the then applicant had no prior banking experience. This reluctance was inexplicably set aside or overruled.
That initial reluctance was priceless.
One may here identify a modus operandi and recall the Labour government’s decision to gift public hospitals to an unknown group of individuals who did not even have one single day’s experience operating a clinic, let alone a hospital; let alone three.
Administrative improvement does not and should not absolve political responsibility- Alex Perici Calascione
The Sunday Times of Malta editorial of September 5 reflects: “Pilatus Bank has inflicted irreparable damage to the country’s reputation, to the perception about its competence and to the integrity of its political leaders and heads of regulatory bodies.”
If Pilatus has done this, it is because it has been able to do it with shocking and disturbing ease. This demands a full reassessment.
Administratively, our regulators need to look back in order to plan ahead better. They can only function with adequate human and infrastructural resources. Even then, they can only function well with full independence, which they themselves should be the first to demand and defend.
Politically, those involved need to look back in order to assume before the country, undeserving of this mess, their respective heavy and determining responsibilities. Administrative improvement does not and should not absolve political responsibility.
The same editorial continues: “Trust in a financial jurisdiction takes decades to build and only a few months to destroy.”
Those decades represent hard work and large investment by many professionals who have promoted and enhanced our national reputation internationally.
Those decades represent today the livelihood of thousands of employees in banks, institutions, funds, gaming, professional firms and their families.
Those decades represent more people across the board who provide a whole range of services to employees in financial services and their employers.
Those decades represent the rightful aspirations of our present and future young generations who expect their leaders to strengthen all that which can further these aspirations and not undermine them.
As the reality and gravity of the fallout from Pilatus and the list of sagas and scandals start to sink in, the task of rebuilding our national reputation looms larger and heavier.
Face it we must, we can and we will.
Those who brought about this state of affairs must shoulder their political responsibility. Those who did not, must assume the responsibility of leading us out of it.
This responsibility falls squarely on the Nationalist Party at this determining juncture. We must move ahead, with full awareness even of our realities and imperfections.
The Nationalist Party was not perfect when it established Malta as an independent state. It was not flawless when it restored a shaken democracy and ushered in the technological world at the time in the late 1980s. It had its failings when it spearheaded an enviable financial services centre.
It had its shortcomings when it fought, together with others, for us to join the European Union with the subsequent flow of capital and potential into our economy. It had its problems when it guided, wisely and securely, our country through the worst global economic and financial crisis in over 100 years.
The Nationalist Party is still imperfect today and still has a lot to learn. It does, however, have the required credentials and experience to once again succeed in establishing and maintaining that high reputation that we urgently need to regain.
We are fully determined to do so. We can only succeed if we walk this path together.