Sanctions by the US Treasury Department cannot stop a locally registered assurance company from releasing funds to former footballer and suspected fuel smuggler Darren Debono, a civil court has ruled.
Debono is facing investigations for alleged international fuel smuggling. The US imposed sanctions against Debono and three other Maltese in February 2018.
As a result, HSBC Life Assurance (Malta) had refused to release funds Debono held with them under a Savings Plan and a Private Retirement Plan.
The company argued that it could not release the funds for regulatory reasons, since its parent company's shares are listed on the New York Stock Exchange and it is therefore prevented from making the payments since it is regulated by the US government.
It further pointed out that the Malta Financial Services Authority had urged local companies to observe the US sanctions "when conducting business activities in view of the wide-ranging applicability of these measures and the risk of significant financial actions which may have serious implications on their business activities."
The court, presided by Mr Justice Grazio Mercieca, said it agreed with another court judgment that had authorised the release of funds to a company, also requested by Debono, this time from a bank in the same circumstances. The court had argued that sanctions by another country could not have an effect on another sovereign country, as was Malta.
Mr Justice Mercieca said the current case was somewhat different in that the request was being made for the release of funds by an assurance company controlled by a parent company listed on the NY exchange, with the risk that the company could suffer heavy fines and its directors could be held criminally responsible in the United States.
But these differences, the court said, did not alter the fact that the life assurance company was incorporated under the laws of Malta and it was therefore subject to the laws of Malta, not another other country's.
Mr Justice Mercieca said he also agreed with the reasoning of the court in the fiprevious case that the situation was not specified as part of the contractual relationship between the client and the bank, and now the assurance company.
The court observed that the assurance company had not shown that the sanctions had been incorporated into the laws of Malta or that, directly or indirectly, the policies covered a situation such as this involving sanctions.
The company's argument based on regulatory requirements abroad did not hold water since the company was registered in Malta and fell under Maltese law.
The court did observe, however, that Darren Debono's assets were under a freezing order issued by a Maltese magistrates' court on November 25, 2020.
The freeze was ordered as part of proceedings against Debono and others for alleged money laundering and smuggling offences.
The court therefore decided that the life assurance company must release the funds requested by Debono, but only once the local freezing order is lifted.
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