Pilatus Bank case being heard behind closed doors for fear of ongoing ICSID dispute

The court case dealing with how and why senior officials at the now infamous Pilatus Bank have not yet been prosecuted is being heard behind closed doors for fear of contaminating an ongoing case that the bank’s former chairman, Ali Sadr Hashemi Nejad, instituted against Malta before the World Bank’s International Centre for Settlement of Investment Disputes.

The request to testify behind closed doors was made on Tuesday morning by Attorney General’s Office lawyer Fiorella Fenech Vella, Attorney General Victoria Buttigieg and State Advocate Chris Soler.

It was acceded to by Judge Christian Falzon Scerri who has been tasked with hearing the case filed by Repubblika, which is requesting confirmation that the Maltese authorities had given an order for the officials to not be prosecuted.

The Shift first reported the ICSID case on 17 September, revealing how Ali Sadr launched a counterattack on an international level in an attempt to fend off Malta’s law enforcement authorities.

An urgent request was filed through Alpene Ltd, a Hong Kong-based company owned by Ali Sadr, in front of the ICSID, which, among other matters, asked for Malta’s proceedings against him and the other related parties, including criminal proceedings, to be immediately suspended.

The ICSID largely acceded to Alpene’s request, effectively ordering all related criminal proceedings by Malta to stop until the ICSID decides on the case.

The extraordinary request forms part of a wider ongoing case taking place behind closed doors, brought by Ali Sadr-owned Alpene against Malta, where the company is claiming millions of dollars in damages.

The case was filed 13 days after Police Commissioner Angelo Gafa announced in early August 2020 that police were close to “solving a big case … which people thought we were doing nothing about”.

After an animated exchange of submissions between Repubblika lawyer Jason Azzopardi and Soler, Judge Christian Falzon Scerri did not dismiss the case but ruled that it would be heard behind closed doors.

Azzopardi argued that bending to the ICSID’s ruling was a “humiliation, it’s the spin that’s been going on out there. No, there is no foreign body that binds, or impinges upon this court.”

Soler argued that the defendants could not even bring evidence of the ICSID’s decision to the court.

According to AG Buttigieg, an order to reveal the details of a criminal investigation would “breach the presumption of innocence” as protected by the Constitution of Malta and the European Convention on Human Rights. That argument was dismissed in a decree issued on Monday.

Azzopardi is alleging, on behalf of Republikka, that AG Victoria Buttigieg had issued a nolle prosequi— an order to not prosecute — Ali Sadr, operations supervisor Luis Rivera, bank director Ghambari Hamidreza and another bank official, Mehmet Tasli.

On 20 August 2020, Alpene had sent a letter through US law firm Steptoe & Johnson notifying Malta of the existence of a ‘dispute’ and its intention to eventually bring proceedings under the bilateral investment treaty between Malta and China.

A year later, in June 2021, noting that Malta had ignored its letter, Alpene filed a formal request for arbitration against Malta before the ICSID.

The ICSID is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States, known as investor-state dispute settlement, or ISDS.

The choice of using his Hong Kong company Alpene and dragging in Malta’s 2009 Bilateral Investment Treaty (BIT) with China not only offers Ali Sadr strong protections but also potentially places Malta at odds with China, a country Malta has been increasingly courting for large investments. A breach of Malta’s BIT with China would place such investments in jeopardy.

Alpene claimed that Pilatus Bank was effectively expropriated and that Malta was “engaging in malicious investigations and harassment”. Alpene also claimed that threats of criminal prosecutions against Ali Sadr or even leaks of conclusions of criminal inquiries represent continued forms of harassment “in retribution” for bringing the ICSID arbitration against Malta.

On 14 September, the ICSID accepted Alpene’s arguments and ‘recommended’ a suspension of all proceedings by Malta, including criminal proceedings, that could affect Alpene’s rights under the relevant treaty, including its right to call witnesses such as Ali Sadr, until the tribunal has conclusively decided the case.

The ICSID’s recommendations are considered to be binding.