Ali Sadr SLAPPs Malta police, criminal proceedings ‘suspended’

Tista’ taqra dan l-artiklu bil-Malti hawn.

As pressure mounts in Malta for the police to take action against those listed in the Pilatus Bank inquiry conclusions, its Iranian owner Ali Sadr Hashemi Nejad has launched a scathing counterattack on an international level in an attempt to fend off law enforcement authorities.

Through Alpene Ltd, a Hong Kong-based company owned by Ali Sadr, an urgent request was filed in front of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

Among other things, the request was for Malta’s proceedings against Ali Sadr and other related parties, including criminal proceedings, to be immediately suspended.

Last Wednesday, the ICSID largely acceded to Alpene’s request, effectively ordering all related criminal proceedings by Malta to halt until the ICSID decides on Alpene’s case against Malta.

This extraordinary request forms part of a wider ongoing case taking place behind closed doors brought by Ali Sadr-owned Alpene against Malta, claiming millions of US Dollars in damages.

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

The press understood that to be Pilatus Bank, and it seems so did Ali Sadr.

On 20 August 2020, Alpene 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.

Malta does not seem to have rebutted this letter or even replied. 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.

An international press investigation nominated for a Pultizer Prize focused on ISDS, such as that by the ICSID, described it as “a private, global super court that empowers corporations to bend countries to their will.”

What has Malta’s treaty with China got to do with Pilatus Bank?

Ali Sadr’s move to resort to the ICSID was described by lawyers consulted by The Shift as “particularly shrewd”.

The choice of using his Hong Kong company Alpene and dragging in Malta’s 2009 Bilateral Investment Treaty (BIT) with China not only offers 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.

Recommendations by the ICSID are considered binding.

Ali Sadr wants millions of dollars in damages

Alpene is claiming that Malta’s actions against the shuttered Pilatus Bank, through the cancellation of its licence (a decision by the European Central Bank) and the resulting winding down of the bank, effectively amounted to expropriation by Malta.

It is claiming millions of US Dollars in damages.

Alpene argues that Malta’s actions against Pilatus Bank were solely motivated by US charges against Ali Sadr.  The proceedings were later ‘bungled’ by US prosecutors resulting in his exculpation notwithstanding a jury finding him guilty of sanctions-busting.

The Hong Kong-based company also claims that Pilatus Bank was unfairly targeted by Malta and essentially used as a “scapegoat” for Malta’s FATF greylisting. Pilatus Bank itself and its money laundering reporting officer and in-house lawyer have been charged in Malta with money laundering.

Lastly, and perhaps yet more misleadingly, Alpene claims that Maltese authorities only threatened criminal proceedings after Malta received Alpene’s letter of 20 August 2020, alleging that this was ‘evidence’ of further harassment and clearly in retaliation for claiming a dispute.

The request for ‘provisional measures’ made on 20 July by Alpene built on that “retaliation” narrative, effectively flipping the script on Maltese prosecutors.

The challenge ahead for Malta is not an easy one.

Efforts by Malta’s Office of the State Advocate suffered a blow earlier this year as the ICSID rejected Malta’s request to get Alpene’s arbitration thrown out, concluding that Malta has a case to answer. Attempts to reach the State Advocate have so far failed.

The ICSID’s decision last Wednesday, effectively ordering the suspension of local criminal proceedings until the ICSID decides the arbitration, is another heavy blow.

In the hands of ‘a private global super court’

Journalist Chris Hamby earned a Pulitzer Prize nomination for his 2017 investigation of investor-state dispute settlement tribunals, including the ICSID.

He described it as “a parallel legal universe, open only to corporations and largely invisible to everyone else, (that) helps executives convicted of crimes escape punishment.”

“A private, global super court that empowers corporations to bend countries to their will.”

Hamby reported: “This court is so powerful that nations often must heed its rulings as if they came from their own Supreme Courts, with no meaningful way to appeal.”

“It operates unconstrained by precedent or any significant public oversight, often keeping its proceedings and sometimes even its decisions secret,” he adds.

The option of investor-state dispute litigation stems from a web of more than 2,800 agreements between countries known as bilateral investment treaties or BITs under which signatory countries mutually promise to allow investors from the other country certain rights and protections.

Countries religiously seek to comply with such treaties to respect their international commitments but also because a breach of an investment treaty could scare off foreign investment.

The people who decide investor-state dispute cases are “largely elite Western corporate lawyers who have a vested interest in expanding the court’s authority because they profit from it directly, arguing cases one day and then sitting in judgment another,” Hamby reported.

He adds that some of them half-jokingly refer to themselves as “The Club” or “The Mafia.”

Perhaps this is where the Labour government’s interests and Ali Sadr’s will again converge.