HSBC Bank Malta’s statement to the press, and my questions to the bank in response to it

HSBC BANK MALTA PLC’S STATEMENT TO THE PRESS THIS MORNING

Title: HSBC Bank Malta on Attard branch correspondence

HSBC Bank Malta notes the continued interest in whether correspondence from the bank’s Attard branch was issued after the branch closed. The bank confirms that certain letters were issued containing the address of Attard branch after its closure due to an administrative error within the bank’s correspondence system and templates. HSBC reiterates that it does not comment publicly on individual customer accounts and relationships.

MY QUESTIONS SENT TO HSBC BANK MALTA PLC IN RESPONSE TO THAT STATEMENT

Please find my questions in writing below as requested. I will be uploading the questions on my website even if no replies, or unsatisfactory replies, are received.

1. Nowhere does the bank’s press statement make specific reference to the information reports issued in May 2013 for the Prime Minister’s chief of staff, Keith Allen Schembri, and his business managing director, Malcolm Scerri. Are the public and the press expected to conclude that these information reports are among the “certain letters” of which the bank’s press statement speaks?

2. I know for a fact, through consultation with former staff and senior executives of HSBC bank, that all templates for a specific branch are kicked out of the system through a standard, checked procedure when that branch closes down, and that there is no way this specific template could have been retained in the system, still less used “by administrative error”. If we are to accept the bank’s explanation that there was an indeed an error in retaining the template for a closed branch, will the bank allay the public’s concerns by explaining how the template was retained with nobody noticing it – still less that it was being used – and what steps are being taken to remedy any such future “administrative errors”.

3. You are asking the public and the press to accept an explanation that is hard to digest, when the experience of all those who have dealt with HSBC Bank is that it is extremely correct with procedure and very careful with documents and systems. You are speaking here not of one “administrative error” but of many, repeated administrative errors. The first was the retention of a template for a bank branch that had closed down, and then we are expected to believe that many other administrative errors followed on from that completely unnoticed: that “certain letters”, which may or may not include, the information reports for two highly politically exposed persons (PEPs), and that these “administrative errors” carried on for an unspecified length of time but certainly for up to 15 months after the Attard branch closed, because that is when the information reports for two PEPs were issued. How do you expect the press and the public, particularly those who are customers of the bank, to believe this?

4. The bank appears to suggest that the Attard template was selected in error. Even if we accept the explanation that the template was retained in error, anybody who has used a computer, and particularly those who have used a computer at a bank or at any other organisation which prints letters and reports on forms, knows that it is not possible to select it in error because all templates are clearly marked and identified for selection. The bank official who issued those two information reports would therefore have had to select – deliberately, and not once but twice – the template marked for the Attard branch (if we accept that it was mistakenly retained). Then, when he or she collected the information reports from the printer, checked them over and folded them to put them in an envelope, he or she still failed to notice the presence of the Attard branch details. Please explain how this was possible in a highly trained bank official.

5. Even if we accept that the Attard branch template was retained by administrative error, and that the bank official who prepared the information reports selected it twice by administrative error, why did the bank official pick the Attard branch in particular? Did the two politically exposed persons in question have a history of banking at that branch? If not, then why Attard?

6. HSBC Bank had, in May 2013, already changed its policy on the issuing of information reports, and was no longer issuing them from individual branches but only from the central office in Qormi. One would assume that any bank official senior enough to issue an information report for a highly politically exposed person would be cognisant of this fact. Is it normal procedure for HSBC Bank to allow information reports for highly politically exposed persons to be produced by bank officials who are 1. unaware of changes to the bank’s policy on information reports, and 2. careless in the selection of templates?

7. There are three information reports in this story: for Adrian Hillman, then chairman/managing director of Allied Newspapers/Progress Press, for Keith Allen Schembri, the Prime Minister’s chief of staff, and for Malcolm Scerri, who handles Schembri’s business operations. Hillman was not known to be a PEP at the time, because his close and secret business relationship with the Prime Minister’s chief of staff had not yet been exposed in the press through the Panama Papers. His information report, as a non-PEP, was issued on 14 June 2013 as standard through HSBC central office in Qormi and carries his identity card number. The other two information reports, for highly politically exposed persons, were issued on the same day a month earlier, on 13 May, on a template retained 15 months earlier through an “administrative error” and then selected twice over in two other “administrative errors”. Those information reports do not carry the identity card numbers for the Prime Minister’s chief of staff and his business handler. How does the bank account for these discrepancies?

8. If HSBC Bank is willing to take on responsibility for two information reports for PEPs which appear to any reasonable person to have been fraudulently issued by a bank insider if not actually forged by third parties using basic photo-editing software on a legitimate old information report (Mossack Fonseca in the British Virgin Islands only required a PDF sent by email, which is how the information reports came to be included in the Panama Papers in the first place), then this places an additional burden of explanation on the bank. Aside from careless in the choice of templates for information reports about PEPs, why did the bank not specify, as it is obliged to do, that Keith Allen Schembri and Malcolm Scerri are politically exposed persons under the law?

9. Did Brian Tonna of BTI Management Ltd (in the case of PEPs Keith Schembri and Malcolm Scerri) and Karl Cini of Nexia BT (in the case of undisclosed PEP Adrian Hillman) inform HSBC Bank of the purpose for which it required the information reports? If not, is it normal policy for the bank to issue information reports without enquiring as to the purpose for which they are required? If the bank did ask for the purpose, and was given an answer, what was the explanation given by Brian Tonna and Karl Cini? Did they give the factual explanation that the reports were required for onward transmission to Mossack Fonseca & Co (BVI) Ltd so that three companies registered in the British Virgin Islands, and undeclared to the Maltese fiscal authorities, which these three clients of your bank own, could be restructured for heightened secrecy? Or did they lie to the bank and give some other explanation?

10. What is HSBC Bank Malta plc’s policy on Maltese clients who are discovered to have hidden companies in offshore jurisdictions and to have been using these companies and related bank accounts for transactions designed to conceal funds from the Maltese fiscal authorities and possibly also to launder money, particularly when these clients are politically exposed persons and members of the current government structure or their close associates?

11. HSBC – through another tranche of leaks last year, Swiss Leaks – has been found to have aided and abetted a then serving government minister (Anthony known as Ninu Zammit) in concealing $3.2 million from Malta’s tax authorities and Financial Intelligence Analysis Unit, and over and above that, advising him on setting up a company in the British Virgin Islands to conceal his identity up ahead of the EU-Switzerland ‘exchange of banking information’ rules coming into force in 2005. Zammit was at the time a government minister. The facts on this matter, including bankers’ notes, were revealed by Swiss Leaks l- and the actual details on his BVI company emerged in the Panama Papers this week. What comfort do the press and the public in Malta now have that the bank is not operating a similar approach with the Prime Minister’s chief of staff, or that it may have opted to conceal the malpractice of an individual or group of individuals within the bank to avoid regulatory censure?

HSBC Bank Malta’s replies to the above questions would be much appreciated, given that this is a matter of serious concern and of public interest, involving as it does corruption at the highest levels of the government of a European Union member state, with possible collusion by bank officials.

Kind regards,

Daphne Caruana Galizia