Deiulemar case being investigated internally by Bank of Valletta

An internal investigation is underway into what sort of due diligence was carried out by Bank of Valletta in offering trust services in connection with the Deiulemar shipping giant of Italy, whose fraudulent bankruptcy is the source of renewed legal trouble for, amongst others, BOV.

A €363 million claim was brought against Bank of Valletta in an Italian court, after liquidators of the Deiulemar group and representatives of 13,000 Italian bondholders, filed a civil claim against trusts held by BOV and another company registered at BOV’s Valletta address on Zachary Street – Banco Svizzero d’Italia Trust Corporation Limited Malta – whose parent company is the Swiss bank BSI, of Lugano.

The bank has told MaltaToday it is conducting an investigation into the kind of due diligence carried out when it became a trustee for Trust Capital Trust, Trust Gaino, and Trust Gilda – which are being called on to answer for the €363 million claim.

“The bank as usual investigates on a regular basis all incidents that affects its operations. The Deiulemar case is no exception,” a spokesperson for BOV told this newspaper.

Bank of Valletta only recently issued a statement concerning legal action from Italy which were filed by the Deiulemar liquidator as early as February 2014.

Asked why it took the bank over a year to formally announce the proceedings, the bank said it was only in November 2014 that a quantifiable claim was first made against BOV.

“Immediately we received the notification we took the following steps: we appointed an Italian legal firm to represent us in court in Italy. We also asked them to review thoroughly the documents presented in the Court of Torre Annunziata and the internal documents of the Bank on this case.

“We also immediately informed our regulators, the MFSA and the Joint Supervisory Team that includes ECB officials. A number of board meetings were held to discuss this case and to hear the advice of our auditors as well as of our legal consultants.”

The bank said that on 2 April 2015 it received the final advice from its lawyers stating that the bank had a strong legal position and that no provision was felt necessary at this stage.

“This advice was sent to our auditors and our regulators, including the ECB. They all agreed with the board’s decision to issue a company announcement that was published on 2 April 2015.

“We are keeping in touch with our lawyers, auditors, and regulators to monitor the situation constantly and when the need is felt the bank will keep the market informed of developments.”

But the bank would not give any details as to whether a reduction from €603 million in trust assets in 2013, to €337 million in 2014 was related to the trusts held in connection with the Deiulemar group. “We cannot give details on a particular trust unless we have a legal obligation to do so. So I cannot reveal the information requested in your question.”

Italian town wants money back

The €363 million claim is the tip of the iceberg of a story of massive fraud that took place in southern Italy, where over 13,000 bondholders had their savings wiped out.

Investors in the Neapolitan province of Torre del Greco have protested the loss of their investments following the €800 million fraudulent bankruptcy of shipping giant Deiulemar.

In July 2014, seven members of the three founding families of ship-owner Deiulemar were jailed for up to 17 years for illegal financial transactions as the company collapsed. It was declared bankrupt in 2012 owing more than €800 million.
They were found guilty of fraudulent bankruptcy, having transferred their assets to Maltese, Swiss, and British Virgin Islands trusts to avoid their exposure to creditors and the 13,000 retail investors from Torre del Greco who subscribed to their bonds.