In the shadow of Kočner: former son-in-law challenges MFSA ban

A financial services practitioner is fighting a ban from the Malta Financial Services Authority, accusing it of having no basis but his previous association with his former father-in-law Marián Kočner, the Slovak businessman accused of commissioning the murder of investigative journalist Ján Kuciak.

Christian Ellul, son of entrepreneur Helga Ellul, a former PN candidate for Europe, presented a raft of documents in his appeal before the Financial Services Tribunal to contest a five-year ban on his corporate services activities by the MFSA.

The MFSA fired its first warning shot against Ellul in late November 2019 shortly after charges were filed against Kočner in Slovakia, when it was revealed that Ellul’s E&S Consultancy had set up two companies for Kočner in 2010. At the time, Ellul was married to Kočner’s daughter.

The MFSA highlighted Ellul’s association with Kočner in the past, as well as a decision by the Malta Gaming Authority that found Ellul not ‘fit and proper’ to hold a gaming licence which he is contesting in a court of law.

But Ellul accused the MFSA of closing an eye at “dishonesty and criminal acts in the institutions and persons linked to licence-holders”, after suspending his consultancy firm’s licence.

Christian Ellul and Karl Schranz

Ellul accused the MFSA of landing him with a disproportionate five-year ban on his corporate service activities, when it had only given the directors in the Falcon Funds fiasco – where €247 million in Swedish savers’ money was lost by a Maltese investment management firm – a two year-ban while still being allowed to retain their previous appointments.

“It is clearly evident and known that the Authority has regularly and habitually deemed persons who have been subject to criminal investigations or who have been arrested and convinced of crimes, to still satisfy the fitness and properness criteria,” Ellul said, protesting the MFSA’s decision to render him unsuitable to hold licenced positions due to his links with former father-in-law Marián Kočner.

“I have never committed any offences, never been arrested, investigated, been subject to any criminal inquiry, charged or let alone been convicted of a crime, all of which might justify such an unprecedented aggressive regulatory action.”

Kocner links

Only weeks ago, a Slovak court acquitted the well-connected businessman Marián Kočner of ordering the 2018 murder of Kuciak, a case that rocked the nation with its obvious similarities to the assassination of Daphne Caruana Galizia. The multi-millionaire and two suspected accomplices were accused of the February 2018 killings of Kuciak and his fiancee Martina Kusnirova, both 27. They were gunned down at home after Kuciak wrote several stories on graft and the shady dealings of the high-powered entrepreneur with ties to senior government politicians.

In Malta, Ellul is now protesting the MFSA’s decision to consider that his past links to Kočner as “exacerbating the Authority’s concern” on his fitness and properness.

Ellul said in his complaints to the authority before the FST, Ellul said the companies set up by Kočner in 2010 and 2011 were holding companies for immovable property in Slovakia and that due diligence was carried out on the company UBOs. Ellul later divorced Kočner’s daughter in 2013, with his former father-in-law acting as co-director of the companies for the purpose of putting them into liquidation. The liquidation of the two companies – International Investment Holdings and International Finance Group – took years, a process Ellul claims prevented him from abandoning his post on the company.

When Ellul was made aware in 2018 of Kočner’s alleged involvement in the murder of Kuciak, he took the decision to resign all posts held in connection with the millionaire. The lawyers for E&S Consultancy said both Ellul and his partner Karl Schranz were aware of the charges filed against Kočner, “however these happened over a year after termination of all services to the said companies and it is rather draconian that the appellant company should be held accountable and guilty by association for charges filed against Marian Kočner after termination of its services.”

Ellul insisted that neither the FIAU nor the MFSA had sent his company any reprimands or fines on due diligence checks after a March 2017 inspection. “The information provided by the MFSA in the minded letter and in the final decision relates to a number of allegations contained in articles and blogs. However, none of the information provided refers to court judgements, or final decisions or arrests on the said allegations,” Ellul’s lawyers told the MFSA.

“Throughout the provision of services to the companies in question, there were no situations within the companies which would have triggered reporting to the MFSA or the FIAU.”

Ellul said E&S’s shareholding in the two Kočner companies were of one share with no rights of dividends or voting rights. “The Authority, in attempting to build its case at any and all costs, irresponsibly mentions a number of links, some of which don’t even refer to Marian Kočner and others that are dated after the termination of our services to him… how can we be held liable for matters that arose after our termination?”

Ellul also referred to a €4 million transfer that passed through Bank of Valletta, which movement was flagged to the FIAU by Malta and Slovak financial police, but which funds were ultimately released to Kočner’s account in Slovakia. “There was no connection between E&S, [related companies] SOLV, RES, myself and the said bank account in BOV. It seems BOV were more than happy to open thee personal bank account for him. I can only imagine that obviously BOV have not been reprimanded or fined and they obviously did not lose their banking licence with regard to this matter.”

In a further letter to the MFSA’s Marianne Scicluna on 17 December 2019, Ellul again protested the MFSA’s decision to invoke a previous decision by the Malta Gaming Authority to consider him of “insufficient integrity and good repute” – a decision that E&S has challenged in the Maltese law courts.

“The MGA’s determination of E&S was based simply on unfounded articles and blogs making claims which to date have not been substantiated. The mind boggles how articles and blogs which are outside my control and contain no veracity or truth, and the fact that the MGA based their assessment solely on such, is therefore a stain on my reputation without giving me the right to defend myself,” Ellul wrote in his letter.

“How can this be the yardstick by which the authority purports to measure fitness and properness of persons when there are number of persons linked to licence holders, or licence holders themselves, who are themselves subject to criminal investigations and who have bene directly linked to corruption, money laundering and other serious crimes and they miraculous are still deemed fit and proper and are still licenced by the authority?”

This was Ellul’s reference to Yorgen Fenech, the Tumas magnate charged with allegedly masterminding the Caruana Galizia assassination. Ellul queried whether the MFSA would take a similar stance on Fenech’s companies. “Am I to understand that the MFSA will take the same stance in relation to licence holders or persons connected to licence holders who have very long-standing business relationships with Yorgen Fenech or any of his and his family’s companies?... Will it also have serious concerns with regard to the lawyers that represent the Authority and who are themselves licence holders and who have sat on boards and have been company secretaries on Yorgen Fenech’s companies? [Or] the Banks that have managed their bonds and the stockbrokers?”

Ellul then drew a comparison with the MFSA’s decision to terminate the banking licence for Pilatus Bank after the arrest of Ali Sadr Hasheminejad, who has since been acquitted in an unprecedented termination of American charges against him on an alleged $115 million transfer of funds from a Venezuelan housing project to his Iranian father’s company in Europe.

“I of course have not been arrested and charged with any crimes, and I also have not been a director and owner of a financial institution… I can only hope that the Authority is not putting me in the same shoes as Hasheminejad.”