Sberbank in Malta court victory over Palmali shipping fraud

A Maltese judge has found in favour of Sberbank, a leading Russian bank registered in Moscow under international sanctions, against a number of Maltese shipping companies owned by the Palmali shipping group.

The case involves the Istanbul-based shipping conglomerate based in Malta for the last 20 years, which is also the subject of a massive asset freeze after owner Mübariz Mansimov, an Azeri-Turkish billionaire, was imprisoned over links to the Gulen coup in Turkey.

Mansimov was arrested back in 2021 over alleged Gulen links. He had based his shipping empire almost in entirety in Malta for its friendly tax laws for the maritime industry. Mansimov was arrested in one of the highest-profile detentions of a crackdown against suspects linked to the 2016 coup by a network tied to U.S.-based Muslim cleric Fethullah Gulen, which President Tayyip Erdogan blames for the failed putsch in which about 250 people died.

In the Malta case, a judge found that Mansimov’s Palmali group had carried out bad faith transactions in a bid to fraudulently bankrupt the shipping companies in Malta, in a bid not to repay a series of Sberbank loans, and called out the malicious scheming of Mansimov in the entire saga.

Sberbank made four loans to two Russian companies – Palmali Caspian Offshore Project and Palmali Company, which loans were secured by Palmali Holding (PHL). The bank had accepted the guarantee as it was aware that PHL owned several ships, all held under subsidiaries in Malta such as Palmali International Holding, Palmali International Holding Two, Palmali Logistics, Palriver Shipping, Palocean Shipping and Palsea Shipping.

As security for the loans, Sberbank obtained a personal guarantee from Mansimov, his Turkish companies, as well as 47 naval hypothecs in the Russian maritime registry over ships belonging to Palmali.

Eventually, Palmali defaulted on the loan and Sberbank turned to the guarantor to pay the €164 million balance. But this was never repaid.

As a result of this, Sberbank obtained precautionary warrants from the Maltese courts, seizing shares owned by Palmali in its direct subsidiaries, as well as opening an arbitration in London courts.

But it was here that Sberbank learnt that a few days after the precautionary warrants were issued, Palmali Holding transferred all its shares in its direct subsidiaries, in favour of Mansimov’s Turkish company Gunesli. This effectively decimated the finances of Palmali Holding.

In turn, Gunesli’s shares were acquired by another Mansimov-controlled company, Palmali Holding AS in Turkey, just a few days after Sberbank filed proceedings in Malta.

Sberbank successfully argued that had been was a fraudulent transfer intended to diminish the capital of Palmali’s direct subsidiaries, with 35 Malta-flagged ships being transferred to the indirect possession of Gunesli.

Sberbank said that Palmali’s deregistration of its 56 companies in Malta had been an “obvious attempt” to prevent or lengthen notification procedures, done in bad faith, illicitly and with fraudulent intent, to prevent Sberbank from recovering the debts due.

Mr Justice Neville Camilleri ordered the repayment of a US$ 10 million tranche to Sberbank.

Sweeping Western sanctions targeted Russia’s financial system after Moscow sent tens of thousands of troops into Ukraine in February 2022, with Sberbank being one of several major Russian banks to have been blocked from the international SWIFT payments system and some senior executives being personally hit by sanctions.

Sberbank’s European arm, based in Vienna, was closed by order of the European Central Bank in March, after the ECB warned that the bank faced failure due to a run on deposits. On 21 July 2022, the EU expanded its Russia-related asset freeze list, with 11 entities, including Sberbank, ordering the termination by August 2023 of operations, contracts, or other agreements, including correspondent banking relations concluded with the bank; and the sale of any proprietary rights directly or indirectly owned by Sberbank in an EU entity.