Delia Explainer: What Happened To The PN Hopeful’s Current Account At BOV?
The Nationalist Party leadership election is in two days’ time and suspicions continue to hover over Adrian Delia’s financial situation, despite the leader hopeful’s frequent explanations. We have spoken to Delia himself, as well as to other professionals, so as to get to grips as to what is going on and who is telling the truth.
1. OK, so what on earth is going on anyway?
Adrian Delia’s foray into politics has been something of a baptism of fire. The lawyer was revealed to have owned an offshore account in Jersey over a decade ago, which was allegedly used to launder money earned from a prostitution ring run by his clients in Soho.
Since then, he was asked by the PN administrative council itself to withdraw from the race, faced questions on a €7 million loan by a development consortium he is involved with, and his personal lawyer was kicked out of the PN after he admitted to having been a freemason. Now, with time ticking until the election, he is facing fresh questions about why Bank of Valletta had closed down some of his accounts.
2. Closed down one of his accounts?
This was first published three days ago by Daphne Caruana Galizia, in a brief blogpost which said BOV closed down his current accounts earlier this year following a recommendation from the bank’s wealth management division.
A few hours later, Delia said Caruana Galiza was referring to an account (singluar), which wasn’t his own, but of a client of his. He said the bank closed the current account down because his client was using it for trading purposes, when it should have been a mere personal account. After closing the account down, the bank then opened a separate trading account for Delia’s client, this time under the client’s name.
The next day, he informed the press he had asked BOV to mail him bank statements of his active bank accounts so as to disprove Caruana Galizia’s claims.
3. What did the bank statements reveal?
Delia today published two BOV statements showing he has an active savings account and an active overdraft account, the latter of which is a facility offered to people used by people to get instant money while they are waiting for debts to be repaid.
The amounts of money he had deposited in his savings account and had withdrawn from the overdraft account were not disclosed.
Notably, the bank did not send him a statement for a current account, used for everyday banking needs – which means it had either been closed down or never existed in the first place.
4. So where is Delia’s current account?
That is the big question right now.
Sources close to Delia have told Lovin Malta he doesn’t use Bank of Valletta for everyday banking and has a current account at another bank. However, Caruana Galizia has insisted the current accounts (plural) the bank closed down earlier this year did not actually belong to Delia’s client, but to Delia himself.
“When commercial banks open up a savings account for somebody who is in work, there is always a current account associated with it. And if [Delia] has an overdraft account, which he does, it follows that he also has a current account.”
Lovin Malta spoke to two bankers from different banks- they said it is rare, but not technically impossible, for people to open savings accounts and overdraft accounts without them being associated to pre-existing current accounts.
5. Let’s rewind a bit…what is Delia’s explanation?
I called up Delia’s PRO this afternoon to ask whether the current account which BOV had shut down had been registered in Delia’s name or his client’s. I ended up having a 16-minute conversation with Delia himself about this account, during which he got quite passive aggressive.
“As a matter of fact, I never had any problems with BOV and I never did anything wrong. This account was a clients’ account – an account registered in my name but for my client. This means the account belonged to me, but the funds belonged to my client.”
6. Fact check time…what IS a clients’ account?
BOV’s website states a Clients’ Account is an account used by customers who offer fiduciary services (eg lawyers, notaries, accountants, trustees etc.) in which they hold their clients’ money, segregated from their own funds.
The reason lawyers would open a clients’ account is twofold – it saves them the confusion of having their clients’ money swimming around in their own personal funds, and avoids them getting personally taxed for money which is ultimately not their own.
“Lawyers use clients’ accounts to deposit money paid to them by their clients whose ultimate destination is a third party,” a banker told Lovin Malta. “The lawyer has to sign a declaration that they are responsible for the money, and indeed the bank would not even know who the clients are.”
The banker said lawyers and law firms usually have one clients’ account to deposit money from all their clients, and “definitely not” one clients’ account for each and every client.
She said lawyers can technically give up power of attorney over the clients’ account, but this is usually the case when lawyers give their secretaries power of attorney for an account.
“They never give up power of attorney for a clients’ account to their own clients…it’s usually the other way round.”
This was corroborated by two lawyers who spoke to Lovin Malta.
“Lawyers do open bank accounts for their clients, but always in the client’s name. It’s something obvious and basic,” one lawyer said. “A lawyer can legally own as many clients’ accounts as you want but it doesn’t make sense to open a clients’ account for each and every client.”
He said clients can instruct their lawyers or law firms to, for example, invest the money they had given them into a bond. However, the lawyer or law firm maintains complete control over the clients account.
Another lawyer told Lovin Malta he has hundreds of clients but only one clients’ account. He said some lawyers do choose to open separate clients’ accounts for major and regular clients, but ultimately the fact is the same – it is the lawyer who owns and is legally responsible for the account and not the client. If the bank suspects the account is being used to launder money, it will report the lawyer – and not the client – to the Financial Intelligence Analysis Unit for investigation.
Lawyers do not have to, but are allowed to designate clients accounts to specific clients, in which case the chequebook will read something like ‘Lawyer Joe Borg…Clients’ Account for Mary Vella’. However, banks could not give a hoot who the clients are, so much so that lawyers can simply change the clients’ designation at the click of a button through internet banking.
7. OK, back to Delia. How many clients’ accounts does he have?
Although it is very uncommon for lawyers to own several clients’ accounts, Delia does not know how many clients’ accounts he has.
“More than two?” I ask him.
“I don’t know,” he responds. “Opening clients’ accounts is usual business…it’s like asking me how many pencils are in a pencil box or how many clients I have. I can’t just tell you how many I have. Sometimes clients need a clients’ account and I open one for them. Why are you are asking me these questions the day before the election?”
I had a clients’ account for one client, then BOV changed its policy, closed the bank account because it was being used for trading purposes, and opened another specific trading account – this time in the clients’ name.
8. Fact check – did the bank really change its policy?
It would appear so, yes. The banker I spoke to confirmed Maltese banks have become particularly stringent about separating business accounts from personal accounts in the past year.
“Before 2016, trading with a current account was completely normal and banks didn’t used to do much about it,” she said. “However, since then, awareness by banks on money laundering and tax evasion has grown and now we’re all monitoring account activity more closely and ordering clients to split their trading accounts from their personal accounts.”
9. Back to Delia again. Did he give his client full control over the clients’ account?
He got very passive aggressive at this point and asked why I was even asking such questions which are “legal and not political”.
“Banks allow lawyers to open accounts for clients and the chequebook issued will state the lawyer as the account holder and the client as the beneficiary of the funds,” he said. “These are legal questions and not political ones. I am speaking to you as a politician, and if you want legal advice then you can ask my firm and they’ll charge you for it.”
Then, in no particular order, came these soundbites:
“You could have asked me these questions at my press conference”
“I’m very busy, you can ask me these questions on Monday”
“I don’t have time for this, I have 16 people in front of me and I’ve just spent 17 minutes talking to you”
“If you want, you can come down to Dar Centrali within the next hour and ask me all the questions you like”
“I cannot disclose information about my clients….I’m not interested in disclosing how clients use the money in clients’ accounts”
“I did nothing illegal and nothing wrong, so what’s the problem? You’re just beating around the bush now…it seems like you’re trying hard to find something wrong I had done.”
10. Why does this matter anyway?
This all revolves around Delia’s personal debts. As reported by the Sunday Times of Malta last week, Delia said he has €728,000 in outstanding personal debts with three banks.
The Times questioned him how he plans to pay back the loans, given the current rates would require him to pay back over €43,000 a year, a higher amount than the annual salary he would receive as Opposition leader.
“Dr Delia has sought professional advice to ensure a solid financial plan to meet all his financial obligations,” his spokesman told The Times.
This is over an above a €7.2 million debt owed to HSBC by Mgarr Developments Ltd, a luxury development consortium of which Delia is a minority shareholder. Although Delia personally signed a constitution of debt deal with HSBC, he denied he is personally responsible for the debt.
“The loan refers to a company. The assets of the company by far supersede the debt. As stated, however, should he [Dr Delia] be elected as leader of the Opposition, he would sell his nine per cent shareholding in the company and, consequently, extinguish all obligations,” his spokesman told the Times.
Delia could be Opposition leader in a few days and Prime Minister in a few years. He will be meeting businessmen and bankers, he will be drafting policies, he will be trying to hold the government to account, and he could shape Malta’s entire future. Could he keep the country’s best interests at heart, while at the same time trying to get out of a precarious personal financial position?
Or are his finances in order and he is just failing to be transparent about it?
11. What questions are still left unanswered?
There are a couple, but these are the most pressing:
– Does Delia own a current account and if so, with which bank?
– How many clients’ accounts does Delia have?
– Who is the client whose bank account, in Delia’s name, was shut down?
– Did Delia give this client power of attorney over the clients’ account?
– How exactly does Delia plan to pay off his personal debts?
Is Delia telling the truth or he is telling a bunch of porky pies? Let us know what you think in the comments’ section.
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