18 Jun 2018
The tenants in buildings 6-9 of the prestigious Europort complex in Gibraltar might be surprised to learn that, until recently, their offices were owned indirectly by a close relative of Syrian dictator Bashir al Assad.
They might be even more surprised to learn that ownership is soon expected to pass to a trust controlled by none other than the family of Gibralter’s own Financial Services Minister.
Rifaat al Assad has been nicknamed the Butcher of Hama for his role in the brutal 1982 Hama massacre in which tens of thousands of Syrians were killed.
He is believed to be the uncle of Bashir al Assad, and has been living in Europe since launching a failed coup attempt against his own brother in 1984. Over the decades his family have amassed enormous property portfolios in the UK, France and Spain.
After years of pressure from anti-corruption groups like Transparency International, in 2017 European authorities finally moved decisively against Assad in relation to suspected money laundering and embezzlement.
Police swooped on his 503 properties in Spain, worth an estimated US$736 million.
In response to allegations, Assad and his family reportedly stated that they had “never benefited from financing that in any way wronged the Syrian state and its people.”
In June 2017, a French court charged Assad with tax fraud and receiving embezzled funds and prohibited him from leaving the country.
Investigators estimate his French properties be worth about US$100m, including a chateau, a stud farm and two apartment blocks.
In September the UK also put a freeze on the Assad family’s assets – although not in time to stop the sale of a mansion in Surrey, a £3.7 million estate in Leatherhead and properties worth a collective £20.7 million in Mayfair.
In the same month, Switzerland’s Attorney General publicly revealed that it was investigating Assad on charges of war crimes.
The asset freezes in France and Spain, not to mention substantial court costs associated with fighting the money laundering charges in France, may have made the Assad family keen to liquidate some of their assets in other jurisdictions.
It is understood that no freeze has yet been placed on Assad’s Gibraltar properties, and the trustees are moving swiftly to sell the company which owns the buildings.
Here’s the catch, however – the trustees are selling the assets to another trust of which they and their family members are themselves the beneficial shareholders.
There’s another twist: the beneficiaries of the purchasing trust include both Gibraltar’s Financial Services Minister and a Member of the Board of Gibraltar’s Financial Services Commission, who happen to be brothers.
According to a judgement handed down by the Supreme Court in Gibraltar, the current trustees of the Europort Trust (which owns the Europort buildings along with a property in Spain) are Fiduciary Trust Limited and Summit Services Limited.
Fiduciary Trust is owned by the family trusts of Albert Isola, Peter A Isola and Lawrence Isola, who are members of a prominent family closely entwined with Gibraltar’s political and legal history.
Albert Isola is the current Minister for Financial Services and Gaming, whilst brother Lawrence is CEO of the Sapphire Group, a broadband supplier which works closely with the gaming industry, in addition to managing the Europort complex.
Peter A Isola, who manages Fiduciary Trust as the chairman of the board, is Senior Partner at the law firm founded by his great grand-uncle in 1892, serves as Director of the Gibraltar International Bank and also sits on the Board of Gibraltar’s Financial Services Commission (GFSC).
As asset freezes descend on Assad’s properties across Europe, Fiduciary is pushing forward with a plan to sell the buildings to another Gibraltar Trust, Glenthorne Holdings Limited.
Glenthorne is 75% owned by the family trusts of Albert, Peter and Lawrence Isola.
Frozen funds raise questions
The public became aware of the deal through a recent Supreme Court judgement, which ruled that the sale could proceed.
The trustees applied to the Court in relation to concerns around perceptions of self-dealing and sanctioning of future distributions.
The Court agreed with the argument made by Peter A Isola that the trust’s assets, including the Europort buildings, could not now constitute criminal property unless they already constituted criminal property at the time of settlement into the Europort Trust.
The Court was satisfied as to the trustees’ “belief that the provenance of the funds used to acquire the Europort Building was gifts from the King of Saudi Arabia (and not the proceeds of criminal conduct) is a considered and reasonable belief.”
However, the Court also noted that Jyske Bank (Gibraltar) has placed a unilateral block on the flow of funds to accounts held with the bank by the Europort Trust companies, Rifaat al Assad or any members of his family.
Jyske has not provided an explanation for the block, but the court judgement observes there is a reasonable possibility that “Jyske may have made a Suspicious Activity Report under the Proceeds of Crime Act to the Gibraltar Financial Intelligence Unit, who in turn may have issued a “no consent” under that Act, ought to put the Trustees on notice that the relevant authorities may be privy to information of which the Trustees are presently not aware.
That information could give rise to knowledge or suspicion about the legality of the provenance of the funds used for the acquisition of 6-9 Europort.
The court advises that “In those circumstances it would be prudent for the Trustees to give the Office of Criminal Prosecution & Litigation 10 working days notice of their intention to make any distribution.”
“Uproar” over sale
The sale has sparked an uproar in the Parliament in Gibraltar.
Former opposition leader Peter Cumming has called the sale unethical, and the opposition party has raised questions as to whether an investigation will be launched by financial regulators over the purchase and sale of the buildings.
Independent MP Marlene Hassan Nahon said: “I believe this issue has to be explained in detail to the Gibraltarian people in a way that is understandable by all, and not buried under layers of legal jargon and coded language.
It is the good reputation of Gibraltar PLC which is at stake here, and that has the potential to affect all of us.”
The GFSC declined to comment in response to questions for this story.
As earlier mentioned, Peter Isola sits on the GFSC Board.
The Gibraltar government has hit back against the opposition’s outcry, arguing in a statement that “this case is an example of how well Gibraltar complies with its international obligations and cooperates with international investigations.”
Chief Minister Fabian Picardo insisted in Parliament that Gibraltar is liaising closely with French authorities on the investigation into Rifaat al Assad and that the trustee beneficiaries including Minister Isola acted properly in seeking the Supreme Court’s approval.
One of the elements of the sale which is raising eyebrows is the purchase price.
According to the court judgement, the Europort buildings have been valued at between £31,000,000 and £31,300,000. The net purchase price which the trustees have determined for the sale to Glenthorne is £17,500,000.
According to Peter Isola, the significant difference between the valuation of the assets and the purchase price is due to debts carried by the company which owns the assets.
“The trustees have agreed to sell the company that owns Europort for a price which includes very substantial amount of debts and liabilities plus £17,500,000, which together amount to a purchase and sale price in line with Europort’s actual market value,” Mr Isola said in a statement on behalf of Fiduciary.
“The recent court proceedings were brought by the trustees precisely to ensure that the trustees were acting in every respect correctly, not least as to the price and manner of sale.”
Mr Isola declined to answer questions about whether other buyers had been considered for the Europort Trust, or been made aware that there might be an opportunity to purchase the buildings.
When asked about the timeline of the sale, Mr Isola said “I am not sure why this question would be a matter of public interest outside Gibraltar however, following the Judgement of the Supreme Court, the parties are proceeding with the transaction which will be completed once the parties are ready to do so.”
The full statement from Fiduciary can be found here.
Main image: Moisemarian
About the author: Melbourne-based Elise Thomas has a background in international affairs and a strong interest in financial crime, data and technology issues.
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