Fr John Avellino

Loan sharks are using lawyers and notaries to draw up dubious contracts that give their activity a veneer of legality, according to a leading priest.

Fr John Avellino, who heads a Church-based group that works with usury victims, said that some had signed contracts presented to them by loan sharks who inflated the original debt incurred to hide interest that could be as high as 100 per cent.

Such contracts were drawn up and signed in the presence of lawyers and notaries, he said.

“Contracts drawn up in this way are vitiated because, had the interest portion of the loan been listed separately, it would be illegal,” Fr Avellino said.

Lawyers and notaries should be aware of the dirty games played by loan sharks, he cautioned, urging them not to be part of such illegal behaviour. Fr Avellino did not identify any lawyers and notaries by name and insisted that only a few were involved in such practices, adding that the growing trend was “worrying”.

His concern was shared by Reuben Balzan, president of the Chamber of Advocates, an organisation that represents lawyers.

He said lawyers should never assist a client to do anything illegal. “A lawyer is duty-bound to refuse instructions, whether he is acting on behalf of the creditor or the debtor, if he suspects the agreement inflates the principal loan amount to hide interest.”

Dr Balzan said that a lawyer was also “ethically bound ” to refuse the directions of a client if he suspected that the instructions were being given “under duress and undue influence”.

Clinton Bellizzi, president of the Notarial Council of Malta, which represents notaries, explained that notaries were public officers. “A notary cannot refuse his service as a public officer unless he suspects something is illegal, immoral or even goes against public policy,” he said.

A notary could probe and ask why a loan was being given and why no interest was being charged. But if the two parties sounded convincing and there was nothing that suggested foul play, there was only so much a notary could do, he explained.

Dr Bellizzi pointed out that a notarial deed was a public act and accessible to anyone. “This in itself is normally an indication that the parties are genuine.”

Very often, such problems happened with private agreements.

These could be agreed in front of lawyers, notaries or solely between the parties.

“If a notary suspects one of the parties is signing under duress, he can pull the individual aside and ask what is happening. But ultimately, it depends on how convincing the two individuals are,” Dr Bellizzi pointed out.

Loan sharks are renowned for the way they charge exorbitant interest rates on a weekly basis, crushing their victims under the weight of rising debt.

A mother of three who fell victim to a loan shark last month recounted her story to this newspaper. She would borrow money to pay a bill of €233 and the following week her debt would shoot up to €349.

“At one point I was even paying interest at €116 per day, borrowing money from other loan sharks to pay the previous month’s debts,” she said.

Fr Avellino said it was normal for Caritas to be approached by usury victims who had thousands of euros in debt.