Updated 12.33pm with government reaction - Pilatus Bank chairman Seyed Ali Sadr Hasheminejad had set up a company in Malta for "social and mass housing projects", Nationalist MP Karol Aquilina told parliament on Thursday.

He said Mr Ali Sadr came from a very wealthy business family in Iran with businesses including two companies, Stratus International and Iranian International Housing Corporation.

Karol Aquilina

In January 2014, Ali Sadr also set up the Malta International Construction Ltd as a subsidiary of Pilatus Bank. Its purpose was to enable him to venture into the construction industry and specifically for 'social and mass housing projects' according to its declared purposes.

This, Dr Aquilina said, raised major questions since it was the government which handled social housing.

He asked what funds were transferred by Pilatus Bank through this company and whether this company was used to circumvent US sanctions.

"Did the MFSA and the FIAU know of this company and did they investigate it after Ali Sadr was arrested in the US for violating sanctions?

Was the government negotiating with Ali Sadr as part of the planned 50m euro housing project it had announced?"

Ali Sadr was a "special friend" of the prime minister and his chief of staff Keith Schembri, and answers were therefore needed before Malta suffered further reputational harm, Dr Aquilina said.

GOVERNMENT DENIAL

Parliamentary Secretary Roderick Galdes, who is responsible for social housing, later denied Dr Aquilina’s claims and said the company he had mentioned never had any connection with government housing projects and never applied for any government tenders for social housing.

He said he hoped this was not an attempt to hinder the government from accessing funds from the European Investment Bank.

This, he said, was the biggest social housing project since the Mintoff years, and he hoped the PN was not trying to harm it.