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Malta slammed for cash-for-passport

program

The super-rich are using the option to buy access to the EU and beyond.
By HARRY COOPER | 8/17/16, 5:29 AM CET | Updated 8/23/16, 10:04 AM CET

Pedestrians in Valletta. Malta has issued hundreds of passports to wealthy non-EU individuals who
made large donations to the government | Horacio Villalobos/Corbis via Getty Images
Malta has issued hundreds of passports to non-EU nationals in exchange for huge sums
of cashover the last two years, resurrecting concern that the country is effectively
selling access to the European Union.

The passports were granted to wealthy individuals who made largedonations to the
government and dropped cash to buyproperty on the Mediterranean islands without
being required to live there.

Prime Minister Joseph Muscats spokesman Kurt Farrugia said almost 700 passports
have been issued to non-EU nationals since the programs launch in 2014.Those
passports have so far generated at least 200 million for Malta.Farrugia was responding
to questions from POLITICO after the government released alist of more than900
peoplegranted Maltese citizenship last year.

Critics charge that the programundermines the concept of European citizenship,

potentially poses security risks and provides a possible backdoor for Russians seeking to
escape sanctions against their own country.

The program requires a 650,000 contributionto a national

development fund and investing 150,000 in government
stocks or bonds. A spouse or a child costs up to 50,000.

If I didnt have a great deal of love and sympathy as well as respect for Malta as a
country, I would say what I was inclined to say two years ago: These are the practices of a
banana republic which must be rigorously counteracted within the EU, said Frank
Engel, a center-right MEP from Luxembourg.

Ana Gomes, a senior Socialist MEP on the Justice and Home Affairs Committee, said
such schemes put at risk the integrity of the Schengen system and should be looked at
closer. I am absolutely disgusted, she said, adding that she has demandedan
investigation by the EU Commission to look into member state investor schemes, not
just Maltas.

The price of a passport

The program requires applicants togive a 650,000 contributionto a national
development fund and provide a 150,000 investment in government stocks or bonds.
That leads to aMaltese passport that providesvisa-free travel to at least 166 countries.
Applicants must also own property worth at least 350,000 in Malta for at least a year to
establish a so-called residency link to the country.

A spouse or a child costs an extra25,000, or 50,000, if the dependent is older than

18.The figures indicatemany families are taking advantage of the scheme: 202
applicants secured citizenship for 503 spouses or children.

Each donation provides more money for the government than

your average Maltese will pay in a lifetime of income tax,
says the CEO of a company spezialising in citizenship planning.

Citizenship is something that has to be earned, not simply handed out to people with
deep pockets,saidLatvian MEP RobertZle, a former finance minister.He added that
the scheme may also be helping to defy the sanctions imposed on Russia by Europe as a
large chunk, if not a majority, of those who get Maltese citizenship through investment
in the country are of Russian origin.

Many Russians originally expressed interest in the scheme, according to a company

involved in the program, but it is unclear how many have actually been granted Maltese
passports.

Getting quality persons

When the government published the list earlier this month of those who obtained
citizenshipin Malta last year, including those who used theIndividual Investor
Programme, it was accused of making it virtuallyunintelligibleby listing individuals by
theirfirst names and not including their country of origin.

We have no idea aboutthe names or who the hell they are, saidJason Azzopardi, the
countrys shadow justice minister. Theres no way of knowing.

Maltese officials, however, defended the program and said applicants are thoroughly
scrutinized.

The people going through the program have to go through a very strong and thorough
The people going through the program have to go through a very strong and thorough
due diligence process, Farrugia said, noting that 25 percent of applicants are rejected.
Weve always looked to get the quality persons.

Applicants must have nocriminal record as well as undergo checks against records
atthe International Criminal Court and Interpol.

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Andrew Rosindell, a Conservativepolitician in the U.K. who sits on his parliaments

Foreign Affairs Committee,saidthere are still security concerns, and the program
highlighted the need for the U.K. to urgently end automatic free movement for EU
citizens.Malta is effectively deciding U.K. immigration policy, Rosindell said. Clearly,
there are going to be security concerns in terms of criminality, in terms of people
coming in who perhaps are not desirable in our own country.

The Maltese government spokesman dismissed such concerns by saying other European
countries have similar routes to citizenship and are less rigorous in their vetting. When
asked, he declined to specify which countries he meant.

Although other countries offer various visa or residence options in return for
investment, Cyprus and Austria are the only other European countries besides Malta to
offer a direct route to EU citizenship through investment.

Building connections to the 1 percent

Today, a person of talent and means need not limit his or her life and citizenship to only
one country, reads the website of Henley & Partners, a company based in the Channel
Islands that handles residence and citizenship planning.

The company, which was awarded the contract to design the program in 2013,
nowpromotes the Maltese passport option globally andrecommends applicantsto the
government, receiving a commissionforevery person who gets citizenship.

Eric Major, the CEO of Henley & Partners, confirmed that Russia, former Soviet
republics and the Middle East are the main markets for the passports.

This is a very privileged offering for the world elite, Major said, adding that the
program builds a connection with the top 1 percent of the world population.

Major pointed out that the

 Major pointed out that the
passport income benefits the
national development fund and
that each donation provides more
money for the government than
your average Maltese will pay in a
lifetime of income tax.

In addition toHenley & Partners,

European Union flag flies with a Maltese flag in front of
the Auberge de Castille, office of the Prime Minister in
Flordiana, Malta | Karl Azzopardi/EPA
individuals can apply through one
of 137 registered agents,including
the accountingfirms E&Y, KPMG,
Deloitte and PwC.

A rocky start
When the program was first announced two years ago,the European Parliament
objected, saying: EU citizenship should not be for sale at any price.In particular, MEPs
expressed concern that a lack of residency requirements for applicants would violate
international law.

Even though the European Commission has no say inan EU countrys citizenship and
does not formally endorse or approve cash-for-passport programs, it encouraged the
Maltese government to introduce a residency link, which it subsequently did.

The Commission continues monitoring investors schemes to ensure that there is a

genuine link between these investors and the EU country that awards them citizenship
and thus also citizenship of the Union, saidChristian Wigand, a spokesman for the
Commission.

Major, whose company also offers help with citizen programs in Austria and Cyprus,
said that business is booming but that Malta isthe most successful investment
program in the marketplace on account of the amounts raised.

Its a very powerful passport in terms of mobility.