Malta has issued hundreds of passports to non-EU nationals in exchange for huge sums of cash over 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 large donations to the government and dropped cash to buy property on the Mediterranean islands without being required to live there.
Prime Minister Joseph Muscat’s spokesman Kurt Farrugia said almost 700 passports have been issued to non-EU nationals since the program’s 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 a list of more than 900 people granted Maltese citizenship last year.
Critics charge that the program undermines the concept of European citizenship, potentially poses security risks and provides a possible backdoor for Russians seeking to escape sanctions against their own country.
“If I didn’t 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 demanded “an investigation by the EU Commission to look into member state investor schemes, not just Malta’s.”
The price of a passport
The program requires applicants to give a €650,000 contribution to a national development fund and provide a €150,000 investment in government stocks or bonds. That leads to a Maltese passport that provides visa-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 extra €25,000, or €50,000, if the dependent is older than 18. The figures indicate many families are taking advantage of the scheme: 202 applicants secured citizenship for 503 spouses or children.
“Citizenship is something that has to be earned, not simply handed out to people with deep pockets,” said Latvian MEP Robert Zīle, 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 citizenship in Malta last year, including those who used the Individual Investor Programme, it was accused of making it virtually unintelligible by listing individuals by their first names and not including their country of origin.
“We have no idea about the names or who the hell they are,” said Jason Azzopardi, the country’s shadow justice minister. “There’s 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 due diligence process,” Farrugia said, noting that 25 percent of applicants are rejected. “We’ve always looked to get the quality persons.”
Applicants must have no criminal record as well as undergo checks against records at the International Criminal Court and Interpol.
Andrew Rosindell, a Conservative politician in the U.K. who sits on his parliament’s Foreign Affairs Committee, said there 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, now promotes the Maltese passport option globally and recommends applicants to the government, receiving a commission for every 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 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 to Henley & Partners, individuals can apply through one of 137 registered agents, including the accounting firms 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 in an EU country’s 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,” said Christian 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 is “the most successful investment program in the marketplace” on account of the amounts raised.
“It’s a very powerful passport in terms of mobility.”
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