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Network News • 14-01-2021

Golden passports: When the dirt hits the fan

Author: George Mangion
Published on Business Today 14 January 2021

While the government continues to claim that the now-defunct IIP programme was airtight with all necessary checks and balances in place, stories are emerging in the international and local press that show a different reality.

A Sunday newspaper recently gave front-page prominence to how Malta’s passport scheme has been the object of criticism. The newspaper revealed how a Maltese passport was apparently issued to Saad bin Khalid Al-Jabri, a former high-ranking minister in the government of Saudi Arabia and who is currently exiled in Canada after claiming to be the victim of a state-sponsored assassination attempt.

His name was included in a list of successful applicants who have been granted Maltese citizenship. Certainly, given his former governmental position, he classifies as a politically exposed person with an international pedigree and who, under current rules, should have been singled out under the so-called tight scrutiny of the previous IIP regime.

Local agents of the now-disbanded IIP scheme were always warned that applicants or any of their dependents could not be persons listed with Interpol at the time of the application.

Saad Al-Jabri currently lives in Toronto along with most of his family fearing persecution from home and shielded with round the clock security supervision. According to the New York Times, he is listed on Interpol’s system as of December 2017 after Saudi Arabia filed a report on him. His name was subsequently removed from the system in July 2018 after Interpol determined his listing to be “politically motivated”.

The controversial Golden Passport scheme was the subject of adverse publicity in the past but the government always reiterated that all applicants who are the subject of a criminal investigation will not be approved for citizenship.

Surreptitiously, there is a provision in the law that allows Identity Malta to reconsider this if there are “special circumstances” which are demonstrated by the applicant. In that case, the Malta Individual Investor Programme Agency can issue a reasoned opinion on why the candidate should be considered for approval, and the application is referred to the Minister,  who has the sole authority to grant the application or otherwise.

The writer is an accredited agent who recently has had a number of bona fide applications refused for hitherto talented persons who could have helped financially in attracting FDI, more needed at a time when the country’s debt has spiralled due to a stimulus and wage supplement helping targeted sectors.

Reading such reports, one is surprised to note a two-weights-two-measures attitude has been apparently in place by the Ministry and its advisors. Following abrupt refusals, the available routes which offer some kind of recourse in the form of an independent review of the application do not elicit much solace to the aggrieved applicants and their agents other than the usual mantra that a passport is a concession and not a privilege.

All this comes like a Damocles sword over the efforts of local agents to attract millions of euros (the list of agents has waned from over 180 to circa 55) knowing full well that the Commission has threatened Malta with infringement proceedings.

It is common knowledge that due to the pandemic there have been fewer applications (under 50) even though Cyprus (our main competitor) has since terminated its scheme. Those in the sector know that Malta has lost the lucrative Asian market, as the latter prefer to invest in competitive property schemes for residence and passport packages introduced in Turkey.

All the while, Malta gets the flak from the Opposition benches and EU Commission who insist passports may have been issued to persons of dubious character. The irony is that Henley & Partners, which has been a sole concessionaire since the inauguration of the scheme, has recently faded from the scene. Henley & Partners is reputed to have attracted the lion’s share of the €1.5 billion passport revenue and was compensated at the rate of 4%.

Definitely, local agents who promoted the scheme faced stiff competition from Henley & Partners, since all its global conferences were exclusively addressed by the former Prime Minister at the time. The patronage by Castille was given free to the concessionaire. Needless to say, no such patronage was on offer to the rest of the unremunerated agents who on their own steam also funded similar promotional events.

Magnanimously, Joseph Muscat showered positive comments each time he addressed delegates at Henley & Partners global events. He is quoted as saying that Malta’s due diligence structure in vetting applications is next to the gold standard.

Not so salubrious was a report published by Transparency International and Global Witness 2018. It looked at various aspects of the schemes offered by Cyprus, Malta and Portugal, and the flaws or loopholes in each, stressing that “insufficient due diligence, wide discretionary powers and conflicts of interest” could open Europe’s door to the corrupt influences.

While the government continues to claim that the now-defunct IIP programme was airtight with all necessary checks and balances in place, stories are emerging in the international and local press that show a different reality.

Local agents who do not get that extra push of assistance have to go to great lengths and expenses to cover promotional events. One hopes that sufficient recognition is given to local agents who are active in the field – they who toil and continuously roam the four corners of the world to promote Malta as a jurisdiction of choice.

Author: George Mangion
Published on Business Today 14 January 2021
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