SThe wealthiest Russians, Chinese and Saudis have been granted unrestricted access to the EU through a Maltese passport-cash system that requires them to spend less than three weeks in the country, a leak from a passport brokerage.
The cache of thousands of Henley & Partners emails and documents provides an unprecedented window into the mechanisms of so-called “golden passport” systems, through which countries sell their citizenship to wealthy foreigners.
The leak reveals how some applicants seeking to buy Maltese passports under a government investor scheme were able to pretend to ‘reside’ in the country for a full year by renting apartments and leaving them empty.
This loophole has allowed some clients, who pay over a million euros under the program, to successfully claim that they have a ‘genuine connection’ with Malta – a key legal requirement – while spending some money there. weeks on vacation and doing a few other superficial gestures. like renting a yacht or donating to a local charity.
The revelations are likely to alarm the European Commission, which recently initiated the steps to initiate potential legal proceedings against Malta for its sale of gold passports. The commission accused Malta of selling citizenship – which allows full access to the EU – to people with little or no connection to the country.
The Maltese government rejects any suggestion that his residency requirement is a sham. He argues that it is he, rather than the EU, who has the final legal say over who can be issued a passport, and that applicants are subject to a security check before receiving a passport. residence permit.
But Henley’s files reveal that in the program’s early years, many candidates told the government they planned to develop only the most superficial ties to the country, with most revealing that they planned to spend only a few weeks. in Malta during the supposed 12 month Residence Period.
The Henley data was shared with a consortium of media partners, including The Guardian, by the Daphne Caruana Galizia Foundation. The non-profit organization was founded two years ago and is named after a Maltese anti-corruption journalist who was murdered in 2017.
Henley & Partners, which was founded by Swiss businessman Christian Kälin, arguably invented the modern industry of “citizen planning”, which is worth around $ 3 billion a year. His first major client was the government of Saint Kitts and Nevis in the Caribbean, where he was hired to launch a citizenship by investment program in 2006.
He played a key role in creating Malta’s Golden Passport program, advising the government on how it should be structured. Originally, Henley was to have exclusive rights to administer client applications, although this was relaxed after a political outcry.
Letters of Intent
Malta announced its plan to sell citizenship eight years ago, prompting expressions of concern from the EU that buyers would have unrestricted access to the Schengen area, allowing free movement between Member States.
In January 2014, a justice spokesperson for the European Commission delivered a speech denouncing the proposals and stressing that EU members should only provide passports to people with a “genuine connection” to their country.
The deadlock was averted when, two weeks later, the commission and the Maltese government issued a joint statement announcing that anyone purchasing Maltese citizenship should reside in the country for a full year, demonstrating the authenticity of their connection to their new home.
“No certificate of naturalization will be issued unless the applicant provides proof that he / she has resided in Malta for a period of at least 12 months immediately preceding the day of issue of the certificate of naturalization”, states the communicated.
However, the Maltese Golden Passport system does not define “residence”. Government officials were once elusive when asked what proportion of the 12-month period applicants had to be physically present.
The Guardian reviewed 250 “letters of intent” that Henley clients had drafted for their claims, in which they explained to the government how they intended to settle in Malta. Several of the letters from those who subsequently received Maltese nationality did not commit to spending any time in the country.
Internal emails repeatedly show customers how much time they could spend. After a representative of a client from the Middle East asked for more details in a 2014 case, an employee asked his manager if he “was dating Malta for about 7-14 days (i.e. say the minimum possible time) for biometric data and requested and received the [residency] card ”would suffice.
The Director replied: “The government would like to see a cover letter provided by each of the main applicants outlining how they intend to establish residency and genuine links with Malta.” He added: “They do not wish to publish on the residency issue which is very busy locally.”
If longer visits were not possible, opening bank accounts, donating to local charities and joining local clubs would help demonstrate ties to the country. “In reality, no candidate will be refused on the nature of this cover letter,” he concluded.
A subsequent opinion appears to have been that only two weeks was sufficient. “The applicant does not necessarily need to be physically present in the country,” said one client. “However, in order to create a real link with the Maltese Islands, [the Maltese government] would appreciate reading the number of days provided in the cover letter. The number of days must be at least 14. “
Of the 250 letters, the average time commitment in Malta was 16 days.
Two bedrooms for 12 people
As part of their demonstration of a commitment to their new home, Malta Golden Passport applicants were also required to invest 1.15 million euros in the country, including a real estate purchase worth € ” at least € 350,000 or a five-year rental at € 80,000.
Some of the leased properties were much smaller than the size the Applicant’s family realistically would have been had they planned to live in the property. In one case, a Chinese national rented a two-bedroom apartment for € 1,500 per month despite applying for citizenship for 12 people, including six children.
A South African businessman seeking Maltese citizenship refused to pay Henley a management fee for his apartment on the grounds that no one would visit him. “It is not used, nobody is going to go for a year,” he complained in an email to the cabinet. “If Henley has inspected it and everything is in good shape, what could possibly go wrong?” The owner will take it back as it was rented. “
In another case, a client asked Henley to find him his residence. When asked to fill out a form detailing his price range and details, including minimum rooms and the desirability of a sea view, he wrote: “I don’t care what is. the cheapest and in line with the program. “
Henley did not dispute that some of his clients had little presence in Malta during their residency. A senior company official said: “Some of our clients have chosen to spend a lot of time and reside in Malta, while others have chosen to spend the minimum time required in the country.”
He also argued that genuine ties were not defined in EU law and that it was the Maltese government that “sets the rules and makes the final decision on all citizenship applications”.
Malta’s High Commissioner to the UK, Joseph Cole, dismissed as “factually incorrect” any description of the 12-month residency requirement as a sham. However, the Maltese government did not dispute the Guardian’s findings, insisting only that the candidates had been properly screened.
In a statement, Henley said it is aware of the potential risks associated with processing client applications and has “invested significant time and capital in recent years to create a governance structure that is committed to upholding the highest standards, with due diligence at heart. ”
He stressed that he had always observed local laws in the countries where he operated and added that he had advised the Maltese government to create an independent regulator for the system.
“We have helped the Maltese government create a remarkably successful sovereign finance and economic innovation platform, raising hundreds of millions of euros in debt-free capital,” he said. “Our processes are well documented and are significantly more advanced than those of the majority of other players in the investment migration industry.”