Scheme even worse now

On December 3, in Times of Malta, I suggested that changes need to be made to the Individual Investor Programme to make it more robust, transparent, and to create a true bond between Malta and its new citizens.

When I read the Prime Minister’s recent declarations of considerable changes to the IIP, I was truly impressed with the changes announced.

However, as always, the devil is in the details, and when I read the text of the new regulations, I was horrified with what had been published.

The fact is that the Prime Minister was unfortunately misleading in his statement to the press about the new IIP. I can only assume it is due to the fact that he is unaware of the details of the regulations, and because he is misled himself by his ‘advisers’ at Henley.

In his statement, he said that the new IIP programme would be “run” by Identity Malta. However, in the new regulations published within hours of the collapse of talks with the Opposition, there is written that the government’s partners at Henley will “design, implement, administer, operate, and promote the programme”.

I do not understand how Identity Malta can run a programme that is “designed, implemented, administered, operated, and promoted” by Henley. The fact is that the regulations create a stronger and even more encompassing partnership between the government and Henley.

This is what is truly shocking. But worse, it continues to endanger not only Malta’s reputation, but even its financial well-being. With these new regulations, the Prime Minister has opened up Malta to almost unlimited financial liability in order to, what I can only assume, guarantee Henley’s profits.

The reasons for my shock are various. Henley designed the original IIP in a way that was so flawed that the government was embarrassed in Malta and internationally so much.that it was forced to change it.

However, instead of firing Henley, the Prime Minister double downed on his country’s partnership with Henley and is giving them the ability to use this new IIP to make even more money. Who would ever believe this was possible?

Under these new regulations, Henley in fact continues to run the programme. While Identity Malta has a few more minor responsibilities, it is still Henley that will manage the due diligence process.

This continues to provide a conflict of interest because Henley will get paid huge commissions only if clients pass the due diligence process, and will get nothing if they do not. It is shocking that this was not changed.

Worst of all, and most reckless, is what I believe can lead to gross criminal negligence. The public part of these regulations clearly show that Malta’s partners at Henley will not only receive the whole donation of €650,000 into their accounts, but also allow them to hold on to these monies from a minimum of six months to a maximum of two years, interest free.

There are many more dangers hidden within these regulations

Potential new citizens will transfer the donation not to the Maltese government, but to Henley. They will be able to spend this money in any manner, on cars or houses, for example, with no restrictions and will receive all the profits generated, instead of Malta.

After two years of holding scores of millions of euros, Henley is supposed to transfer most of what is left of the money to Malta. However, according to these regulations, if it loses the money during those two years, it has no liability whatsoever.

This scheme opens Malta to almost unlimited financial liability, and for what? Simply to help the Prime Minister’s chosen partners at Henley make more money? Shocking is an understatement.

There are many more dangers hidden within these regulations, aside from the fact that it is a sale of passports, and that the buyers do not have to even step foot on Maltese soil.

I can only restate my forlorn hope that those with ears ought to hear what true logic and good governance dictate.

Nuri Katz is president of Apex Capital Partners Corp.