Cash-for-passports scheme concessionaire Henley and Partners have pocketed €36.8 million in commissions since the programme was launched in 2014.

However, the regulator of the Individual Investor Programme, as the scheme is called, is insisting that the concessionaire’s dual role of conducting the applicants’ due diligence at the initial stage and piloting the application on their behalf posed no conflict of interest.

IIP regulator Carmel de Gabriele allayed such concerns in his annual report covering the period between July 2018 and June last year. In this period alone, Henley and Partners received €8 million in commissions as by law they are entitled to get four per cent of the €650,000 contribution fee payable by each successful applicant, which translates to €26,000.

Mr De Gabriele was reacting in the wake of concerns about the concessionaire’s multiple roles highlighted by the European Parliament, the European Commission, Transparency International and Global Witness.

Moreover, throughout the report he also referred to “detractors” whom he claimed “continued disseminating allegations that the process is simply a matter of criminals queuing up at MIIPA offices, paying their dues and leaving with freshly-printed Maltese passports”. 

He noted that Henley and Partners’ role was to eliminate from a very early stage applications which should be “clearly refused”.

Subsequent to receiving the agents’ own due diligence, the State agency managing the IIP (MIIPA) carries out its own process “separately and more thoroughly” regardless of what the initial checks had revealed, Mr De Gabriele said.

However, he called for changes to Legal Notice 47 of 2014, which regulates the programme, as under this law the concessionaire’s role is to have complete control of the programme. Such a definition reflected the government’s original plan which had been amended in the wake of criticism both locally as well as by the European Commission in 2013.

Waiver has been a source of concern for foreign rapporteurs

Another change being recommended by the regulator is to ditch a controversial provision whereby “in special circumstances” the agency was vested with the authority to recommend an applicant for approval even if he or she was ineligible.

Such a waiver has been a source of concern for foreign rapporteurs as it was deemed to be a back-door entry for criminals. Moreover, the fact that the law does not define what these special circumstances could be was criticised as being an even bigger loophole.

While noting that such provision had never been invoked since the programme had been launched, the regulator said it would be best to scrap it to allay any concerns of abuse.

In his report, Mr de Gabriele did not mince his words in reaction to criticism on the overall IIP’s level of due diligence. In this respect, he said that MIIPA had flagged 14 cases of suspected money laundering and collaborated in 120 others.

As for the criticism by international and EU bodies, the regulator acknowledged that a certain element of risk would remain regardless of what level of due diligence was adopted.

However, he pointed out that when compared to all foreigners who became Maltese citizens during the period under review, the successful IIP applicants represented just 0.16 per cent of the total.

“This effectively means that up to 99.84 per cent of third country nationals could have been awarded EU citizenship without an effective due diligence being carried out on them,” the regulator said.

Mr de Gabriele also lashed out at various rapporteurs saying none of them put forward any recommendation on how to beef up the due diligence except for ditching the programme completely.

Last October, Nationalist MP Karol Aquilina slammed the “fake due diligence” in place saying the scheme was getting Malta into trouble and delivering one blow after another to Malta’s reputation.

Dr Aquilina based his claims on the strength of reports that a Russian-Israeli businessman, 61-year-old Anatoly Hurgin, was facing fraud charges to the tune of millions in the US.

Mr Hurgin was granted the right to vote after filing a false declaration on the same day he bought a Maltese passport.

Dr Aquilina also referred to four other foreign nationals – Boris Mints, Liu Zhongtian, Pavel Melnikov and Mustafa Abdel Wadood – who had been deemed fit to acquire a Maltese passport, only to face serious charges of money laundering, fraud and tax evasion abroad a few years later.

In his report, the regulator said he monitored media “allegations” of incidents involving two IIP citizens and that MIIPA had requested that the citizenship of one particular applicant be revoked.

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