Malta is again in the headlines of the international media for the wrong reasons. While many business operators sighed with relief when Malta was removed from the FATF grey list, the spectre of reputational risk is haunting the business community once again.
The European Commission has formally taken Malta to the EU’s highest court for its cash-for-passports scheme that grants Maltese citizenship to wealthy third-world citizens in return for money and investments.
The Commission accuses Malta of breaching the EU treaty’s principle of “sincere cooperation” by selling EU citizenship. EU Justice Affairs Commissioner Didier Reynders argues that “European Union values are not for sale”.
The Maltese government’s narrative has been as consistent as it has been untenable. The government denies that the scheme violates EU law and reiterates that its citizenship policy is strictly a matter of national competence.
While it will now be up to the European Court of Justice in Luxembourg to decide on the case’s legal merits, many investors are aware that the court of public opinion in international business circles may already have made up their minds on the security risks of the golden passports scheme.
Public opinion is often based on the principles of common sense.
When many European citizens fear for their security due to a fast-changing geo-political context, it is hard for Malta to argue that granting EU citizenship to third-country nationals poses no risks to many European citizens.
Malta has long argued that its due diligence process minimises the risk of rogue third-country citizens with Maltese passports causing harm to other EU countries.
However, many examples prove that this assertion is, at best, defective.
For instance, August Meyer, a US businessman who has operated in Russia since 1999, received a two-month prison sentence in December 2021 from a Russian court for defrauding state-run Sberbank, Russia's largest bank.
Meyer said in court that he owns Maltese, Russian and St Kitts passports.
Malta remains the only EU member state that sells passports to third-country citizens. The controversial passport scheme is receiving almost universally negative reviews from the international news and financial media.
Many online news agencies report that the controversial scheme was announced shortly after now-disgraced ex-prime minister Joseph Muscat came to power, involving a concession awarded to Henley & Partners.
The government will continue to argue that were it not for the €1.1 billion raised through the scheme since 2013, Malta would not have been able to weather the COVID and Ukraine war risks as well as it did. Still, this is another clear case where ultimately, the end does not justify the means.
Prime Minister Robert Abela is wrong to let this scheme hang like an albatross around his administration's neck. He must dump the baggage of the Muscat administration that has harmed Malta’s reputation as a respectable jurisdiction.
The golden passports scheme is one of the items of heavy baggage that must be jettisoned from the ship of state.
Abela needs to change his stand on the passports scheme if he wants the country to clear all doubts about its determination to be a loyal and trustworthy member state that defends EU values in deed as well as in rhetoric.
It is time to take into consideration EU public, political and investor opinion on this matter rather than hiding behind interpretations of EU legislation, whatever the outcome of the court case may turn out to be.
The jarring narrative on the golden passports scheme must be killed without further delay.