The European Commission has contradicted the claim made by Prime Minister Joseph Muscat that it had given its “written endorsement” to Malta’s cash-for-passports scheme.
Dr Muscat’s statement last week came on the back of comments by European Justice Commissioner Věra Jourová, who told the European Parliament that the Commission does not endorse any such schemes.
The Prime Minister hit back by saying that Malta’s Individual Investor Programme (IIP) had received a written endorsement for the sale of EU citizenship from then Justice Commissioner Viviane Reding in 2014.
“We stand by what the [European] Commission told us in writing and declared publicly when we reached an agreement with the Commission,” he said.
Maltese passports are sold to rich foreigners against payments and investments totalling €1 million.
Replying to questions from The Sunday Times of Malta, a Commission spokesperson said representatives of the European Commission’s services and the government had met in January 2014 to discuss the scheme but it was never endorsed.
That same month, Commissioner Reding delivered a strong speech saying that European citizenship must not be up for sale.
The Commission spokesperson said that during the meeting, part of the discussion was about legislative amendments aimed at introducing a requirement for applicants to reside in Malta for a period of at least 12 months.
“After that meeting, a joint statement was issued in which the Commission had welcomed the amendments announced by Malta at the time but the Commission did not endorse the Maltese investor citizenship scheme,” the spokesperson said.
A Commission report on citizenship and residency schemes across the EU found that although the residence requirement exists in legislation, in practice the requirement for applicants to physically reside in Malta is not verified sufficiently.
We did not endorse the scheme
As set out in the report, the Commission is examining whether or not such schemes are in line with EU rules, the spokesperson said.
“This relates not only to the legal framework governing the scheme but also to its application”.
Henley & Partners, the scheme’s concessionaire, has earned over €28 million between 2014 and 2018 from passport sales.
Part of the funds paid by foreigners buying EU citizenship are ring-fenced in a national development fund.
The fund has been used to buy €21.8 million worth of shares in BOV as well as shares in Lombard bank.
A large-scale social housing project will also be partly funded from passport sales.
The scheme has been beset by controversy.
Malta’s Financial Intelligence Analysis Unit (FIAU) found that €100,000 worth of funds from passport sales to three Russians had made their way into the bank account of the Prime Minister’s chief of staff Keith Schembri.
These funds were transferred by Mr Schembri’s auditor Brian Tonna, whose firm Nexia BT is a licensed agent under the passport sale scheme. Both men deny wrongdoing and a magisterial inquiry is underway.
Henley & Partners have described Mr Schembri as their main point of contact within the Prime Minister’s office.
Nationalist MEP Roberta Metsola told The Sunday Times of Malta that the government had failed to address long-standing concerns about the scheme, particularly when it came to the very real and well-documented security, secrecy and money-laundering implications.
Dr Metsola said the Commission had clearly stated it did not endorse or support this scheme in any way, belying the Prime Minister’s mantra.
“They’re telling him clearly to stop making a claim of some inexistent EU endorsement to flog his passports,” Dr Metsola said.
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