The decision by some EU states, including Malta, to issue golden passports to wealthy third-country individuals who want easy access to the EU has legitimately raised concerns. It even prompted European Commission President Ursula von der Leyen to state that “European values are not for sale”.
Former Prime Minister Joseph Muscat had insisted that the Individual Investment Programme (IIP) scheme, introduced in 2014, would attract direct foreign investment to Malta.
He said Malta’s scheme was not a transaction but the relationship of building a “unique and special nation”.
The bedrock of the process was the “genuine link” that passport buyers were supposed to build between them and the Maltese community.
That strategy appeared to go out of the window last Thursday, when a cross-collaborative journalism project, spawned by the Daphne Caruana Galizia Foundation, proved how many foreign ‘investors’ had little or no significant links to our country.
The so-called Passport Papers reveal the superficial and artificial elements of the golden passports scheme process as they exposed the way a number of the specified requisites could easily be circumvented.
A scoring model, adopted by Identity Malta, had loopholes that made it easy for applicants to spend just a few hours in Malta before they were granted a Maltese passport. Every loophole had a price that millionaires and tycoons were happy to pay as long as they could return to their country without any delays.
A senior executive at Identity Malta, Jonathan Cardona, defended this unorthodox practice that defeats the stated purpose of the golden passports scheme. He said the system was established “in the interest of all stakeholders to ensure there is a common standard practice in a fair and consistent way which is applied equally to everyone”.
The details of the Passport Papers investigation prove otherwise. They showed how Henley & Partners, together with Identity Malta officials, facilitated the issue of passports to applicants who never had any intention of spending more than a few hours or days in Malta. Some IIP applicants ended up renting unfinished properties, sharing addresses, or renting basic properties for exorbitant prices.
Henley & Partners repeated the mantra of Muscat, insisting they have assisted the government in the creation of a “remarkably successfully sovereign financing and economic innovation platform, raising hundreds of millions of euros in debt-free capital, without which healthcare, social and cultural investment would not have been possible”.
But there are other realities that the government and the defenders of the golden passport scheme fail to address. While the IIP scheme has been a massive money-spinner for Malta, the way it has been implemented has been corrupted by the very people who should have ensured that the spirit and the letter of the scheme’s regulations were at least respected.
After the commission challenged the legality of the new version of the golden passports scheme last October, the government insisted that citizenship is the prerogative of individual EU states, conveniently dismissing the fact we are effectively talking about EU citizenship.
The scheme may have injected €850 million into the Maltese economy but it has also strained relations with our EU partners, which rightly have concerns about the potential security risks the scheme inflicts on other states. It is also time to ask why applicants with millions in the bank, who can pay a high price for the coveted EU citizenship, are being given the chance of circumventing the regulations, when other (low-earning) foreigners, who have really built a “genuine link” with Malta for years and paying all their taxes, have been repeatedly denied Maltese citizenship.