MALTA: Jurisdiction mired in golden visa scandal.

As published on international-adviser.com, Thursday 22 April, 2021.

Malta’s citizenship-by-investment scheme is once again under the microscope after a local paper discovered that wealthy applicants did not fulfil the mandatory requirements to acquire their passports.

The Times of Malta found that millionaires looking to buy a Maltese passport would spend, on average, around 16 days in the country, significantly below the one-year mandatory residency period.

The findings were uncovered following a leak of documents belonging to global citizenship advisory firm Henley & Partners.

The passport scheme requires a “genuine link” to Malta, but the documents showed that applicants were able to slash the time spent on the European island by joining a local club, donating to a charity, buying a yacht, or even subscribing to a newspaper.

Times of Malta reported that, in some cases, people flew in and out of Malta within 24 hours of swearing an oath of allegiance to the country.

The investigation was carried out by the newspaper as part of a project pertaining to the Investigative Journalism for Europe fund and was coordinated by the Daphne Caruana Galizia foundation, named for the murdered Maltese journalist.

The newspaper also uncovered that a Saudi prince was permitted to bypass public transparency safeguards when he applied for the Individual Investor Programme (IIP).

This was allowed following a meeting with former prime minister Joseph Muscat and Jonathan Cardona, chief executive of Identity Malta, the government agency in charge of the scheme.

According to documents from Henley & Partners seen by the Maltese paper, prince Bander Al Saud applied for a passport in 2015 and became a citizen two years later.

But his name does not seem to have been included on the list of people who received citizenship, which is published every year in the Government Gazette, as legally required.

A leaked email released by the Times of Malta showed an agent acting on behalf of the prince had asked Henley & Partners to remind Identity Malta about an agreement made by the three parties where they concluded prince Al Saud’s name would not be mentioned in full on the list and that the same would apply for his father prince Khaled Al Saud.

Malta has already come under fire from the EU Commission, which insisted that there was a need for genuine links to be established between applicants and the country before granting citizenship.

The Commission also initiated infringement proceedings against Malta’s IIP over the summer of 2020.

Henley & Partners said in a statement: “Henley & Partners is proud of the service that it has provided to Malta and its people. We assisted the Maltese government in the creation of a remarkably successful sovereign financing and economic innovation platform, raising hundreds of millions of Euros in debt-free capital without which healthcare, social, and cultural investments would not have been possible to make to the extent that they have been in recent years.

“The direct injection of debt-free liquidity into a sovereign wealth fund – rather than increasing the debt burden for future generations – has allowed Malta to be more autonomous with its monetary and fiscal policy than would have otherwise been the case. It creates a safety net against the volatility that countries around the world are having to manage, which is particularly damaging to smaller, tourism- and global- trade–reliant economies such as Malta.

“We are fully aware of the potential inherent risks in handling client applications for residence and citizenship and have invested significant time and capital in recent years to create a governance structure that is committed to the highest of standards, with due diligence at its heart.

“However, ultimately it is the responsibility of the countries involved to investigate and vet applicants. As a private company, we are neither required by law to do so, nor do we have access to the same level of background information, contacts, and resources that government authorities have. Even so, our processes are well documented and are significantly more advanced than those of the majority of other investment migration industry participants, and they do regularly result in the rejection of potential clients — a position on which we pride ourselves.

“It is fundamentally false and potentially defamatory to suggest that there is a systemic problem, or that the programs we are involved in are for nefarious purposes. They are not. In reality, and while we continually strive to do better, proportionately only a very small percentage of applications — significantly less than 1% of all applications over a period of many years — have later been called into question or been found to have been potentially misused, as is evidenced in multiple independent analyses.

“We assist hundreds of clients each year to enhance their mobility, personal security, and quality of life, nearly all of whom can be characterized as positive actors who have created businesses, jobs, and significant societal value. They do so additionally by also investing in the countries we introduce them to. Henley & Partners makes a positive contribution to the societies and economies of host countries through this very valuable form of immigration, of which more, not less, is required globally.”

International Adviser contacted Identity Malta; the body responsible for citizenship matters since December 2020, Community Agency Malta; and the Office of the Regulator IIP, but none provided a comment in time for publication.