Cyprus handed out ‘golden passports’ to shady foreign investors because it did not conduct the necessary due diligence through the now-discredited Citizenship for Investment Scheme.
A 53-page report from a committee tasked to review 42 passports of the defunct citizenship-for-investment program reveals that authorities ‘merely pushed papers through’ like a filing office.
The government released the redacted report in what it said was a demonstration of its commitment to transparency amid strong criticism it was trying to sweep the matter under the carpet.
Findings made public after the removal of the names of investors, law firms and companies for the purpose of personal data protection shows a shocking lack of basic checks.
The detailed report revealed how lax vetting procedures allowed some investors to submit incomplete applications or to provide false information.
It also illustrated that some “promoters'”- law firms, accountants and other companies that prepared applications for their clients – apparently broke the rules because of a lack of oversight.
According to the report, the entire process relating to applications submitted by foreign investors eyeing a Cypriot passport was managed by a single official in the Ministry of Interior who merely completed a formal document.
It was then was sent to the Minister of Interior in the form of a proposal and forwarded to the Cabinet for approval.
One investor used two different names and tried to open bank accounts with each of them.
Another investor paid over €3.2 mln to obtain citizenship in 25 credit card instalments inside of 30 minutes without raising any red flags.
In comments to Astra Radio, Demetra Kalogirou head of the committee probing the scheme, said procedures for revoking passports in 12, out of 42 cases checked, should begin immediately.
She said that the 12 cases involve a Malaysian citizen, two Iranians, a Cambodian whose names have been involved with money laundering cases and quoted in international media reports.
The Malaysian fugitive financier and Cyprus passport holder Jho Low is accused of misappropriating funds from 1MDB and laundering its assets through financial institutions in the United States, Switzerland, Singapore, and Luxembourg.
Low was granted a Cypriot passport under the investment scheme, but the government has said it was to strip him of his of citizenship along with 26 others.
The committee recommends that some lawyers should be sent to the disciplinary body of the Bar Association while their actions should also be investigated by the police, along with audit firms carrying out due diligence checks.
The report found that audit checks did not determine the source of an investor’s income or their motive for applying for a Cypriot passport.
“Adequate verification of the authenticity of the letters of recommendation had not been carried out, while there were cases with either incomplete CVs or false information, even with the knowledge of specific law firms.”
There were cases where the property involved in an investment deal was estimated beyond 200% of its real value.
A property with an estimated value of €800,000 in the Land Registry, was sold for € 5.5 mln while another property valued at €950,000, was sold for €2.25 mln.
Opposition AKEL MP Eleni Mavrou found the report “disappointing”, as apart from being released with a three-month delay, it does not address the root of the problem.
She told Astra Radio that in order to fight corruption, the report should have also focused on those who facilitated it.
“There is no reference to service providers such as law firms and law enforcement agencies and government officials who facilitated the ‘golden passports party’”.
Mavrou argued that members of the government and the law firm linked to President Anastasiades are among the list of firms which provided services to investors with a dodgy background.
Cyprus Audit Office chief Odysseas Michaelides issued a statement calling on the government to apologise over its stance.
“Following the incomplete and problematic conclusion of the Kalogirou report, which does not deal with the responsibilities of those exercising public power, the Audit Office awaits the apology of those who tried to discredit it,” the Audit Office tweeted.
Michaelides has slammed the government for refusing to hand over the details of a July 2019 cabinet decision granting citizenship to 18 people connected to the casino investment.
The citizenship-for-investment program started in 2007 but ramped up after 2013 when a financial crisis nearly drove Cyprus into bankruptcy.
Investors needed to pour at least €2.5 mln into companies and property to obtain citizenship. The program raised over €7 bln until the government scrapped it on November 1.
The government decided to scrap the scheme following an undercover Al Jazeera report that allegedly caught on video the parliament speaker Demetris Syllouris and another long-serving AKEL lawmaker Christakis Tzovani promising to help circumvent the rules for a fictitious Chinese investor with a supposed criminal conviction. They resigned soon after the Al Jazeera video was broadcast.
The European Union in October launched infringement procedures against Cyprus and Malta, saying the schemes violated the bloc’s treaties and undermined “the essence of EU citizenship.”
The report was based on reviews of a dozen files on applications from 42 investors and their families during 2008-2018.
A wider, more in-depth probe of more than 6,000 investors and their relatives who received a Cyprus passport since 2013 is being conducted by the attorney general.