Passport by investment, the end of the back door to the EU in Cyprus

“EU securities are not for sale”, said the president of the European Commission, Ursula von der Leyen, in September. And Cyprus has taken for granted. This Tuesday, and after eight years in force, Nicosia announced the withdrawal as of November 1 from the Citizenship by Investment program, one of the star measures that the country launched during the Great Recession to obtain liquidity, as confirmed by the spokesperson of the Government, Kyriakos Koushos. The announcement comes shortly after a scandal revealed by the Al Jazeera network in which some Cypriot politicians granted nationality to non-EU foreigners with criminal records in their countries of origin, mostly Russian and Chinese. “You could see it coming. There was a lack of control in this scheme”, summarizes the Cypriot deputy Eleni Mavrou, from the Progressive Party of the Workers (AKEL) by phone.

With an investment in the Mediterranean island of 2.5 million dollars (2.1 million euros) per request, at least 2,500 people and their families from 70 different countries, dozens of them with criminal records and many of them under the yoke From the Brussels sanctions, they obtained the Cypriot passport – therefore, European -, between 2017 and 2019, as revealed in August by Al Jazeera based on a huge leak of up to 1,400 documents. Despite the fact that in the last two or three years “this was only talked about” in the island’s internal politics (just over a million inhabitants), according to Mavrou, the final fireworks have rumbled this week in the rest of Europe, when the scandal hit top politicians.

The Qatari chain revealed on Monday the alleged involvement of the president of the Cypriot Parliament, Dimitris Siluris, and other national deputies in the sale of passports to investors with criminal records who would not meet the necessary criteria to be able to move and work freely for the EU because they are under criminal investigation or even convicted of a crime.

Sven Giegold, German MEP and spokesman for economic and financial policy for the Green group, adds in the same vein that there has been a “misuse” of EU rights and a “violation” of the principle of cooperation that governs the Member States. “We will lose the European project if citizenship becomes a commodity. The (European) Commission must now open an infringement procedure against Cyprus and other countries that use not only golden visas, but also the sale of citizenship (which is done) indirectly through passports ”, he explains over the phone. This is the case of Cyprus, but also of Malta and Bulgaria (among others), countries that have been under the scrutiny of Brussels and anti-corruption organizations such as Transparency International for years.

Under pressure from various investigations, Nicosia tightened the law on acquiring citizenship in July (which did not even require a language test or residency in the country), but it was “too late,” Mavrou laments. Now Giegold believes satisfied that the Commission will open this infringement procedure “soon”, which will start with a letter of notice to Nicosia, will continue with a complaint at the Court of Justice of the EU and will end, this German MEP hopes, with a sanction financial for the Mediterranean country. “Buying an identity is inadmissible,” he exclaims. In fact, Christian Wigand, spokesman for Justice of the Commission, confirmed on Tuesday at a press conference in Brussels that they are “closely studying” opening this procedure against Cyprus, although, for now, Wigand is limited to asking the national authorities let them do their job in the investigations.

The latest episode that has made Nicosia move and permanently suspend this program, for which the country has raised some 7,000 million euros since its launch in 2013, is a video in which the President of Parliament himself, Dimitris Siluri , is fully involved in the passport purchase and sale plot. In the images, recorded with hidden cameras, Siluris is seen meeting with journalists posing as representatives of a fictitious Chinese successful businessman who would have fled the country and was sentenced in absentia to seven years in prison for bribery and money laundering. money. The reporters met with Siluris and AKEL parliamentarian Christakis Giovanis, as well as with lawyers and real estate agents, to negotiate a Cypriot passport for him within the Citizenship by Investment scheme, reports Efe. “You can tell him, without mentioning my name or anyone else’s, that he will have the full support of Cyprus. At any level. Political, economic, social, anything goes? ”Says Siluris in the video.

The same chain had put this program under the magnifying glass in the summer in its investigation The Cyprus Papers, a work in which the identities of those investors who were allegedly buying community passports were revealed: Russian oligarchs, wealthy businessmen Chinese, Vietnamese, Americans, British, Israelis, Palestinians, Saudis, Cambodians, Afghans and even the brother of former Lebanese Prime Minister Najib Mikati, one of the richest men in Lebanon. Many of them, classified as Politically Exposed Persons (PEP, in its acronym in English), were accused of money laundering, corruption and embezzlement in their countries and found a kind of hiding place on this island. “Cyprus has been the back door to the EU for criminals and people with criminal records”, says Mavrou convinced, who also, citing a 2019 report from the Cypriot Ministry of Finance, reveals that those 7,000 million euros have not had an impact on the economy of the country as a whole, but a good part of the proceeds has gone to the hands of a few. “On the coast of Limassol (in the south of the island), for example, you can see skyscrapers that are part of the real estate investments that a foreigner could make to obtain citizenship (…) There are usually more Russians there”, he illustrates.

Ava Lee, head of anti-corruption campaigns at Global Witness, one of the organizations that, like Transparency International, has been denouncing these practices for years, welcomes Nicosia’s braking of the Citizenship by Investment scheme, but believes that “while other Member States of the EU continue to offer visas, passports and citizenship to anyone with money to spare, the whole EU will remain at risk, ”he wrote in an email. “It is time, once and for all, for the whole of Europe to come together to agree that citizenship is more than often dirty money.”

Business model

Many countries hit by the Great Recession saw citizenship grant programs as a legal opportunity to improve their economy. This was the case of Malta, which, together with Bulgaria and Portugal, continues to be scrutinized by Brussels and an anti-corruption NGO. In Spain, however, the Government of Mariano Rajoy approved in 2013 a law by which foreigners could obtain a visa and residence in exchange for the purchase of houses of more than 500,000 euros. It is the so-called golden visa that, unlike the Cypriot case, does not set off alarms in Brussels since nationality is not used as a purchase asset.

“In the end they are business models to get money, but that is not an excuse to accept this and become a criminal”, says the German MEP. In a recent report, Giegold also adds northern countries like Latvia as common places where non-EU citizens engage in money laundering. “For too long, black money has been flowing to Europe through the residency and citizenship programs of some EU states that have not been careful and endanger the internal security (of the EU)”, has launched this Wednesday this MEP in a statement urging the European Council and the German Government, which holds the rotating presidency of the EU until 2021, to take more severe measures.

At the moment no one has been officially charged in Cyprus, although the deputy Giovanis resigned on Tuesday night, becoming the first and, for the moment, the only one who has assumed his political responsibility in the plot. “We are asking for the indictment of all those who have had something to do with this scheme,” insists Mavrou. “This goes beyond the reputation [of the country]. It’s about being taken seriously. That they respect us as a State ”, he concludes.

Link to the original article (in spanish): El País