Cyprus urged to scrap ‘corrupt’ golden visas

Editorial
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Cyprus urged to scrap ‘corrupt’ golden visas

Cyprus Citizenship for Investment scheme has not only attracted Al Jazeera’s attention but also come under scrutiny from global anti-corruption watchdog Transparency International who wants it binned.

Transparency International, a Berlin-based non-governmental organization, committed to combating global corruption, has called on the European Commission to take decisive action against the scandal-ridden ‘golden visa’ schemes.

The NGO’s call follows a leak of Cypriot government documents which it said showed that the Citizenship for Investment schemes remain vulnerable to corruption and money laundering.

Transparency International said, “the Cyprus Papers – a new series by Al Jazeera’s Investigative Unit – shows that the EU is currently defenceless against the haphazard sale of EU citizenship and residency to criminals and the corrupt”.

Investigative reporters obtained a trove of documents that appear to show how an investment of over €2 million in Cyprus secured EU citizenship for 1,400 wealthy individuals and their 1,100 family members from 2017 to 2019.

Reportedly, among the primary applicants were at least 30 individuals with pending criminal charges or convictions, as well as 40 politically exposed persons.

“Despite sporadic reforms in response to criticism and public scandals – Cyprus’s golden passports scheme has remained vulnerable to corruption and money laundering”.

Some on the list appear to have bought their passports after the government introduced more stringent eligibility criteria in May 2019.

For example, former Gazprom official Nikolay Gornovskiy was on Russia’s wanted list for corruption when he reportedly bought EU citizenship in 2019.

“The government of Cyprus has previously admitted mistakes, committing to fix loopholes and to revoke citizenship from those who should not have been granted it in the first place.”

But the Cyprus Papers show that the problem is far greater than occasional lapses of judgement. By design, the Cypriot scheme is prone to abuse and the only adequate response is to suspend it,” said Laure Brillaud, senior policy officer at Transparency International EU.

“These investigations add to the mounting evidence that the Member States have little incentive to sufficiently reform their golden visa schemes to prevent abuse.”

Al Jazeera on Tuesday published another part of the Cyprus Papers, claiming that more than 1,000 Russians obtained a Cypriot passport through the investment scheme.

Documents obtained by Al Jazeera’s Investigative Unit showed that almost half of the applications came from Russia.

“Showing how the country’s political and business elite, billionaires and criminals have been buying their place in the EU, granting them the ability to travel, work and bank in the whole of the EU”.

Al Jazeera reported that a number of Cypriot passport holders have made their money through political and economic relationships with their own government.

Its list includes a number of politically exposed persons like former Deputy Minister Igor Reva and former Russian MP Vadim Moshkovich.

The list provided by Al Jazeera also includes the former boss of a subsidiary of the state-owned railways, Vitaly Evdokimenko, and Vladimir Khristenko, who comes from a highly politically connected family, his stepmother is the current deputy prime minister of Russia.

Al Jazeera ‘probe’ a smear campaign says minister

Andrew Rosenbaum
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Al Jazeera ‘probe’ a smear campaign says minister

For a second day on Monday, the Qatar state-owned broadcaster Al Jazeera continued to release a selection of 1,400 Cyprus government documents regarding the Cypriot Investment Programme which it claimed showed citizenship was “sold to dozens of foreigners linked to crime and corruption”.

Interior Minister Nicos Nouris swiftly condemned the reports on the programme which grants citizenship in exchange for investment and implied Turkey was involved in an attempt to wrongly discredit Cyprus.

“We should ask why an organisation like Al Jazeera, when we know to which country it belongs and we know where this country stands politically, chooses this moment in time to try to deal a blow to the Cyprus Republic. This is a question we must all ask including those criticising the operation of the (citizenship) programme,” he told the Omega TV lunchtime programme.

He was referring to the very close political, military and economic ties between Qatar and Turkey and at a time when tensions have risen in the eastern Mediterranean.

The Al Jazeera reports are at best disingenuous, at worst malicious, deliberately portraying the programme as a means for politically exposed or criminal persons to obtain citizenship in Cyprus.

Not only are the facts reported incomplete, and the description of the programme inaccurate, but the source of the “huge leak of confidential Cypriot government documents” was the result of deliberate abuse of personal data by officials in Cyprus.

What is true about the Al Jazeera series is that it is intended, on the one hand, as a political smear, and on the other as an attempt to discredit the Cypriot Investment Programme just after it has been carefully reformed and redesigned to ensure careful selection of awarding citizenship. The Al Jazeera series claims to report “flaws” in the Cyprus scheme, but makes no attempt to report the facts.

The Cyprus Mail will in two upcoming articles reveal the smear tactics used by Al Jazeera, the means behind this criminal leak of personal data, and the questionable motivations behind this attempt to hurt Cyprus’ reputation. The articles will also explore the well-known political influences to which Al Jazeera has shown to be subject – from both Qatar and Turkey.

First, we report the real facts behind the Cyprus Investment Programme.

Nouris on Sunday stressed that all the individuals revealed by Al Jazeera were evaluated according to the criteria in force at the time – and that these criteria have since been tightened and reinforced.

“We want to clarify that all the individuals mentioned in an Al Jazeera article were evaluated according to the criteria which were in force at the given time and which fulfilled the consent of all relevant services in Cyprus and internationally had been secured for these individuals,” he said.

“It is well known that the Republic of Cyprus has made successive changes to improve the citizenship-by-investment programme, most importantly the recent vote by the House of Representatives, regulations which ensure transparency, credibility and continuous control both before submitting an application and after obtaining Cypriot passport.”

On Monday he also warned that there was a personal data issue. Reproduction of the names of people granted passports was a criminal offence, something confirmed by the Commissioner for the Protection of Personal Data.

Asked whether he suspected who had leaked the 1,400 applications for citizenship, between 2017 and 2019, which Al Jazeera claimed to have in its possession, Nouris said he did not. All he knew was where the documents went. The services involved were those of the interior and foreign ministries as well as the House of Representatives.

‘Golden Visa’ Programmes

The United States, the United Kingdom, Malta, Canada, New Zealand, Singapore, Greece, Switzerland, Bulgaria, Spain, Portugal and Turkey also all have ‘golden visa’ programmes, in which foreign investment or the movement of assets into the country leads to a residence permit, and nearly always eventually to citizenship.

These programmes have been the subject of criticism for some years. The UK programme was recently described thus by the Lydon Consultancy: “The revelations about this programme have included a smattering of cases of corrupt governmental kleptocrats and of ‘businessmen’ whose wealth has been derived from criminal, or at least highly suspicious, activities.”

But it is wrong to single out the UK, or the US, because legitimate criticism of this type has been ongoing for decades with regard to nearly every market of this type.

Reforming the Cyprus Programme – Revocation is possible

The Cyprus programme was first implemented in 2007, and in 2013 was extensively reworked and tightened, then again in 2014 and 2016.

Direct investment, to the amount of €5 million, or bank deposits, government bonds, business activities in Cyprus, along with further terms were the basis of the required investment. Character references were evaluated, and later, those with criminal records were not eligible. Applicants were required to own a private residence worth at least €500,000 and to hold a valid residence permit.

In 2019, further tightening measures were added. A €75,000 donation or investment in Cyprus research or into innovative companies was added, along with a mandatory donation of €75,000 to the Cyprus Land Development Corporation.

Investments are required to be maintained for at least five years. Applicants must already have a Schengen visa in order to acquire citizenship.

All of this is subject to enhanced due diligence, not only by government agencies but also by independent third-party experts like the well-known Kroll.

Citizenships that have been awarded may be revoked if there are questions about the present or past conduct of the persons in question.

In a following article, the Cyprus Mail will show how Al Jazeera has been subject to political influence and banned in many countries. This unjust attack on Cyprus and its institutions does not come at this time for an arbitrary reason.

Al Jazeera names ‘golden passport’ holders

Nigel Howarth
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Al Jazeera names ‘golden passport’ holders

The names of individuals who obtained so-called ‘Golden Passports’ and citizenship through the much-criticised Cyprus Investment Program have been published by Al Jazeera in a second of its exclusive reports.

The individuals include convicted criminals, oligarchs on the run from the law, and government officials. Al Jazeera has only published the names of individuals when there is clear evidence of wrongdoing or if the person is a Politically Exposed Person who would no longer be entitled to obtain Cypriot citizenship and a passport. There is no suggestion of wrongdoing by the PEPs listed in the Cyprus Papers.

Analysis by the Investigative Unit found that at least 60 people who bought passports between 2017 and 2019 would have been rejected as “high-risk” according to the rules that exist in Cyprus today. It has published the profiles of 100 individuals, including:

High-risk – Limits the list to 60 named profiles that are categorised as “high-risk” according to the criteria set out in the 2019 rules.

Politically exposed – 35 Politically Exposed Persons (PEPs) whose applications put the Cyprus Investment Programme at risk from political corruption.

Redacted profiles – These profiles have had their names redacted. They conform to the laws that currently regulate the scheme. They have been included to show its appeal among a global elite that includes at least 15 billionaires.

The list includes profiles of EU citizens from Bulgaria, France, Germany and the United Kingdom and EU candidate country Serbia.

It also includes profiles of Afghans, Americans, Chinese, Egyptians, Hong Kongese, Indians, Indonesians, Iranians, Israelis, Kazakhstanis, Lebanese, Nigerians, Pakistanis, Palestinians, Russians, Saudi Arabians, South Africans, Syrians, Emiratis, Venezuelans and Vietnamese.

The rules have tightened in recent years in response to critics who want the scheme shut down. The EU says it is a back door into Europe for criminals and dirty money.

Full details may be found on the Al Jazeera website.

Details include the names of the individuals concerned, an analysis of those who obtained Cyprus citizenship and a ‘Golden Passport’ by nationality, the new rules for applicants applying for Cypriot citizenship that were introduced in 2019 and the 2020 law to strip citizenship.

Cyprus sold passports to criminals and fugitives

Al Jazeera Investigative Unit
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Cyprus sold passports to criminals and fugitives

Convicted fraudsters, money launderers and political figures accused of corruption are among dozens of people from more than 70 countries who have bought so-called “golden passports” from Cyprus, according to a large cache of official documents obtained by Al Jazeera’s Investigative Unit.

The Cyprus Papers is a leak of more than 1,400 passport applications approved by the government of the island nation between 2017 and 2019, and it raises serious questions about the Cyprus Investment Programme.

Passports for the Greek part of the divided island can be important for individuals from countries that have restricted access to Europe, as Cyprus is a member of the European Union (EU) and a passport offers its holder access to free travel, work and banking in all 27 member states.

In the coming days, Al Jazeera will reveal the identities of dozens of people who acquired Cypriot citizenship who, according to the country’s own rules, in many cases should not have received a passport.

Security risk

To apply for a Cypriot passport, applicants must invest at least €2.15 million ($2.5m) in the Cypriot economy, usually by buying real estate, and have a clean criminal record.

However, applicants provide their own proof of eligibility, and although Cyprus claimed to check applicants’ backgrounds, the documents obtained by Al Jazeera prove that this did not always happen.

Since its inception in 2013, the programme has received repeated criticism from the EU, which has called for it to be closed down.

Burisma and Gazprom officials

Between 2017 and 2019, the countries with the highest number of people applying were Russia, China and Ukraine.

Among the approved applications seen by Al Jazeera was Ukrainian tycoon Mykola Zlochevsky, owner of the giant Burisma energy company.

When Zlochevsky bought his Cypriot passport in 2017, he was already under investigation for corruption in his home country.

In June 2020 Ukrainian prosecutors said they were offered $6m in cash to drop the investigation.

Zlochevsky and Burisma deny any knowledge of the bribe.

Like many on wanted lists in their home country, Zlochevsky’s Cypriot passport allows him to live beyond the reach of Ukrainian law enforcement.

A similar application came from Russian national Nikolay Gornovskiy, former boss of the state-owned energy giant Gazprom.

Gornovskiy was already on Russia’s wanted list for abuse of power when Cyprus approved his passport in 2019 and has so far thwarted all attempts to extradite him.

Other applications were approved even after the applicant had been arrested and sometimes even served their time in prison.

Ali Beglov, a Russian national, bought his passport despite serving a prison sentence for extortion, which should not have been possible according to Cyprus’s rules.

Chinese businessman Zhang Keqiang also received a Cypriot passport, despite having spent time in prison for a fraudulent share deal.

Vietnamese businessman Pham Nhat Vu’s passport was approved a month after he was charged with giving millions of dollars in bribes in a telecoms deal.

He is now serving three years in jail.

According to Laure Brillaud, Senior Policy Officer with Transparency International, an NGO focused on combatting international corruption, these results are worrying but not surprising.

“These programmes bear inherent risks of money laundering, corruption and tax evasion. They were designed to attract people just looking for a fast track to the EU,” she told Al Jazeera.

Stricter rules

In May 2019, Cyprus introduced tougher rules on who was eligible for citizenship, which banned anyone under investigation, wanted, convicted or under international sanctions from buying a passport.

Cypriot parliamentarians in July finally passed a law that gave the country the power to remove citizenship after several scandals involving notorious golden passport investors, but politicians voted against any move to publish the names of those who buy Cypriot citizenship.

The new stricter law applies to anyone who commits a serious crime, is wanted by Interpol or subject to sanctions in the 10 years after they bought their passport.

Cyprus is reviewing all past applications and announced about 30 unnamed people face losing citizenship, but The Cyprus Papers reveal many more may fall foul of the new law.

They include people such as Venezuelan Leonardo Gonzalez Dellan, an ex-banker, who was sanctioned by the United States for laundering millions in illegal currency deals for the Venezuelan government.

Another person who could lose his passport is Oleg Bakhmatiuk, under investigation in Ukraine for embezzlement and money laundering relating to his giant agricultural firm.

He called the charges “a complete fabrication and politically motivated”.

Although Bakhmatiuk told Al Jazeera the proceedings against him had ended with the charges dropped, the country’s official prosecutor confirmed he is still on Ukraine’s wanted list.

Embezzlement and money laundering

Some other examples of passport holders facing serious charges are Russian brothers Alexei and Dmitry Ananiev, who bought citizenship in 2017.

They are accused in Russia of embezzling from the bank they once owned.

Another person who received Cypriot citizenship is Chinese national Li Jiadong, who was sanctioned by the US for laundering $100m in cryptocurrency related to North Korean hackers.

Lastly, there are Maleksabet Ebrahimi and his son Mehdi, who are both on Interpol’s most-wanted list for money laundering and fraud in Iran and facing similar charges in Canada.

Maleksabet Ebrahimi denies the charges against him and says he complied at all times with Iranian and Cypriot laws.

‘Cyprus should be ashamed’

In response to questions from Al Jazeera, Cypriot Member of Parliament Eleni Mavrou said: “The way the programme was implemented the last few years was obviously a procedure that allowed cases for which the Republic of Cyprus should be ashamed.”

“I believe that the new regulations will not leave room for foul play or for stepping over the boundaries that a state should respect,” she added.

The Minister of the Interior, Nicos Nouris told Al Jazeera: “No citizenship was granted in violation of the regulations in force at the given time.”

Over the coming days, Al Jazeera will reveal dozens of other people who acquired Cypriot citizenship including many who would now be in breach of the country’s rules for application.

© 2020 Al Jazeera Media Network

Luxury towers could become white elephants

Editorial
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Luxury towers could become white elephants

Developers fear they will be left with a large glut of unsold luxury apartments on the market as interest from foreign investors wanes due to COVID-19 restrictions.

Built to suit the needs of foreign investors eyeing a Cyprus passport, and beyond the pocket of local buyers, these luxury apartments will soon start piling up, as applications filed from investors has dropped to less than a third of previous years.

The government expects to see some 200 applications a year, following tougher Citizenship for Investment criteria combined with restrictions imposed in the wake of the coronavirus outbreak.

Cyprus on average would process 700 applications from foreign investors every year since the program began in 2013.

Interior Minister Nicos Nouris has expressed satisfaction as “this year, despite the difficult international circumstances, around 20 applications per month were submitted for the first five months of 2020, despite the pandemic”.

A total of 107 applications have been submitted up to May, applications are expected to drop further, as they traditionally do, during the summer period.

However, developers remain confident that interest will pick up and that the drop in applications is collateral damage caused by the coronavirus outbreak.

In comments to news site Stockwatch, the executive director of the D. Zavos Group and member of the Cyprus Land and Building Developers Association (LBDA) Michalis Zavos, said: “As a direct result of the coronavirus outbreak, the flow of applications has decreased to around 200.

“But I hope that by the time the pandemic ends we’ll get back to receiving 500 or more applications as from our side we can see that investors’ interest has been rekindled”.

Zavos noted that the pandemic put investors off as they could not physically come to the island to inspect prospective investments worth millions.

“Developers have grave difficulties in acquiring visas for interested investors as the majority of foreign investors are from third countries which are either in category B or not even mentioned in Cyprus’ epidemiological risk assessment list.”

The developer argued that 2021 would see applications from foreign investors stream in, creating a backlog.

He attributed his optimism to three reasons.

“We know for a fact that many foreign investors and businessmen from various countries want to relocate their families to Cyprus and not just invest.”

Secondly, as he said, Lebanon was added to these countries, with several well-off families who are looking to move permanently to Cyprus and are looking for luxury homes.

“The same trend prevails with Russian investors who want to obtain a Cypriot passport through the investment program and stay on the island.”

Zavos said the tightening of the much-maligned CIS program with its enhanced due diligence procedures makes it even safer and more credible.

“While previously we had investors, who felt insecure that their agreement could be overturned at some point and remain exposed, they will now feel safer with the new regulations because the Cyprus investment program is now more credible, and no one can question it.”

Danos Real Estate sales manager Agathangelos Constantinou said sellers are concerned as they feel that if citizenship applications from foreign investors are limited to just 200 a year then there will be a surplus of luxury apartments on the market.

“If we take into account that the ceiling sets 700 naturalizations per year, the reduction is more than two thirds, so the developers who have launched their projects with this in mind will be left with a large percentage of unsold apartments, with unforeseen consequences.”

He added: “Currently there is a surplus because the naturalisation processes have been put on ice and because foreign investors from Russia and China, cannot travel.

“However, we expect to see them return when the situation stabilises and things return to some sort of normalcy”.

Constantinou praised the new framework introduced for the CIS program.

Property prices could crash

Cyfield Group CEO, George Chrysochos, appeared puzzled over the minister’s estimates of 200 applications in 2020.

“The Interior Minister says 200 would be a satisfactory number. But the problem is that we have a huge stock of luxury properties that are directed at foreign investors within the framework of the Cypriot passport plan for an investment of €2 million, especially in Limassol and Paphos.”

He warned that that on Limassol’s coastal road alone, from the village of Moni to the port there are some 3,000 luxury apartments which are under construction or are about to start.

“The ball is at the feet of the private sector. They can and will have to regulate their development plans in such a way that the market is not overflooded by the supply of such developments, which could destroy the market”.

Chrysochos said the risk of prices crashing is a remote possibility, as these type of properties depend largely on the connections and networking of the developer abroad, and on advertising and promotion.

Big developers have brokers all over the world, so it is difficult to influence the prices, he pointed out.

According to Chrysochos, prices could start falling in the next 2-3 years following the period during which a foreign investor must hold on to the property they bought to obtain a Cypriot passport.

“Then we could see prices plunging, especially in Limassol and Paphos will be affected, as a developer may be selling the same type of apartment, even in the same building, at a higher price than the investor who is looking to unload a property they do not need anymore.”

He does expect things to balance out as he feels that applications in the coming years will pick up, stabilizing between 300 and 500 annually.

Cyprus residential property prices decelerating

Cyprus News Agency
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Cyprus residential property prices decelerating

The Residential Property Prices Index (RPPI) for the first quarter showed signs of slowing down due to the stricter criteria imposed on the Cyprus Investment Programme and uncertainty created by the coronavirus pandemic.

The RPPI compiled by the CBC, rose by an annual 1.8% in the first quarter of 2020 compared with an increase of 2.2% in the fourth quarter of 2019 and 2.8% in Q3 of 2019.

“The limited increase is due to the reduction of demand for real estate both by foreign investors and local buyers,” the CBC said, adding that the slowing down trend are fuelled by the stricter criteria in the Cyprus investment programme that came into force in mid-2019, while the Covid-19 pandemic renders the climate even more uncertain.

According to the CBC, in Q1 2020 both prices in houses and apartments have registered annual growth amounting to 0.8% and 4.6% compared with 1.5% and 4.1 respectively in the previous quarter.

In the first quarter of 2020, the RPPI recorded a quarterly increase in al districts with the exception of Limassol that fell by 0.3%, the CBC said.  Prices in Larnaca rose by 1.7%, in Pafos by 0.8%, in in Nicosia by 0.4% and in Famagusta by 0.3%.

Compared with the first quarter of 2019, the RPPI rose in all districts. Famagusta rose by 3.6%, Larnaca by 3.0%, Limassol by 1.9%, Pafos by 1.4% and Nicosia by 1.2%.

On a quarterly basis (compared with Q4 2019), house prices in Limassol declined by 1% followed by Pafos where they declined by 0.6%. In Larnaca house prices rose by 1.8%, in Famagusta by 0.6% and in Nicosia by 0.2%.  On an annual basis, house prices felly by 0.2% in Limassol while Prices in Pafos remained unchanged.

On their part, apartment prices registered Q1 200 the eighth annual increase for the eighth consecutive quarter, with prices in Larnaca showing signs of slowing down.

Apartment prices in Larnaca rose by 5.0% compared with an increase of 7.4% in the previous quarter. Apartment prices in Limassol rose by 7.9% from 7.6% in the previous quarter, 4.3% in Pafos (from 1.6%), 2.4% in Famagusta (0.8%) and 2.3% in Nicosia (1.5%).

Demand for properties buy overseas investors fell by 10.9% and by 4.4% for locals in the first quarter of the year. While demand for properties has been affected by the outbreak of the pandemic, the fall had begun before the appearance of the Covid-19 said the Central Bank.

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