Germany’s Der Spiegel today: “Citizenship for the rich: Malta’s billion-dollar trade in EU passports”

Published: August 19, 2016 at 8:56pm

Germany’s most respected news journal, Der Spiegel, has published a hard-hitting piece today about Malta’s trade in EU passports. You have it in translation below. There is some confusion with the numbers, but the gist of it can’t be missed.


Malta has sold EU passports to wealthy investors – and takes hundreds of millions of euros. A list of new citizens has fuelled criticism of the trade.

Those who want to cross the Mediterranean from Africa and come to Europe have to pay smugglers thousands of euros. But if they have hundreds of thousands of euros they need not risk their lives. All they have to do is buy a Maltese passport. Since 2014, the Valletta government has operated a golden bridge to the European Union. Those who spend at least one million euros in the island state can be a citizen – and they do not even have to live there.

According to a list that has just been published the Maltese Ministry of Justice, more than 900 people received a Maltese passport last year alone. Two hundred and one of them did so, according to Justice Minister Owen Bonnici, under the ‘individual investor programme’ (IIP). So in 2015 alone, Malta took around 200 million euros from its trade in passports.

In line with Maltese law, the Justice Department must publish, every year, the names of all naturalised citizens – but the list clearly suggests that the Ministry is not the biggest friend of transparency. Yes, the list is in alphabetical order, but strangely enough, by first name. Without putting in much effort, it is difficult to see how many times, for example, entire families have become Maltese citizens. And the Maltese government conceals their country of origin.

Is this a back door to the European Union for Russian oligarchs?

This is more than just a provincial farce: anyone who is a citizen of a member state of the European Union can move freely within the Schengen area and can live and work anywhere in the entire EU. When the Maltese government had announced its plans for the ‘IIP’, criticism rained down on it. Other EU governments condemned the plans, and the European Parliament, in a resolution, said that citizenship in the EU should not be sold at any price.

Critics suspect that Malta is now a gateway for shady characters, like Russian businessmen who want to evade EU sanctions against Russia for its intervention in Ukraine. Malta is a tax haven which has long been known as a magnet for Russian money, and unsurprisingly, there are many Russian names on the newly published list.

Henley & Partners, the British company that organises the procedure, has confirmed publicly that most applicants are from Russia, China, the Middle East and South East Asia. The Maltese government has emphasised that the applicants are put through a rigorous process and that there is no question of criminals getting through.

Malta is by no means the only one to give access for cash. Permanent and temporary residence – though not citizenship – re offered against cash by Spain, Portugal, Great Britain, Hungary and Greece. But Malta stands out in more ways than one – and not just because of the large number of naturalised citizens relative to the small population.

One million euros for access to the EU

Malta does not require its new citizens to live on the island. The Valletta government was put under pressure to revise its conditions and did so slightly. Applicants must prove that they have stayed on the island for at least 12 months beforehand. But that, say Brussels insiders, is not monitored. Beyond that, it is enough to deposit €650,000 in national development and social funds, to invest €150,000 in Malta government bonds or in shares, and to buy a house or flat worth not less than €350,000 at least. Fees for the spouse and minor children are €25,000 each, and for €50,000 for older family members.

For rich businessmen it may be a small price to pay for free access to the financial centres of the EU, notably London. London law firms recently told the Financial Times that up to three-quarters of their clients who were interested in this went to Malta or Cyprus. In the UK, you can even buy a right of residence – but you have to invest £2 million and wait for six years, and the residence visa is valid for only a little over three years.

Actual citizenship of EU member state, which also costs much less, is far more enticing – probably even if Britain leaves the EU in a few years. For Malta, it is worth the deal. Justice Minister Bonnici said that in the second year of the programme, 2015, Malta received 578 applications. Malta plans to sell a total of 1,800 passports, which will bring in at least €1.2 billion.

But disquiet in the rest of the European Union remains great. “It isn’t right that a member state makes a business out of selling European Union citizenship,” the Green MEP Sven Giegold said. Luxembourg MEP Frank Engel compared the Maltese programme to the “practices of a banana republic”. There must be vigorous action against it, he told Politico.

But there is scant possibility of that happening: neither the European Commission nor the European Parliament have recourse at law to ban Malta from trading in passports, because citizenship law is the preserve of member states. “It makes no sense that we should have a common area for freedom of movement but then individual control on how citizenship is granted,” Giegold said. “We need to introduce uniform standards.”

But that will be difficult as long as trade in passports makes so much money for some.

Article summary: the government of Malta is doing a roaring trade in passports. Those who invest more than a million euros in the country are given citizenship – and thus access to the rest of the European Union. Critics condemn the trade, especially given the refugee crisis.

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