These last weeks much ado has been made about the Maltese scheme for naturalised citizenship for foreign investors (initially called Individual Investor Programme, today called Citizenship by Naturalisation for Exceptional Services). This scheme permits rich foreigners who invest substantial amount of funds in the country (more than €1 million) and are resident in the country (in the initial scheme for 12 months, and now between twelve and thirty months), amongst other conditions, to obtain Maltese citizenship (and consequentially a European one).
This scheme is referred to by its critics as ‘citizenship for sale’.
I had commented on this scheme in edition 174 of The Voice of the Maltese. Amongst others, I had considered that several countries had similar (not identical) schemes, like Australia, and Cyprus and Austria in Europe, and so I could not see such as scheme as being inherently objectionable, given it attracts funds and assets to the country, as long as precautions are taken, for example, not to accept people with a criminal history, transparency and independent oversight, unprofessional and corrupt conduct having real consequence etc.
Lately, investigative journalists discovered that Identity Malta as well as the concessionaire Henley & Partners had been interpreting the need for the old IIP scheme for twelve months residency as a legal, rather than a physical, one. This means that an applicant would not necessarily be expected to spending this amount of time physically in the islands.
Instead, an applicant would be expected to make alternative activities that demonstrate a genuine relationship with the country, like a donation to a charitable organisation, joining a local club, renting a phone service etc. This was all evaluated with a points system that measured its relevance to the expectation of a significant relationship with the country.
This points system one can understand, however I can not understand why points were also given for the purchase or rental of property, which had been one of the mandatory requirements of the scheme.
Probably many people would not understand how a requirement for residency be understood in any other way than a physical presence there for the stipulated period. The Maltese authorities are making that exact argument, that residence be considered legal, not physical.
More worrying to me are reports that properties were being rented not to serve as residences, but simply to tick the box that the requirement for a purchase or rental of a property had been accomplished.
This scheme does have its problems. There is no doubt that it has contributed economically to the country, a substantial one worth hundreds of millions of euros. There is no doubt also that it has dragged Malta’s name in the mud.
Given the importance of this scheme’s revenue in the country’s economy, I understand why the government is doing all it can to keep this scheme in one form or another. The problem will be that many in the country, and also institutions of the European Union, not least the European Commissin, will be sceptical that its governance can be credible.
If the scheme eventually folds prematurely, this will surely be a huge slap in the face economically.
1https://haskewlaw.com/second-citizenship-investor/residence-investment-austria/, retrieved 29/4/2021
2https://timesofmalta.com/articles/view/the-phantom-homes-and-shared-addresses-rented-by-passport-buyers.866349, retrieved 29/4/2021
3https://timesofmalta.com/articles/view/european-commission-mulls-legal-proceedings-on-golden-passports-scheme.825460, retrieved 29/4/2021
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