How Malta’s cash-for-passport scheme gives the super-wealthy an EU backdoor

The Maltese government is facing questions over its cash-for-passports scheme after a leak revealed that millionaires from Russia, China and Saudi Arabia have secured unrestricted access to the EU despite spending less than three weeks in the country.

A “cache of thousands of emails and documents” from passport brokerage Henley & Partners has provided an “unprecedented window” into the “mechanics” of Malta’s golden passport scheme, The Guardian reports, prompting scrutiny of the already controversial plan.

The leak reveals that super-wealthy individuals hoping to gain access to the EU were able to “create a pretence” that they were “resident” in Malta for a year. They did so “by renting apartments and then leaving them empty”, the paper adds.

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‘Genuine link’

To gain access to a passport through the Maltese government’s Individual Investor Programme, applicants must invest upwards of €1m (£866,000) in the country and prove a “genuine link”, including living in the country for one year. This provision was introduced in 2014, after the European Commission first raised questions about the scheme and its surrounding due diligence.

However, documents obtained by the Daphne Caruana Galizia Foundation, an NGO founded after the murder of a Maltese investigative journalist, found that a “loophole” in the scheme allowed some applicants to claim a link while “spending just a couple of weeks holidaying there”, The Guardian reports.

The paper adds that wealthy applicants often made other “superficial gestures”, such as “renting a yacht or donating to a local charity”, and that the disclosure will “alarm the European Commission” after it urged a crackdown on golden passport schemes in 2019.

EU passports were handed out after individuals “flew in and out of Malta within 24 hours of swearing an oath of allegiance to the country”, the Times of Malta reports, with others claiming a link to the country by “taking up a newspaper subscription”.

Applicants would arrive in Malta with the “express purpose” of “picking up their residency card, opening a bank account, signing documents and other formalities that required their physical presence”, the paper adds.

In one instance, the paper found that a wealthy investor decided to “visit the apartment the family had rented” as part of their application, but on arriving at the address found that the building linked to their application was “still being built”.

Henley & Partners, a “citizenship planning” company founded by Swiss businessman Christian Kalin, “played a key role in the creation of Malta’s golden passport scheme, advising the government on how it should be structured”, The Guardian reports.

In a statement to the paper, the company said that it was “fully aware of the potential inherent risks in handling client applications for residence and citizenship”, adding that it has “invested significant time and capital in recent years to create a governance structure that is committed to the highest of standards, with due diligence at its heart”.

The Maltese government has not publicly responded to the investigation. However, it previously defended the scheme.

VIP guest list

The leaked documents also reveal not just how the scheme functions but also who has made use of it and the extent to which the government woos high-profile applicants.

Irina Abramovich, the ex-wife of the Russian billionaire and Chelsea FC owner Roman Abramovich, was greeted at the airport in 2014 by an “S-class Mercedes” that drove her to Le Meridien St Julien’s, “a luxury seafront hotel with a Mediterranean view”, The Guardian reports.

Henley & Partners sought to arrange a “private tete-a-tete” with Maltese Prime Minister Joseph Muscat, the paper adds, before Abramovich joined the “851 wealthy Russians” to have sought citizenship under the golden passport scheme.

The Times of Malta reports that one applicant from the United Arab Emirates spent just “nine hours” in Malta, during which he “had an appointment to take an oath of allegiance”, while another from Nigeria completed the process in “just three hours”.

Prince Bander Al Saud, a member of the Saudi royal family who died in 2019, was also “allowed to bypass one of the few public transparency safeguards in the cash-for-passports scheme”, the Times of Malta also reports. Al Saud first met with Muscat and the then CEO of Identity Malta, the agency behind the scheme, in 2015 before becoming a Maltese and EU citizen in 2017.

Malta has long been blighted by corruption. Muscat stood down as prime minister in January 2020 after his chief of staff, Keith Schembri, was linked to Malta’s richest man, the property and gambling tycoon Yorgen Fenech, who was charged with the murder of investigative journalist Galizia in November 2019.

Her son, Matthew Caruana Galizia, who worked on the exposure of the documents, tweeted that the leak shows that the “genuine link” that was supposed to exist between “the passport buyer and the Maltese community was nothing more than a cynical box-ticking exercise”.

The cash-for-passports scheme is “making a mockery of the law”, he added in a second tweet.

Action stations

The disclosures contained in the documents are “likely to alarm the European Commission”, The Guardian says, which in October 2020 began infringement procedures against Cyprus and Malta in relation to their golden passport schemes.

In a statement at the time, the commission said that the legal action was in relation to the granting of citizenship “in exchange for a predetermined payment or investment” to individuals “without a genuine link with the member states concerned”.