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More Feelings Than Facts: Commentary on The Guardian’s Vanuatu Passport Series

 

Like many other countries around the world – big and small, rich and poor – the Southwest Pacific island nation of Vanuatu operates a Citizenship By Investment (CBI) programme wherein applicants get a passport in exchange for a sizable investment in the country’s economy. Revenue from the programme, now in its fourth year, currently amounts to a third of all government income that it desperately uses to fund essential services, especially since COVID has deprived it of much-needed tourism revenue.

On July 15, UK newspaper The Guardian ran an “investigation” on Vanuatu’s CBI programme, where it combed through the list of new passport holders to find disreputable characters and, thus, denounce the programme as dangerously light on vetting applicants.

Among them was an Australian ex-biker-gang member, a former provincial governor under the Assad regime in Syria, and other “fugitives, politicians and disgraced business people.” While there’s nothing wrong with being a politician or a businessperson, the newspaper alleged that some of these individuals obtained Vanuatu citizenship while “accused of” wrongdoing. 

Contacted by the journalists, Floyd Mera, the director of Vanuatu’s Financial Intelligence Unit, commented that all he saw in The Guardian‘s line-up of unsavoury characters were “allegations, pending investigations and ongoing court proceedings,” and a few had active cases against them only after they had obtained their Vanuatu passport. He went on to say that any substantial conviction against any of these people would get their citizenship revoked in keeping with Vanuatu’s CBI rules, and he promised to take another look at the persons cited in the articles.

So when The Guardian states, “Vanuatu was selling passports to individuals with links to fraud or sanctions and others who were sought by police in their home countries,” the actual meaning of those words is somewhat distorted because none of the applicants listed have been found to have criminal/conviction records during the vetting process. And sanctions from one single nation do not have the same influence as internationally-agreed sanctions from the U.N., which indeed would be a dealbreaker.

Taking the moral high ground

On a factual, legal, documented basis, the investigation fails to support the claim that Vanuatu’s CBI programme (a more apt terminology than “selling passports”) accepts criminals or money launderers. 

But writing for a newspaper is about telling stories, and stories need both information and emotion to engage readers. 

On the emotional side of The Guardian‘s stories, there’s a recurring theme that Vanuatu granting citizenship in exchange for money is inherently a bad thing in itself, and that the alleged actions of these people are just the symptom of a much deeper concern. 

Deeming the CBI programme “highly controversial” without much demonstration beyond these alleged, yet-to-be-convicted wrongdoers is sending the overall message that on a fundamentally moral level, “selling passports” is wrong. That’s an interesting opinion, better placed in the editorial section. 

But these stories are indeed presented as an “investigation,” and quoting Mr. Mera’s defense was the right thing to do for journalists who are professionally compelled to get both sides of any story. However, in this case, it somewhat backfired. 

Mr. Mera’s statements refuted the premise of the whole investigation. Under the headline “Who’s buying Vanuatu passports?” readers had every reason to expect they would be shocked upon discovering the terrible people who held Vanuatu passports. Finding no convicted criminals currently holding a Vanuatu passport made that expectation fall flat except, of course, if Mr. Mera’s statements are proven untrue. That’s a tall order given all the available documentation.

Vanuatu is far from alone

Another passage has the journalists nearly shooting themselves in the foot when they recognize that it “is not illegal and many countries around the world offer CBI programs. There are many legitimate reasons for applying, including improved freedom of movement or tax-free offshore banking privileges.”

It is true that many countries offer citizenship or residency with a path to citizenship, including the U.S. and wealthy European nations. And while Vanuatu insists on checking criminal records from the country of residence and citizenship of every applicant to its programme, some European countries don’t even apply this requirement to individuals who apply for naturalisation there.

The realm of imagination

While unknown “experts” quoted by The Guardian warn that “the scheme is ripe for exploitation […] allowing transnational criminal syndicates to establish a base in the Pacific,” just stating that something may happen doesn’t make it happen. This qualifies as the realm of imagination and, again, storytelling. 

As Ronald Warsal, chairman of the Vanuatu Citizenship Office and Commission, eloquently said in the article: “Vanuatu is a signatory to […] most internationally sanctioned treaties and has ratified such treaties in recent years prohibiting transnational criminal syndicates to operate within its [jurisdiction] and as such, it is hard for international criminal syndicates to establish a base in Vanuatu.”

Like many of the other CBI programmes in the world, Vanuatu’s includes a careful vetting process in order to avoid issuing criminals with a passport, including a thorough check of criminal records worldwide. Every single applicant goes through a redundant vetting process by three of the country’s most robust institutions(FIU, COC, and NBV). And the zeal is understandable.

A question of economic survival

Think about it for a minute: Who would be the first victims of Vanuatu’s alleged inability to properly vet applicants? The government badly needs this revenue to function. If the vetting weren’t stringent and bad apples were left to enter, they would tarnish the reputation of the programme and lead to the loss of some of its benefits; for example, Vanuatu passport-holders enjoy visa-free access to the Schengen area, and the country’s authorities are wary of letting any ill-intentioned new citizen cause trouble in Europe if they want the passport to retain its value and good name.

Finally, the article states: “Many in Vanuatu see the scheme as an affront to the sovereignty of the young country.” It is true, there have been arguments between our citizens about the CBI programme, as there should be in any healthy democracy. Notwithstanding that, the programme is actually a celebration of our sovereignty as it exercises a privilege reserved for sovereign states which many other states exercise.

More Opinion

On a factual and legal basis, the investigation fails to support claims that Vanuatu accepts criminals or money launderers, writes Martin St-Hilaire.

“As a general rule, it is not advisable to earmark the revenues generated by RCBI programs to reduce public sector debt,” writes Andrés Solimano.

Though the Senate rejected Grassley and Leahy’s request for unanimous consent, reauthorization bills are still pending, writes Aaron Grau.

 

The post More Feelings Than Facts: Commentary on The Guardian’s Vanuatu Passport Series appeared first on Investment Migration Insider.

From List of 2,000+ Names, Journalists Uncover Handul of Questionable Vanuatu Cases

In a series of four articles and a podcast episode published today, The Guardian has summarized the findings of what it says is a months-long investigation into the Vanuatu citizenship by investment program. Through freedom of information requests, the newspaper obtained the names of all 2,000-odd approved applicants from 2020. Having combed through the list and confirmed identities, The Guardian identified a handful of cases over which to raise eyebrows.

Most of the individuals highlighted in the articles

The list includes:

  • Two South African crypto-entrepreneurs who in April this year were accused of absconding with billions worth of cryptocurrencies, allegations they categorically deny. One of the two co-founders of crypto-trading platform Africrypt, who are also brothers, reportedly obtained ni-Vanuatu citizenship in October 2020, while the other received his in January this year. In both cases, the allegations only surfaced several months after their approval for citizenship.
  • The Guardian also named Libya’s former prime minister, Fayez al-Sarraj, as among Vanuatu’s new citizens. According to the newspaper, the Prime Minister and his family gained citizenship in Vanuatu in January 2020, while he was still in office. Though the Guardian suggest no wrongdoing, it notes that he is plainly a Politically Exposed Person and that would, as such, be subject to enhanced scrutiny by Vanuatu’s Financial Intelligence Unit and likely unable to qualify under most other CIPs.
  • A former Syrian governor is also included in reports. He is not accused of anything in particular. Syria is on Vanuatu’s banned nationalities list but – like in the Caribbean – exceptions are made for those who have been residents elsewhere for a number of years. In this case, the governor demonstrated he had held a residence permit in Lebanon for a full six years prior to applying for Vanuatu citizenship.
  • An Italian businessman who is accused of extorting the Vatican (he denies the charges) also features in The Guardian’s list. A UK court granted the man conditional bail in May this year. The Guardian made no mention of when the individual had applied for citizenship in Vanuatu.
  • A Syrian businessman who co-owns a number of companies sanctioned by the United States obtained ni-Vanuatu citizenship in January this year. Ronald Warsal, Chairman of the Citizenship Commission, told the newspaper that the man’s application “was lodged prior to sanctions on a number of his business and by the time his application came before the screening committee and the FIU there was no adverse finding against him and the commission approved his application.” The man in question had also submitted proof of residency outside Syria for five years prior to application.
  • An Indian politician “embroiled in a multimillion-dollar cattle- and coal-smuggling case in western Bengal” received approval for ni-Vanuatu citizenship in November last year. No allegations of criminal activity had surfaced at the time of application.
  • An Australian former member of a motorcycle club whose members have been involved in criminal activity also featured on the list as having received his Vanuatu passport in September last year. The individual is not wanted in relation to any crime and it was not immediately clear why he was included in the report.
  • A former Australian fund manager named Zhou Xiang Huang who reportedly fled Australia in July 2020 is also named. The Guardian maintains that he got his Vanuatu citizenship in May 2020, i.e. before he became a wanted person.
  • A former Turkish banking magnate, who was convicted for embezzlement in 2013 and for harboring a fugitive in 2011, years before applying to Vanuatu’s CIP. Speaking to the journalists, the head of Vanuatu’s CIU said they had uncovered nothing untoward about the man from its databases and that there were no Interpol notices about the banker when it approved his application in January last year.

With the exception of the latter instance, The Guardian’s list of individuals demonstrates no glaringly negligent approvals on the part of the FIU and Citizenship Commission. In similar reports from the same newspaper in the past, most cases highlighted as “disconcerting” have been related to investor migrants who turned out to be criminals after their citizenship approvals. This magazine has argued in the past that CIUs can’t be expected to reject applicants whose alleged crimes are not yet known.

“I don’t expect these revelations to have a negative impact on demand,” said Georg Chmiel, Executive Chairman of Juwai IQI upon learning of the story. “The authorities are explicit about the fact that they have the right to revoke investment migrants’ citizenship, even after they have a Vanuatu passport. One reason that Vanuatu cannot charge more for investment migration is because of this risk.”

Most CBI jurisdictions reserve the right to revoke citizenships where misdeeds are uncovered post-hoc. Indeed, just two years ago, Vanuatu revoked the citizenships of four Chinese nationals wanted by China over a crypto-currency scam. The move was widely criticized for having circumvented the conventional legal proceedings usually involved in revocations.

In 2018, Saint Lucia revoked the recently approved citizenships of six named applicants because of what the government said were acts they had committed that would harm the country’s reputation.

Upon receiving the list of salient cases from the Guardian this week, Vanuatu’s FIU promised to review the individuals in question, which could lead to revocations.

The post From List of 2,000+ Names, Journalists Uncover Handul of Questionable Vanuatu Cases appeared first on Investment Migration Insider.

Malakouti: The Guardian Reaching to Find “Loophole” in Malta

 

Last Thursday’s The Guardian article titled “Revealed: residency loophole in Malta’s cash-for-passports scheme” only revealed itself to be an overpromising non-exposé. 

More sizzle than steak

The piece’s sensational title fizzles down to the humdrum “discovery” that some applicants to Malta’s citizenship by investment program only spend the minimum amount of time in Malta required by the program in order to satisfy the EU’s “genuine link” requirement [which, in any case, is an illegal argument]. 

Citizenship applicants the world over often complete the minimum statutory requirements to obtain the benefit. Immigration professionals and adjudicators alike know that this is hardly a revelation or a loophole. 

The core problem with The Guardian’s article is that instead of posing the simple but challenging question of whether Malta should be required to demand more physical presence of applicants (the intellectually honest framing of the issue), the article starts at the finish line by strongly implying from the get-go that residency with a “minimal” amount of physical presence is a “loophole” or “sham.” 

It’s a false insinuation that the authors likely employed due to either temptation to sensationalize or lack of understanding.

In fact, residence and physical presence are two separate concepts. Residence requirements for naturalization in some countries require significant physical presence whereas some countries require less or even no minimum statutory physical presence.

Unfortunately, the average The Guardian reader, unaware of this diversity in the world’s residence regimes, may have fallen prey to the article’s insinuating language regarding Malta’s program applicants. 

After all, melodramatic titles with the terms “revealed”, “loophole”, and “cash” sell better than the dry language of sober EU citizenship policy questions. 

The Guardian overreached on this one. 

More Opinion

Post Grid lazy load

Parviz Malakouti: That CBI applicants the world over often complete the minimum statutory requirements to get the benefit is no “revelation”.

Many Americans still harbor serious myths and misunderstandings about alternative residences and citizenships, writes David Lesperance.

İsrafil Kahraman recounts five anecdotes of investors who had their Turkey citizenship applications rejected because of simple mistakes.

 

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