The citizenship application filed by the Saudi owner of jet used by President Nicos Anastasiades on various trips should have been rejected because it did not meet the criteria, the audit service said on Friday.
Through the citizenship by investment scheme, the Saudi owner and 38 other individuals – family members and friends – received Cypriot passports, the audit report said.
The auditor-general launched a probe into the affair after it transpired that the presidency had used a private jet to travel to New York for the UN General Assembly last September.
It later emerged that the owner had been granted Cypriot citizenship in 2015.
According to the auditor’s report, a joint citizenship application had been filed by the owner of the jet, two siblings and three other individuals.
“These individuals were granted Cypriot citizenship with a cabinet decision dated January 14, 2015,” the report said. “Along with the six individuals, citizenship was granted to 36 members of their families (spouses and children), 19 of which were members of the families of the three brothers.”
According to the criteria, the report said, the six applicants should have invested at least €15m (€2.5m each). No additional investment was needed for the family members to be granted citizenship.
The market value of an investor’s permanent residence is not included in the amount unless they decide to buy one residence only at a cost of over €2.5m. In that case they are not obliged to buy a permanent residence of at least €500,000.
“Approval of the application was not in line with the criteria in force on the date of the examination and consequently the citizenship application should have been rejected,” the auditor said.
The report said the applicants should have owned a permanent residence of at least €500,000 plus VAT.
“Since all purchases in the case in question were conducted through companies jointly controlled by the six applicants, there should be a legally binding designation of the residence that each owned,” the report said.
In the files presented by the finance ministry there was a December 31, 2014 note referring to an agreement signed by all applicants, “which, however, we haven’t located,” it added.
“It appears that such an agreement was not submitted to the finance ministry.”
Even if it had been, however, it does not seem to meet the condition stipulating that each applicant must own a permanent residence of €500,000 plus VAT, the auditor said.
Specifically, one of the six applicants declared as residence two adjacent flats in Paphos bought together for €500,000.
“Ownership of the two adjacent flats, each of a lower value, did not meet the condition for a €500,000 plus VAT residence,” the report said.
According to the application filed by the applicants’ lawyers, their clients had invested in real estate in Cyprus, as per the scheme’s criteria, after buying all the shares of a company, Mrv Ltd.
The auditor said the investors essentially bought all the company’s shares but not its immovable property.
This, according to the auditor, was a classic case of acquisition of a company, thus falling under a different criterion of the investment scheme.
That criterion calls for the acquisition of a company, which should employ at least five Cypriot nationals.
“At the time of acquisition, Mrv Ltd did not employ anyone since it was not active, and only had immovable property.”
The interior ministry said the citizenship applications had gone through all the necessary checks and parliament had been informed before approval.
Responding to the audit service’s report, the ministry said the applications had been examined based on the criteria in force on March 19, 2014, whose minimum requirements called for applications from at least five individuals and a total investment of €12.5m.
The investment in question exceeded the criteria with six investors and €19.8m plus taxes, the ministry said.
After they were examined by the authorities and after informing parliament, the applications were submitted to the cabinet, which approved them on January 12, 2015, it added.
“Examination of the particular applications was carried out strictly on the basis of the criteria followed in all similar cases and there was absolutely no discrimination in favour of the specific applicants, something the auditor also determined in his report.”
To Diko, the auditor’s report proved that the administration’s awful and opaque handling had turned a pillar designed to boost the economy into a tool for smearing Cyprus and an incubator of bad practices that humiliated the state and its citizens.