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Full text of passport probe conclusions released, criminal investigations set to follow (updated)

nicolatos better
Committee chairman Myronas Nicolatos handing over the enquiries findings to the Attorney general earlier this month

A report into the now-defunct citizenship-by-investment (CBI) programme, released on Tuesday, conveys a picture of an almost total system failure – authorities and actors across the board not doing proper background checks on the applicants or their wealth provenance, vast discretionary powers assumed by the cabinet, and an overall lax attitude that over the years granted 6,779 citizenships of which the majority are flagged as problematic in one way or another.

The final report into the CBI – an interim report had been released in late April – comprises some 780 pages, in some places heavily redacted to conceal names and vital details.

The attorney-general’s office said the dossier is being evaluated by a state prosecutor “with the aim of speedily forwarding the report to the police for the start of criminal investigations.”

The tax department is urged to take a closer look at some of the cases classed as high-risk so as to determine whether the applicants – and their promoters – paid the correct tax on their transactions.

These include cases concerning real estate purchases in Ayia Napa and Pyrgos, Limassol. The names of the foreign applicants and their respective promoters are again provided, but blanked out.

On the government’s responsibility, the dossier zeroes in on the cabinet – which green-lit citizenship applications following proposals submitted by the interior ministry.

It notes that certain cabinet members (ministers) should have recused themselves from participating in sessions where relatives of theirs were in some way involved with the applications.

During sessions where decisions were taken on CBI applicants, cabinet members were not informed of the promoters behind the respective citizenship applications, so that they might then recuse themselves.

It’s understood that this lapse – deliberate or not – might also have given cabinet members plausible deniability.

The panel also highlights an incestuous relationship between the beneficiaries of the citizenship scheme and people in government:

“From examining the investors’ files, it emerged that certain service providers (promoters) who had ties to political persons, would at times leverage this relationship in order to pressure and influence the ministries of the interior and finance, even the presidential palace, to either speed up examination of their applications or to approve applications, deviating from the applicable criteria.”

It’s also observed that “under the false impression that the finance minister at any given time had the discretion… to disregard or deviate from some of the criteria which the cabinet itself set, the finance ministry gave the green light to a number of naturalisations that did not satisfy the schemes’ criteria.”

Moreover, though tasked with checking the economic criteria (the funds invested by applicants in Cyprus), the finance ministry “seems never to have linked these audits with checking the source of the funds being declared.”

The criticism extends to the legislature which “never posed a single question to the executive branch regarding the citizenships.”

At parliamentary committee sessions that discussed CBI applications, some of the MPs taking part had associations with law firms filing applications on behalf of their clients.

In addition, one MP (name redacted) appears to be connected to a land developer.

Although such MPs broke no law in participating in these committee sessions, they did have an ethical responsibility to abstain, the report notes.

The voluminous dossier recommends among others the revoking of citizenships granted to a number of foreign nationals, and also prompts authorities to investigate the possible commission of criminal offences, including making false declarations.

The report covers the period 2007 to August 17, 2020. It categorises citizenship applications into low-risk and high-risk, the latter corresponding to 8.8 per cent of all naturalisations (or 597 individuals).

It notes that of the high-risk cases, 81 persons were given Cypriot citizenship even though they did not qualify as they were merely managers in a company and did not hold stock there – a prerequisite to make them eligible for consideration.

For 53 applicants, the committee of inquiry recommends authorities look into the possibility of revoking citizenship, for three it recommends revocation outright for failure to meet the programme’s criteria, and for another 29 it proposes that authorities examine citizenship revocation “in order to safeguard the interests of the Republic.”

Of the 6,779 individuals granted citizenship, 53.24 per cent consisted of the applicants’ family members – and were therefore illegal.

Of the remaining 3,170 – the applicants/investors themselves – 67 were not checked because the police does not hold the files in question. That leaves 3,103 individuals, of which 33.58 per cent “seem not to have met all the formal criteria during the time of their vetting, while 66.42 per cent appear to have met the criteria.”

Coming back to the high-risk files (the applicants themselves, not their dependants), 27.64 per cent of these 199 individuals “do not appear to have met the criteria which the cabinet itself set…”

In the low-risk category, 33.39 per cent of applicants apparently did not meet all the formal criteria at the time, while 8.2 per cent seem not to have satisfied the economic criteria (amount of investment required and so forth).

And 12.1 per cent did not meet the criterion of owning a residence in Cyprus.

The report recommends revoking citizenships/naturalisations on the grounds of “potentially false and/or misleading declarations… and potential criminal offences… and concerns 29 cases.”

These names are provided, but redacted. They relate to actions occurring from 2010 to 2020, and two of these cases involve applicants’ spouses.

During the presidency of the late Tassos Papadopoulos, five citizenships were granted under the CBI; another 228 under Demetris Christofias; and the bulk – 6,546 – during the administration of Nicos Anastasiades from March 2013 to August 2020.

Additionally, the report recommends considering citizenship revocation in nine cases due to the fact the individuals concerned are wanted for criminal offences either by international or local law enforcement.

Notably, the authors recommend that, where revocation may be considered, that this extend to the applicants’ dependants who likewise got naturalised under the CBI.

Although regulatory authorities – the Central Bank, the Securities and Exchange Commission, the Bar Association, the realtors association – did not have explicit authority to monitor their respective members’ activities for the purposes of the CBI specifically, the report states they should have nonetheless ensured that the promoters – accountants, real estate agents, law firms assisting investors with their applications – exercised due diligence.

It further notes that Mokas (Financial Intelligence Unit) “should undertake action to investigate the cases described in this report and which raise the issue of money laundering and, where deemed necessary, to initiate the appropriate legal proceedings in order to seize and/or recover any illicit moneys in cooperation with the police.”

In making the dossier public, the attorney-general’s office said it had to blank out certain information and names for reasons of public interest: to protect personal data, in line with EU law; to safeguard ongoing criminal investigations and possible future ones; and to safeguard the reasoned opinion procedure initiated by the European Commission against the Republic of Cyprus.

Revealing certain names and details would jeopardise investigations and potentially lead to evidence tampering, “preventing the courts from dispensing justice, given that the punishment of the guilty is what is at stake.”

The extent of the redactions was agreed with the Personal Data Commissioner, the statement added.

 

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