The Cyprus government continued for at least four years to unlawfully issue passports to relatives of wealthy investors under an investment-for-citizenship programme, despite warnings by the Attorney-General that this could be in breach of the law, the head of an independent commission said on Monday.
Former Supreme Court President Myron Nicolatos said that, of the 6,779 passports issued during the programme's 13-year run, 53% were issued not to the investors themselves but to family members or top company executives.
The Attorney-General's Office had warned on separate occasions in 2015 and 2016 that the practice might be unlawful because there was no specific law enabling the government to issue such passports.
Of the remainder that were granted to investors, one-third failed to meet all the criteria, Nicolatos said. He was speaking after handing the final, 780-page report of an investigation into the multibillion-euro programme to Attorney General George Savvides.
He said 8% didn’t meet the primary condition of investing around €2.5 million into the Cypriot economy, while another 12% failed to meet the bar on owning a permanent residence in Cyprus.
Nicolatos said the four-member commission is recommending that authorities look into revoking citizenship in 85 cases in which the applicants may have committed criminal or other offenses to secure a passport.
He said that revoking the citizenship of investors’ relatives and company executives who weren’t directly at fault could prove “particularly complicated” because of legal clauses enshrined in Cypriot and European Union law.
“It’s obvious that the (programme) operated between 2007 and Aug. 17, 2020, with blanks and omissions, without a legal framework and almost without a regulatory framework,” Nicolatos said.
“Also absent were those safety valves, the proper legal guidance as well as adequate supervision regarding existing laws and regulations.”
The programme was scrapped last year amid much controversy over an undercover TV report that allegedly showed the parliamentary speaker and a powerful lawmaker claiming that they could skirt the rules to grant citizenships.
They had made the pledge to a reporter posing as a representative of a fictitious Chinese investor who had been convicted of fraud in his country. Both resigned shortly after the report was aired.
The golden passport programme ran for 13 years but was ramped up in 2013 following the financial crisis. It generated more than €8 billion for the east Mediterranean island nation and proved particularly attractive to foreign investors because obtaining an EU passport allowed them access to the 27-member bloc.
The EU had also taken Cyprus to task over the scheme.
Nicolatos also faulted some lawyers, accountants, banks, real estate brokers and developers who he said “didn’t sufficiently live up to their legal or other obligations” through the application process, while in some instances, supervisory authorities failed to do their job properly.
Politicians and officials may bear “political” responsibility for the debacle and some could face disciplinary action.
Although the programme spanned the tenure of three different presidents, the overwhelming majority of citizenships were granted during seven years during which the sitting president, Nicos Anastasiades, held the office.
He called on law enforcement authorities to prosecute alleged lawbreakers and to mete out punishment to the degree of an individual’s responsibility.
Attorney General Savvides said authorities would examine revoking citizenships, take lawbreakers to court and take disciplinary action in those instances that the report recommends.
In the first such legal action, his office last month took five individuals and four legal entities to court to face 37 charges in connection with the commission's findings.
A redacted version of the final report — so as not to compromise ongoing legal actions — will be made public in due course, Savvides said.
An interim report released in March also pointed to serious shortcomings in how the Interior Ministry processed applications, including the “complete lack” of a database to properly vet applicants. It said the Finance Ministry was also at fault for “green lighting” certain applications that didn’t fulfill all the criteria due to the size of the investment.