An IMGW News Report
The Cypriot Scandal dragging on
The trial for the ‘Cyprus Papers’ case has been postponed due to a court backlog. The case, revealed by a leak of government documents related to the Cyprus Investment Programme (CIP) obtained by Al Jazeera and released in August 2020, showed that Cypriot officials were willing to grant citizenship in exchange for money, exposing vulnerabilities within Cyprus’s programme. The Nicosia Criminal Court announced that the trial, previously scheduled for 10th June 2024, has been postponed to 2nd October 2024 due to a backlog of cases. This is not the first time the trial has been postponed, and it doesn’t end here.
Charges and Key Figures
The Cyprus Papers case charges include bribery, conspiracy to defraud, and influence peddling, primarily related to the naturalisation of foreign investors through Cyprus’s now-defunct Citizenship-by-Investment programme. The defendants are former House Speaker Demetris Syllouris, former MP Christakis Giovanis, and company executive Antonis Antoniou. Notably, Pittadjis was acquitted in November 2023 and now represents Antoniou. The Al Jazeera report implicated a Chinese businessman, among others, further intensifying the case’s complexity. Following pressure from the EU and anticipating domestic potential fallout, Cyprus scrapped its lucrative Citizenship-by-Investment Programme in late 2020.
The Revocation of Jho Low’s Citizenship
In another high-profile story, the Cypriot government definitively revoked Malaysian businessman Jho Low’s citizenship on 8 June 2024. Low, wanted by Interpol for allegedly embezzling $4.5 billion from Malaysia’s 1MDB investment fund, obtained Cypriot citizenship in September 2015 through the now-defunct Cyprus Investment Programme (CIP). The revocation process for Jho Low’s Cypriot citizenship began on 18th May 2023, when the Cabinet initiated the action based on the Interior Minister’s proposal. Low was notified of the decision and his right to appeal on 8th June 2023. On 17th May 2024, the Independent Committee reviewed Low’s appeal, which questioned the political motivation of the charges and the independence of the Malaysian justice system but ultimately deemed these claims beyond its scope. Following this, the Cabinet received a briefing on the Interior Ministry’s actions on 20th May 2024, paving the way for the final revocation decision on 5 June 2024.
“the Cypriot cases and the EU’s landmark case against Malta served as an alarm call, sparking heightened awareness about the need for improved scrutiny of all CBI applicants and recognised training and qualifications for the operators involved in this sector.”
Contrasting Case: Malta
On the western side of the Mediterranean, Malta, another European country with a thriving CBI programme, has not revoked the citizenship of a Russian man who was jailed in the UK for five years and seven months earlier this year for money laundering. The individual in question is 24-year-old Semen Kuksov, who was included in the latest list of people granted Maltese citizenship in 2022.
The case of the new Maltese citizen does not appear to involve corruption in Malta itself. However, the law governing the CBI programme in Malta allows the home affairs minister to revoke a passport if, within seven years of being granted citizenship, an applicant is sentenced to a jail term that is 12 months or longer.
When contacted by IMGW News, Joseph Mizzi, Chief Executive Officer of Agenzija Komunita’ Malta – the government body responsible for the island’s CBI programme, stated that “Community Malta Agency is currently reviewing the official documentation of the case and is seriously considering advising the Minister to initiate the process of deprivation of citizenship.” IMGW News has contacted Mr Mizzi again about this case and will keep readers informed of the latest developments.
EU: Broader Implications
Experts in the industry have voiced concerns about the potential impact of the troubling news from the Cyprus Papers on other European countries that offer Investment Migration (IM) or CBI Programmes, such as Austria, Portugal, Italy, Greece, and Malta. Malta is facing a significant court case, and in September 2022, the European Commission declared its intention to pursue legal action against Malta regarding its CBI programme, which allows individuals to obtain EU citizenship in exchange for investment.
The European Commission alleges that Malta’s Citizenship by Naturalisation for Exceptional Services by Direct Investment programme, introduced in 2020, violates EU law.
Some EU lawyers argue citizenship falls under member states’ sovereignty. In a recent Verfassungsblog post, a widely respected EU lawyer questioned if Malta or the EU Commission truly upholds European values. Malta insists it hasn’t violated EU law despite Commission warnings in 2020 and 2021. The citizenship programme continues with adjustments, except for Russians and Belarusians post-Ukraine invasion. See Joseph H. H. Weiler, Citizenship for Sale (Commission v Malta), Who of the Two is Selling European Values?
Mark your diaries: 17 June
The much-anticipated first public hearing in the European Commission’s case against Malta’s Citizenship by Investment (CBI) Programme is scheduled for next week, on 17 June, at the European Court of Justice in Luxembourg.
EU Parliament (EP) elections: A Game Changer?
In addition to the ongoing developments surrounding the Cyprus Papers and the EU case against Malta, another major event this June was the EU Parliament (EP) elections, held between the 6th and the 9th. A more conservative Parliament is likely, as mainstream conservative parties are set to come under pressure from the far-right after the European elections saw record gains for these groups, particularly in France and Germany, along with the collapse of the Greens. These parties, which harbour strong anti-migration stances, risk putting a spoke in the wheel of CBI operators’ aspirations to gain further acceptance among other services.
While it is still early to judge, the election outcomes could lead to stricter policies and regulations that may hinder the growth and acceptance of CBI programmes. The influence of far-right parties could result in a political climate less favourable to investment migration, potentially slowing reforms such as the recent ones aimed at enhancing transparency and due diligence.
A Silver Lining?
Despite the dark clouds on the horizon, new developments offer solutions and a potential future for CBI programmes. It is not a coincidence that the EU has pushed for stricter anti-money laundering (AML) and due diligence measures. The Cypriot cases and the EU’s landmark case against Malta served as an alarm call, sparking heightened awareness about the need for improved scrutiny of all CBI applicants and recognised training and qualifications for the operators involved in this sector.
On 30 May 2024, the European Council approved new laws targeting anti-money laundering (AML) and the financing of terrorism (CFT). These regulations represent a major change for the investment migration (IM) industry, as it now falls under regulatory oversight. The implications of these regulations are far-reaching, affecting political and reputational aspects and also impacting third-party stakeholders with interests in the European Union (EU).
While the EU’s case against Malta remains in balance and could have a detrimental impact on the CBI field, the new EU anti-money laundering rules are seen by many as an implicit acceptance of Investment Migration (IM) and will have an impact on IM operators within and outside the EU. The intersection of these political dynamics with ongoing legal challenges marks June 2024 as a pivotal month for the future of CBI programmes in Europe.