Cyprus Golden Passports: A Total Failure Of Checks And Balances
For years, European institutions were concerned about the Cyprus Investment Program and repeatedly asked the country’s authorities to be transparent about it. In response, the Cypriot government reassured them that the program is crystal-clear and that there is no way for corrupted criminals to obtain European citizenship. When local and international media revealed that the fugitive Jho Low and relatives of Cambodia’s authoritarian prime-minister, Hun Sen, had a Cypriot passport, the government answered that these cases were the exception.
Since its inception in 2013, authorities have changed the Cyprus Investment Program many times to safeguard the country’s reputation and limit reactions domestically, as well as from abroad. But the results show that this effort had a big blind spot: its implementation. We now know that despite the fact that strict laws and regulations were in place, there was no capacity to impose them. The departments who had the duty to examine the applications were understaffed and the procedure to become a service provider for the program, required zero expertise. Applications for the Cyprus Investment Program were submitted on behalf of the applicants, at the Ministry of Interior, by natural / legal persons registered with the Registry of Service Providers of the Cyprus Investment Program. For nearly five years, the applicant or his service provider submitted the due diligence report to obtain a citizenship. It is also worth mentioning that up until 2018, the Cabinet approved almost every application. The number of rejections was close to zero.
When something negative about the scheme made the news, the communication strategy of the Cypriot government was always the same; our competitors and our political enemies want to damage our economy and reputation. It was only after an investigation by Al Jazeera, that the government had no other option but to cancel the Cyprus Investment Program.
Al Jazeera undercover journalists – posing as intermediaries for a convicted Chinese criminal who wanted to obtain Cypriot citizenship – filmed the President of the Parliament of the country, Demetris Syllouris, as well as Christakis Giovannis, an MP, reassuring them that there are ways to bypass the law and issue their client a Cypriot passport. Giovannis, who is the owner of a well-known real estate company in Cyprus, tried to convince the reporters that if their client invested in Cyprus, they could find ways to make him a citizen. Syllouris assured them that he would do whatever he could to help their client. The only request he had was for his name not to be mentioned in any way. Both men resigned soon after the video was released and the public uproar that followed.
For the time being, the government hasn’t revealed whether it will introduce a new scheme in place of the Cyprus Investment Program. But real estate insiders are hoping that authorities will introduce a new program soon. To obtain a citizenship, many foreign investors put their money into high-end real estate. Without the program, many of these projects will remain unsold or will be sold at lower prices.
According to a study by the Ministry of Finance, between 2013-2019, the government granted citizenships to 2.855 investors. These people invested more than $10 billion in Cyprus, of which more than $7 billion were funneled in real estate. Most investments came from Russia and China followed by Ukraine, Lebanon and Saudi Arabia. The study concluded that the program’s effect on the country’s GDP wasn’t significant, and in the case that it was terminated, it would have a cumulative impact of -1.3% for the period 2021-2023.