Increasingly popular, "golden visas" offer virtually scrutiny-free EU citizenship for rich outsiders. Critics say EU governments are ignoring the risks to collect quick cash. Teri Schultz reports from Brussels.
If Malta's government records are to be believed, scores of Russian millionaires are building new lives in gas stations and unfinished garages as proud new citizens. Blogger Manuel Delia has tried to drop in on a few of his new compatriots at their official addresses, but they never seem to be "home."
"It's an uncontrolled back door to Europe, and it's institutionalized fraud," Delia told DW, calling Malta's government "addicted" to the seemingly unlimited cash that it can collect from primarily Russian and Chinese businesspeople who would otherwise be barred from the bloc or at least have no other legitimate way to live in it.
And those are the best-scenario cases.
"In theory, there's supposed to be scrutiny; there's supposed to be due diligence," Delia explained. "The law, however, is very clear: If a terrorist comes here, if a criminal comes here, the government has the right to give them a passport. There's no problem with that."
Commission slowly taking stock
When the European Commission (EC) was asked in early March whether it's concerned about the practice, it noted that citizenship is a matter for national governments but underscored that there must be a "genuine link" between applicants and the passport-granting country. Spokesman Christian Wigand said the EC is "closely monitoring" the situation and that an EC report is due out later this year.
As for "genuine ties" to European countries, Delia explained what the process of "becoming Maltese" consists of these days. "They fly in; they're brought by car here," he said. "They're here for 30 minutes just to sign their papers and get their passport and go on to move to Europe. So we cannot check for sure what these people are doing and why they bought a European citizenship."
More than just Malta
Cyprus is another quick path to Europe for the well-heeled, but some of its new citizens are getting serious scrutiny from outside the country, if not inside. Russian oligarch Oleg Deripaska has been linked most recently with the US investigation into President Donald Trump's ties to Russia. It was recently revealed that he's bought himself a Cypriot passport.
A new series of articles by the Organized Crime and Corruption Reporting Project (OCCRP), a consortium of investigative centers and media that also helped expose the Paradise Papers, lays bare how pervasive the programs are. Twenty reporters spent half a year examining the practice in a dozen countries. Jody McPhillips, OCCRP's regional editor, said the research found "it's pretty irresistible" for EU governments. McPhillips explained that Malta went from budget deficit to surplus in two years largely thanks to selling passports. "For a country [that's] generally small, not terribly well-governed that has financial trouble," she said, "this is a game changer."
It's not always clear whose game is getting the change, however. Miklós Ligeti, head of legal affairs at Transparency International Hungary explained how this works in Budapest. The visas are sold through "bond packages," he said, which raised €192 million ($237 million) over the roughly four years the program was run, before it was suspended. However, Ligeti said, it's not the government itself selling the bonds and it's completely unclear where all that money went.
"These intermediary organizations generate the revenues at the expense of Hungarian taxpayers' money," Ligeti said. "But on top of that, this is an invitation to individuals whose assets are coming from unknown resources to launder that potentially ill-gotten money into Hungary's, and potentially Europe's, capital markets."
Maltese blogger Manuel Delia says his government has "institutionalized fraud" with its passports-for-sale scheme.
With all the migration- and terrorism-related concern about who's getting into the EU's Schengen system of visa-free travel, Global Witness's Rachel Owens said she's appalled authorities seem to be unconcerned about this avenue. "The cousin of the Syrian dictator [Bashar al-Assad] was able to get access to an EU passport despite being on the US sanctions list," Owens said. "The EU's core values of security and freedom are at risk through these schemes." She said European citizens would be shocked to find out who's moving in down the road, and how they got there.
Global Witness has presented a list of recommendations to the EC demanding more checks on applicants and their money in this billion-dollar industry. "You can't just throw your hands up and say it's not within your purview," Owens said.
Manuel Delia said the security aspect, while critical, is not his biggest complaint. He's disturbed that EU governments willingly hand over passports to Chinese, Russian or Middle Eastern millionaires while rejecting people facing serious threats — including in those countries. "That's a reason to give citizenship to someone coming in but we don't," Delia said. "We give citizenship on the basis of affordability."
At the same time, Delia fears it is only a security problem that could possibly change governments' behavior. "Let's allow for the possibility that a terrorist obtains a passport and commits a heinous crime somewhere in the EU," he said, "enabled by the fact that he has a Maltese passport."
Even then, he said, he's not sure Valletta would stop selling its popular export.