What is being done with the millions of euros being collected through Malta’s cash-for-citizenship scheme?
Officially known as the Individual Investor Programme, this scheme allows non-EU nationals to purchase Maltese citizenship through €1.15 million in cash, real estate and stocks or bonds under an obligatory one-year residency clause. The government promised that no more than 1,800 Maltese passports will be sold to very rich non-Maltese citizens.
How are things faring so far? Let’s take a look at official data released last November by the national regulator. As at June 2016, this scheme generated revenue which exceeds €218.7 million.
A total 723 applications were received in three years, 450 of which last year. The latter accounts for 1,186 persons when one considers the dependents of applicants. In all, 241 applications had been approved so far during year, an increase of 75 per cent from previous year. The rejected amounted to 52.
According to the regulator, the funds generated since this scheme was launched were distributed to various governmental and private entities. This includes almost €55 million within the National Development and Social Fund, around €23.5 million within Malta’s Consolidated Fund; around €7.3 million to Identity Malta and around €5.8 million to Henley & Partners. Furthermore, almost €134 million worth of applications were still under consideration and were therefore accounted for within the suspense account. Besides, Justice Minister Owen Bonnici recently announced in Parliament that around €1.7 million were donated to NGOs as at year end 2016.
The funds generated from Malta’s cash-for-citizenship scheme account for almost three per cent of the country’s gross domestic product. Some may say that this is adding wealth to the Maltese economy especially since the global Passport Index now ranks Malta as having the ninth most powerful passport in the world in terms of mobility opportunities.
Indeed, Malta offers visa-free travel to 150 countries apart from being part of the EU Schengen area.
Who is actually benefitting from such travel is another question. Indeed it is paradoxical that while such opportunities are created for the mega-rich, other persons who flee war and misery are subject to limited mobility, detention or deportation.
From an economic perspective, one may argue that Malta is now becoming dependent on the sale of passports, as Malta’s economy will shrink if the sale stops.
Hence, it would be timely to find alternative sources of revenue which are more sustainable. This is especially the case when the current administration is also emphasising economic paths which commodify everything.
This includes rendering Malta into a crammed and congested building site for massive projects such as high-rise development, and privatising certain public services through non-transparent deals.
But let’s go back to the question with which I opened the article. Can the government elaborate on the revenue generated from the scheme?
For example, is all revenue being accounted for? If the government believes so, is there tangible proof of this, for example through investigations and audit trails?
As regards revenue being deposited in public coffers, does further information exist? For example, what is IdentityMalta doing with its revenue? Is the amount deposited within the consolidated fund used for general or specific government expenditure?
As regards the National Development and Social Fund, what exactly does this represent? Who decides on the allocation and utilisation of funds? What are the timelines? Does a business plan exist? Does this fund have line items of budgeted expenditure?
My hunch is that this fund will be used by the Labour government for partisan purposes in the run up to the general election. Alfred Sant once dubbed such a method as the power of incumbency.
If the Labour government embarks on such a pre-election shopping spree, is this ethical or politically acceptable?
Let us keep in mind that the National Development and Social Fund is not part of the EU funding framework which is subject to strict rules and regulations. Rather, it is under the discretion of those who control it, namely a government characterised by a governance deficit, a Panama Papers albatross around its neck and countless examples of bad governance in its pockets.