The Cyprus Citizenship for Investment (a.k.a Golden Passport) scheme was “rotten” to its core, while several actions of government officials could constitute criminal acts, said the Audit Office on Monday.
Releasing an almost 200-page dossier containing the findings of a probe into 3,517 cases of foreign investors who acquired citizenship through the Golden Passport scheme, the Auditor General’s office said that actions by officials, including the cabinet, deprived the state of sizeable revenue.
The report’s main conclusion is that many people who used the scheme did not meet the criteria.
At least 3,810 additional people were naturalised as spouses, adult dependent children, or parents of the investors without any legal authorisation.
According to the report, officials at the Interior Ministry concealed information from the cabinet and the House of Representatives regarding applications.
It said that the then Interior Minister Constantinos Petrides failed to attach the memos he received from the interior and finance ministries on many applications when presenting the proposal to the cabinet.
As a rule, the Interior Ministry informed the minister of the applications to be brought before the cabinet, while the Finance Ministry would inform him whether or not the applicants fulfilled the investment criteria.
Information withheld could have either led to the immediate rejection of the applications or forced the cabinet to exercise its discretionary jurisdiction.
According to the Audit Office, the minister did not inform the cabinet that 27 cases of foreign investors were linked to the Casino resort in Limassol.
It called these acts “reprehensible and illegal since it withheld essential information from the body that had the decisive authority”, stressing that parliament was also kept in the dark.
It also said that the cabinet approved a number of applications in full knowledge the beneficiary did not meet the eligibility criteria, but they “fell within the spirit of the criteria”.
The Auditor General’s office said that mishandlings by the cabinet cost millions in public funds, “from the illegal use of the reduced VAT rate and the illegal naturalisation of the thousands of people who were given Cypriot citizenship as members of the investors’ families, without these persons making any investment”.
An estimated €200 million was lost from VAT and another €25 million from uncollected fees.
Potential abuse
The report argues that “the potential abuse of power and/or the potential commission of criminal offences by persons who exercised public authority, is not limited to the astute ones who abused the Cyprus Investment Programme, taking advantage of its loopholes, shortcomings and weaknesses”.
Auditor General Odysseas Michaelides said the report helped rectify a “scheme that stigmatised Cyprus internationally, so there would be accountability, attribution of responsibilities and revocation of passports”.
The European Commission launched infringement proceedings against Cyprus in October 2020.
The citizenships programme was axed in November 2020 after an undercover Al Jazeera video showed then House speaker Demetris Syllouris and Akel MP Christakis Giovanis offering help to a fictional Chinese businessman with a criminal record to secure citizenship.
A public inquiry found the government broke the law countless times to grant citizenship to over 6,700 people from 2007 to 2020.
The damning report said that over half (53%) of the 6,779 passports granted were done so illegally, encouraged by a due diligence vacuum or insufficient background checks.
Cyprus’ passport scheme generated over €8 billion during its lifespan.
In July, the attorney-general’s office announced it would prosecute four individuals in connection with the passports scheme.
