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Economy

After Video Alleges Corruption, Cyprus Abolishes Golden Visas

Repeatedly denying there were any serious problems in its selling of GoldenVisas to rich foreigners despite warnings about money laundering and use by criminals, Cyprus has abruptly ended the scheme.

That came following an emergency Cabinet meeting after Al Jazeera published a secret video alleging corruption in the program that came with coveted European Union passports that have been lucrative to the government.

Government spokesperson Kyriacos Koushos, who spoke after the meeting at the Presidential Palace, the decision will take effect starting Nov. 1 based on proposals by Interior Minister Nicos Nouris and Finance Minister Constantinos Petrides, his predecessor, said Kathimerini Cyprus.

Koushos said the establishment of a new passport scheme would be examined following the completion of an ongoing probe, the decision an embarrassing end to the Golden Visas also in place in a number of other European Union countries.

High-ranking Cypriot officials, politicians, lawyers and real estate developers were implicated, said the news site in the latest in a string of stinging reports showing applicants weren't vetted for criminal backgrounds or being fugitives.

In The Cyprus Papers Undercover, Al Jazeera said there was corruption at the highest levels of the government of President Nicos Anastasiades who had defended the program to the hilt, saying other countries were even worse.

Al Jazeera named Parliamentary Speaker Demetris Syllouris and a Member of Parliament, Christakis Giovanis (also known in Cyprus as Giovani), who is also one of the country’s largest real estate developers.

The Cyprus Papers, that began being published in August, were based on a leak of some 1,400 documents showing Cyprus violated its own laws so that convicted criminals and fugitives could get citizenship with big investments.

The government then responded there were some lapses, after saying there weren't and now, backed into a corner by the latest revelations, has pulled the plug on a program that had brought in some 7 billion euros ($8.25 billion.)

Applicants had to invest at least $2.5 million, usually through real estate investments, their money helping prop up an economy that was recovering after a near collapse in 2013 because of bank failures.

The EU and anti-corruption groups said Cyprus' Golden Visa scheme was a conduit for money laundering and being used by criminals to hide their cash, the report now saying the criminals too were hidden to protect them. 

Al Jazeera's Investigative Unit said it used an undercover operative called Billy who claimed to represent a Chinese investor sentenced to seven years in prison for money laundering, 

He claimed having been jailed but still wanted the visa although a conviction should have automatically disqualified him. But he was told by a real estate developer tied to Syllouris that wouldn't be a problem, the report alleged.

“That’s not the first to face this issue in Cyprus,” Andreas Pittadjis, a registered service provider for Golden Visas was said to have told him.

“I had a guy who was in custody for two years.  He was in prison for two years for corruption and money laundering. We had ways to justify everything and he went through with the approval of his passport application. He now has his visa waiting for him. No problems whatsoever.”

Pittadjis even suggested changing the name on the passport, which, in combination with the new passport, would allow a convicted criminal to assume a completely new identity. “Of course we can change his name. This is Cyprus,” he said.

Syllouris, said Al Jazeera, went even further, saying: “You can tell him that he will have, without mentioning my name or anybody else’s, full support from Cyprus. At any level – political, economic, social, everything – ok.”

The program is especially popular with Russia, whose wealthy have long been accused of hiding their money in Cypriot banks, the island fighting a reputation for being a tax haven. Investors from China and Ukraine were also favored.

Many businesses, such as the Giovani Group, a real estate developer founded by politician Giovani, cater specifically to wealthy investors.

Its Executive Director Antonis Antoniou, said Billy’s employer should look at investing more in Cyprus – up to 20 million euros  ($23.57 million.) – despite knowing he was a convicted criminal.

“The more you invest you, (the more) you are in more favourable terms. You can ‘skip the waiting list’, as we say,” Antoniou told Al Jazeera’s undercover journalists.

Laure Brillaud, Senior Policy Officer for anti-corruption NGO Transparency International EU, said the video showed the program is a failure.

“What all this shows is that it’s not just a few bad apples. It’s the system that is broken beyond repair,” Brillaud told Al Jazeera while calling on the EU to take action to change programs across the bloc.

In response to questions from Al Jazeera, Pittadjis said he understood from the outset what was proposed involved money laundering and criminal activities and that everything he did thereafter amounted to “fishing for more details”.

He also indicated that, a few days after Al Jazeera’s journalists left Cyprus and failed to provide him with a copy of the proposed applicant’s passport, he reported it to Cyprus’s anti-money laundering unit.

Giovani and Antonis Antoniou of the Giovani Group told Al Jazeera they shared their suspicions regarding the proposed applicant with Pittadjis.

They said their dealings with our undercover journalists were intended to gather information to support a report to the authorities without “tipping them off”.

Syllouris said that he provided no services to the applicant and referred to the anti-money laundering report subsequently made by Pittadjis.

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