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Politics

Al Jazeera Report Says Cyprus Sold Passports to Criminals, Corrupt Politicians

NICOSIA — As Cyprus' government said it has reformed a program selling Golden Visas and European Union passports to wealthy foreigners, a report by Al Jazeera said beneficiaries have included convicted fraudsters, money launderers and political figures accused of corruption from more than 70 countries.

The news site's Investigative Unit – as had the Reuters news agency earlier – said it uncovered the sales of people not properly vetted to see if they are hiding criminal cash in Cypriot banks or laundering money for mobsters and politicians.

The report cited a large cache of official documents the site said it had obtained, calling them The Cyprus Papers, a review of more than 1,400 passport applications approved by the government from 2017-19.

Cyprus’ much-criticized Golden Visa offers citizenship in exchange for an investment of 2 million euros ($2.36 million,) including the purchase of a residence worth at least 500,000 euros ($589,749.50, in addition to another 150,000 euros ($176,924.85.)

Their value is heightened by coming with passports allowing travel, banking and working within the 28-member state bloc, with restrictions now in place with some because of the ongoing COVID-19 pandemic.

The site named names and said it would reveal the identities of dozens of people “who acquired Cypriot citizenship who, according to the country's own rules, in many cases should not have received a passport.”

In response to questions from Al Jazeera, Cypriot Member of Parliament Eleni Mavrou said: "The way the program was implemented the last few years was obviously a procedure that allowed cases for which the Republic of Cyprus should be ashamed." 

"I believe that the new regulations will not leave room for foul play or for stepping over the boundaries that a state should respect," she added.

Interior Minister Nicos Nouris told Al Jazeera: "No citizenship was granted in violation of the regulations in force at the given time” although the government of President Nicos Anastasiades – who first downplayed the scandal – admitted there were serious shortcoming and revoked visas from 26 people accused of a range of wrongdoing.

In June, Nouris said the program had been reformed after the European Union said the country, along with Malta and Bulgaria, was cited for lax controls that increased the changes for corruption and misuse of the program while those abroad with Cypriot heritage had to wait residency or dual citizenship if not rich.

Nouris said then that the security of the scheme that  Anastasiades defended until a Reuters report pointed out loopholes that led to the government revoking visas for 26 people, had been enhanced, SchengenVisaInfo.com reported.

WHO'S CHECKING?

“The candidates are carefully vetted when they apply, and the providers for the candidates are also vetted. Once candidates are approved, their conduct as residents in Cyprus is reviewed each year for 10 years, and if they break our laws or engage in other undesirable activities, the passport can be revoked,” Nouris said.

He also pointed to anti-money laundering legislation as another important improvement. “This is the law approved by the EU and implemented by the banks,” he said, adding as well that, “providers of candidates are vetted again every year by a special interior ministry committee. “Providers must show that they are respecting the rules,” unlike before.

In the past, only real estate investment was considered, another reason why the Cyprus program had been so widely criticized, the site noted.

“This is no longer the case. There is a wide choice of investment possible, and we privilege investment that develops young companies, high-tech, the stock market and other businesses – we hope the scheme will bring in funds that support innovation in our country,” Nouris pointed out.

Applicants are required to show they have a clean record, said Al Jazeera, adding that while the government claimed to check applicants' backgrounds, the documents showed that didn't always happen, further tainting a program that began in 2013 during a banking and financial crisis.

"It's high value for everyone who comes from a country where there's a lot of dirty money involved," German MEP Sven Giegold, a strong critic of the program, told Al Jazeera.

"You open a bank account, a business relationship and less questions asked, no visa requirements, easier to get access to get everywhere to travel than if you are from Russia, China or even more doubtful countries,” he added.

The Golden Visas have brought in more than 7 billion euros ($8.26 billion,) since it began, coming relatively close to matching a 10-billion euro ($11.79 billion) international bailout that propped up the economy and banks in 2013.

Between 2017- the countries with the highest number of people applying were China, Ukraine and Russia, which has seen the wealthy pour money into the island country's banks and named in a 200-billion euro ($235.9 billion) money laundering scheme through Denmark's Danske Bank.

Among the approved applications seen by Al Jazeera was Ukrainian tycoon Mykola Zlochevsky, owner of the giant Burisma energy company, who was being investigated for corruption in his country when he bought the Cypriot visa.

In June , Ukrainian prosecutors said they were offered $6 million in cash to drop the investigation but he denied any knowledge of the alleged bribe as having the Cypriot visa and EU passport could put him beyond the reach of Ukraine police.

A similar application came from Russian national Nikolay Gornovskiy, former boss of the state-owned energy giant Gazprom who was being probed in his country for abuse of power when he got his visa, the report said.

LIFE ON THE FAST TRACK

Other applications were approved even after the applicant had been arrested and sometimes even served their time in prison, including Ali Beglov, a Russian national, bought his passport despite serving a prison sentence for extortion, which should not have been possible according to Cyprus's rules.

Chinese businessman Zhang Keqiang also received a Cypriot passport, despite having spent time in prison for a fraudulent share deal while Vietnamese businessman Pham Nhat Vu's passport was approved a month after he was charged with giving millions of dollars in bribes in a telecoms deal.

Laure Brillaud, Senior Policy Officer with Transparency International, an NGO focused on combatting international corruption, told Al Jazeera the findings are worrying but not surprising.

"These programs bear inherent risks of money laundering, corruption and tax evasion. They were designed to attract people just looking for a fast track to the EU," she said.

In May 2019, Cyprus introduced tougher rules on who was eligible for citizenship, which banned anyone under investigation, wanted, convicted or under international sanctions from buying a passport.

Cypriot lawmakers passed a law to allow removing the visas and passports from those who shouldn't have gotten them but barred naming people who bought citizenship in their country although critics said it should be public knowledge.

The new stricter law applies to anyone who commits a serious crime, is wanted by Interpol or subject to sanctions in the 10 years after they bought their passport and as the government said it's reviewing all past approvals.

Al Jazeera said it found, however, that many more would not be eligible if the law is applied properly, including Venezuelan Leonardo Gonzalez Dellan, an ex-banker, who was sanctioned by the United States for laundering millions in illegal currency deals for the Venezuelan government.

Another person who could lose his passport is Oleg Bakhmatiuk, under investigation in Ukraine for embezzlement and money laundering relating to his giant agricultural firm although he said the charges were "a complete fabrication and politically motivated".

Another is Chinese national Li Jiadong, who was sanctioned by the US for laundering $100 million in cryptocurrency related to North Korean hackers and the report named Maleksabet Ebrahimi and his son Mehdi, who are both on Interpol's most-wanted list for money laundering and fraud in Iran and facing similar charges in Canada.

Maleksabet Ebrahimi denies the charges against him and said he complied with Iranian and Cypriot laws without fail.

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