Malta gets another drubbing over its citizenship sales

Like a dog with a bone, the overwhelming majority of the European Parliament will just not let the sale of Maltese citizenships go.

This is not just a matter of stubbornness, it is an issue that hits at the very heart of what European identity, and security is all about.

MEPs are concerned that the government’s Individual Investor Programme has opened the floodgates for persons unknown to become European citizens and to move and settle freely within the bloc. They are of the opinion that the programme “foments corruption and imports organised crime and money laundering into the Union,” according to their last rule of law report on Malta.

This is clearly and indisputably an issue of pan-European concern.

Malta is not alone in the sale of European citizenships, or the so-called Golden Visas, but it is the leading proponent and the original test case. Such people, the EP was reminded during Wednesday’s debate, need to have a genuine link to the country they are acquiring citizenship from. In Malta’s case that was to be in the form of an economic contribution to society and a one-year effective residency in the country.

On the first count, Malta seems to be making the mark. It is, after all, only a matter of the millionaires and billionaires acquiring Maltese, and European, citizenship, forking out a little more than the cost of their passports. But on the second count, Malta appears to be failing wholesale. There is

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substantial evidence showing that such people have no desire to reside in the country. And they don’t, not even for the effective tax year demanded by the deal struck between Malta and the European Commission.

Some may find the sale of citizenships under such circumstances unethical in the extreme. In fact the previous administration had been offered the same scheme by the programme’s concessionaires. That is, however, really just a matter of moral disagreement.

What is of real concern is European parliamentarians’ concern that the programme is importing organised crime and money laundering into the bloc. The Organisation for Economic Co-operation and Development recently found that such schemes are hugely vulnerable to abuse and undermine the fight against corruption in member states. Transparency International had come out with similar findings just recently. The list goes on and on right back to the scheme’s inception. As one MEP put it in a nutshell on Wednesday: “They have created a backdoor to the EU in the most opaque way possible and undermine all our efforts to tackle the influx of dirty money, corruption and money laundering.”

Another put the Maltese issue into painful perspective: “For me, selling EU citizenship does not only mean enabling the rich to freeride on our common European assets. It also allows the rich to escape sanctions or launder money. Take the example of Malta, where rich Russian citizens – who potentially could be targeted by further sanctions – are amongst the nationalities that most frequently receive Maltese - therefore European - citizenship.”

Whatever the financial gain from the sale of citizenships, is it really worth gaining such an abysmal reputation, especially when that is coupled with the dubious behaviour of senior members of government as exposed in the Panama Papers and elsewhere, and the way in which companies from fellow EU member states are allowed to so liberally avoid taxes at home by setting up brass plate companies in Malta?

Of course there is nothing illegal about any of this, and all of it is sanctioned by the European Commission and other international bodies. But whether the monetary gain the country is receiving at the moment is really worth the reputational damage the country is accumulating on almost a monthly basis is another matter. We would say it is certainly not, and we would add that these decisions will eventually come back to haunt the country.

That will, however, come to pass beyond the five-year cycle that governments’ plan for, and well after the current prime minister will have stepped down as he has pledged. That will, however, mean that someone else, somewhere down the lines, will be tasked with picking up the pieces of the country’s shattered reputation.