CARIBBEAN CITIZENSHIP DREAM UNDER THREAT?
Caribbean passports have always been highly sought-after by expats in the region as they offer visa-free travel to 130 countries. But, their citizenship by investment schemes have been plagued by a massive scandal. |
The fate of hundreds of GCC residents seeking passports of Caribbean nations hangs in the balance amid allegations of fraud in the various economic citizenship schemes run by these countries.
Caribbean passports have always been highly sought-after in the Middle East as they offer visa-free travel to over 130 countries. Since the time Caribbean nations slashed citizenship costs to rebuild infrastructure damaged by recent hurricanes, there has been an even bigger surge in applications from the region.
SURGE IN DEMAND
High-net-worth families in the GCC contributed to a 76 per cent spike in demand in the last quarter of 2017, according to the findings of an immigration firm in the UAE.
Most applications under the Citizenship By Investment Porgrammes (CBI) were for Caribbean nations such as St KittsNevis, Dominica and St Lucia.
However, in recent days, these programmes have been plagued by a massive scandal with Caribbean media reports suggesting that many immigration firms — including some in the UAE — circumvented legal requirements or forged government documents to process citizenship applications, depriving government exchequers of valuable foreign currency.
In December 2018, the issue rocked St Kitts-Nevis Parliament and even led to a no-confidence motion against prime minister Dr Timothy Harris.
A Dubai-based law firm specialising in economic citizenship said the fallout of the racket could jeopardise hundreds of applicants. Sam Bayat, CEO of Bayat Group, said agents were abusing CBI schemes by offering citizenships at way below government sanctioned rates through real estate trickery.
“Some 2,000 applications are received annually for St KittsNevis citizenship, 2,500 for Dominica and around 500 each for Saint Lucia and Grenada. All applications processed under these CBI schemes over the past four years are under the scanner. Those that didn’t follow the process may be cancelled and the applicants could lose their investments or have their citizenships revoked,” said Bayat.
But Les Khan, head of the Citizenship by Investment Unit (CIU) of one such country — St Kitts-Nevis — ruled out any such possibility.
ALLEGATIONS UNFOUNDED
Talking to Gulf News at a meeting arranged by Consulate General of St Kitts-Nevis, Justin Kareem Hawley, on January 28 both Khan and St Kitts-Nevis’ minister of justice, legal affairs and communications, Vincent Fitzgerald Byron Jr defended the programme, saying the allegations of fraud were “unfounded and politically motivated”. They also allayed concerns of applicants of losing St Kitts-Nevis citizenship. The fear stems from threats by former prime minister Denzil Douglas who has repeatedly said that if he returns to power, he will revoke the citizenship of any applicant who is found to have underpaid for the country’s CBI programme.
St Kitts-Nevis goes to polls early next year. Khan said certain parties with personal agendas were trying to malign the programme. “Let me say this, nobody will be stripped of their citizenship. We’ve a robust programme and we follow the due process. Yes, we’ve come across some dubious cases, but they’re very few and far between. We’ve referred them to the police,” said Khan. However, he couldn’t explain how their agents were selling citizenships way below their legitimate price. “You [should] pose that question to the agents,” he said.
WHAT THE LAW SAYS
Applicants looking for St Kitts and Nevis citizenship have two choices. The first is a donation to the Hurricane Relief Fund (HRF) which requires a contribution of $150,000 (Dh550,500) for a single applicant with up to three
dependents. In the second option, they are required to invest a minimum of $200,000 in an approved project and also pay $75,000 towards real estate fees.
Bayat said regardless of the rule, many agents have fraudulently switched applications from the donation option to real estate investment and misappropriated client money into personal accounts.
MODUS OPERANDI
Explaining the modus operandi behind the racket, Bayat said: “A candidate is required to donate $150,000 to the government once his application is approved under the HRF scheme. Unknown to him, the agent requests the Citizenship by Investment Unit (CIU) to switch to the real estate option. Hoping this would inject the much-needed cash into their realty sector, CIU readily accepts the change and issues a letter demanding the stipulated $75,000 government fee. At this juncture, the agent enters into a secret pact with a developer. As part of the deal, he splits the client’s money ($150,000) with the developer, who is still left with a sizeable amount in kickbacks after having paid $75,000 towards special government real estate fees.
The developer doesn’t have to build anything since no one is following up to see if he does. As for the applicant, he doesn’t get anything of tangible value in return for his purported real estate investment except for St Kitts and Nevis Citizenship as would be the case if he had remained with the HRF option. The government gets its fee ($75,000), but it’s half of what it could have got under the HRF scheme. Worse, it never gets to know if the applicant gave $200,000 to the developer as specified under the programme.
As a result hardly any money ends up in real estate projects many of which are stalled because of lack of funds. Khan said this was not true and that they have an Escrow Account Bill in place to safeguard the programme. “The funds are held in escrow accounts in StKitts and we ascertain everything before issuing a citizenship certificate,” he said.
ESTIMATED LOSSES
Local media reports in St KittsNevis say the government has offered no evidence or other assurance that the funds in question are actually held in escrows.
According to them, the economic citizenship abuse is estimated to have cost St Kitts-Nevis between $30 million and $130 million. Similar allegations of fraud have been reported by some other Caribbean islands.
Bayat said he has come across cases involving forged letters of approval (see box), unmonitored switching and undercutting of the minimum price required for the real estate investment option.
“The scale of the scam is mindboggling,” he said.
The allegations are unfounded and politically motivated. We have a robust citizenship programme and we follow the due process.” Les Khan | CEO, CIU, St Kitts-Nevis