Faustian choices | Jason Azzopardi

The Nationalist Opposition has declared that opposing the sale of Maltese citizenship for  €650,000 a pop is a matter of principle. But at the same time, it also unsuccessfully tabled amendments to the law to ensure that the buying of citizenship is accompanied by tangible investment and preceded by a period of residence in the country. Has the Opposition thus sent a conflicting message?

Azzopardi insists that there is no contradiction in seeking to improve the law and opposing it law on the basis of principle.

"From day one, [Opposition leader] Simon Busuttil made it clear that we are in principle against the concept of selling our citizenship. We cannot accept turning citizenship in to a commodity.  This is an abhorrent thing."

Azzopardi feels vindicated by the onslaught in the international media which has highlighted the fact that what the government is doing is "selling" citizenship. In fact, most new headlines described the scheme as a "sale".

But despite its objection on the basis of principle, the Opposition was willing to discuss with the government on ways to improve the proposal. It was the government which, according to Azzopardi, bulldozed its way to get the new law approved in a short time without any real consultation. He strongly denies that the Opposition initially signaled its agreement with the new law in preliminary discussions with government.

Azzopardi reveals that on 4 June, Home Affairs Minister Manuel Mallia approached him in parliament to discuss an important matter. A meeting was set up on the following day. Azzopardi had no idea what the meeting was going to be about, and thought that the Minister was going to brief him on the pre-announced amnesty to prisoners given to commemorate Labour's electoral victory.

But during the meeting the Minister informed Azzopardi of the government's plans to set up a citizenship investment programme. Azzopardi claims that the programme was described to him as one aimed at attracting high net worth investors who would eventually be granted citizenship after investing in the Maltese economy, as happens in some other countries. No mention was ever made at this stage of selling citizenship at a fixed price.

"I replied that I could not take a position before discussing the matter internally but told him that if this is linked to investment it is an interesting proposal."

Jason Azzopardi subsequently informed the PN's parliamentary group and 15 days after their first and last meeting on this matter, he told Mallia that he expected more information from the government. 

But the Opposition received no feedback from the government until Saturday, 5 October when at 7pm parliamentary secretary Owen Bonnici sent an email to PN whip David Agius and PL whip Carmelo Abela which included the new bill on citizenship. Two days later, the bill was published on the government gazette.

"Nobody informed us about anything or consulted with us on the bill. We were faced with a fait accompli. What I read in the Bill had nothing to do with what Mallia had talked about in June.  There was no reference to any bond between the applicant and Malta. There was no requirement for investment and no requirement of residency in Malta before one becomes eligible for citizenship as happens in other countries."

Azzopardi compares this secrecy to the fact that in the Caribbean island Antigua, where a White Paper was discussed for two whole years before a similar law was approved. Subsequently, Azzopardi and former Finance Minister Tonio Fenech requested a meeting with Henley, the company chosen by the government to administer the programme. A two-hour meeting was arranged two weeks later, during which the two PN MPs asked Henley a number of questions.

"During the meeting we asked them directly why the new programme was not tied to investment. Their reply was that they had strongly advised government to link the programme to investment, but the government would have none of it as it was in a rush." 

Azzopardi is ready to confirm this sequence of events under oath.

He also insists that during the same meeting, the Opposition also raised its concern on the secrecy of the programme and the absence of any bond between the applicant and Malta.

The Nationalist Party is saying that if elected in power, it would revoke citizenships granted under the scheme. The government has published the advice of the Attorney General, which clearly states that once granted, citizenship cannot be revoked. Kevin Aquilina, the dean of the Faculty of Law, has also expressed the same opinion. Is the Opposition ready to publish the legal advice which states that citizenship can be revoked?

He insists that the PN is in possession of a legal advice given by a lawyer who specialises in constitutional law and which is based on precedents in the European court, but would not commit himself on its publication. 

"It is not up to me to decide whether this advice should be published or not... neither can I prejudice the position of the lawyer who does not want to be named."

He respects the opinion expressed by Attorney General Peter Grech and Kevin Aquilina, but insists that, "nobody is the oracle of Delphi... there are cases where legal opinions can contrast..."

Prime Minister Joseph Muscat accused the Opposition that if it revokes citizenship, it would expose the country to claims for compensation. But Azzopardi insists that this is not the case.

"Henley are already informed that the PN will revoke these citizenships. Therefore they are duty-bound to inform their clients that any citizenship granted would only be valid until a Nationalist government is elected. So if any citizenships are revoked, it is Henley - not a future Nationalist government - which will have to answer to claims for compensation by those stripped of citizenship."

Is the PN simply making these statements to scare away potential applicants from buying citizenship, and so undermining the government's plans to secure revenue from the scheme?

Azzopardi turns the tables on the government.

"It is surely not us who are writing the news reports which are damaging the country's reputation. From China to Chile, the news has taken the world by storm...we have been turned into a laughing stock among other countries."

He quotes economist Warren Buffet, one of the world's leading investors, who said that "it takes 20 years to build a reputation, and five minutes to destroy it".

One piece of collateral damage of the government decision to seek revenue by selling citizenship was that of creating the perception that the country is desperate. In fact, most news agencies linked the government's decision as an attempt to fill the country's empty coffers or to balance its budget.

"In eight months, this government has sent the message that Malta has its back against the wall. Perceptions count a lot in economic matters. Unfortunately, the government has given the impression that Malta has big financial problems and that its economy is ailing, which is clearly not the case. The end result of this is that real investors could be scared away from Malta."

Moreover, he warns that the government is being penny wise but pound foolish by seeking short term gain while undermining the reputation of Malta's financial services.

But by harping on revoking citizenship doesn't the opposition risk being exposed to the accusation that it is simply interested in derailing the government's targets? Azzopardi blames the government for this situation for not consulting with the Opposition before the scheme was introduced.

"Why did the government refuse to budge on any of the proposals we made to it in parliament?"

The Opposition has highlighted the conflict of interest which Henley will have as the company which will be scrutinising applicants while at the same time receiving commissions on every citizenship granted by Malta.

"There is not a single country in the world - not even in the Caribbean - which has granted exclusivity to one private company to be responsible both for the marketing aspect and exclusivity on receiving applications."

He points out that in the Libor Fixing scandal still occurred despite Barclays assurances of being ringed fenced by Chinese walls against any abuse.

"Henley has already announced that it will seek to attract 200 to 300 applicants every year. This is like giving a teacher a pack of papers to correct while giving him or her a commission on every candidate who passes the examination. In such a circumstance, do you expect the teacher to be strict or is there a risk that he would close an eye?"

Azzopardi had previously claimed that Henley will gain €140,000 for each passport. The government has rebutted this, saying that the company will only receive a 4% commission (€26,000) on each citizenship granted. But Azzopardi still stands his ground, insisting that his information came from a quote given by Henley to a lawyer representing a client.

Azzopardi claims that the quote includes an additional €70,000 fee paid directly to Henley over and above the €650,000 paid to the government. If one adds the €26,000 paid by the government to Henley as commission, one would already arrive at a €96,000 figure. Moreover, if one adds an extra payment for each dependent, one may even surpass the €140,000 figure. He also refers to a presentation by Henley in Russia in which it was promoting a "fast-track option" for those who pay an additional 50%. Noting that this was made before parliament even approved the new law, Azzopardi raises questions on whether this fast-tracking would impinge on the due diligence carried out by the company.

I point out to Azzopardi that Henley was deemed reputable by former finance minister Tonio Fenech, to the extent that in a foreword which was attached to the company's Global Residence Handbook, Fenech wrote that "one firm which we have had the pleasure of working with is Henley and Partners".

"Internationally recognised as the firm of choice for residence and citizenship planning, we sought their advice on the reform on our residence schemes and the development of new programmes designed to attract foreign investors to settle in our country. Their knowledge and expertise in this area are truly unrivalled and they have imparted to us some very valuable advice," the former minister wrote.

"Fenech did not endorse the citizenship scheme but was expressing a judgement on the basis of past advise given by the company to government. We are here talking of a company whose bottom line is profit. We are here talking of a company which stands to gain as much as €30 to €40 million if they manage to sell their 200 to 300 passport target, all this from our citizenship."

For Azzopardi the greatest flaw in the system is that the company selling passports will also be responsible for the due diligence process.

"Why isn't the government responsible for this process as proposed in our amendments?"

One of the objections to the scheme, which I have personally expressed, is that it would create a tier system; an automatic path to citizenship for the rich while retaining the status quo for those who seek naturalisation after having lived in Malta for a long time. Only 2,401 persons have acquired citizenship through naturalisation since 1991 and the largest number 183 was awarded in 2012. European Union Democracy Observatory (EUDO) citizenship observatory states that the acquisition of citizenship by naturalisation in Malta is overshadowed by the "singular non-reviewable discretion" which the minister for home affairs enjoys in decisions on each case.

The discretionary powers of the minister are described as "avenues of potential abuse and conflicts of interest". Moreover, while the names of all these citizens are published in the government gazette, the names of the citizens granted citizenship after paying €650,000 will not be published.

In parliament, the PN unsuccessfully presented amendments to the law to limit the IIP programme to people who have been recognised as Maltese residents for five years. Why did it not propose a similar residence period for all people who seek citizenship through naturalisation, as happens in countries like Belgium?

Azzopardi agrees that a reform of citizenship laws is imperative but insists that the opposition's amendments were addressing the bill proposed by the government.

"We need amendments to the law. But it was the government which rushed things and so prevented a wider discussion on citizenship. The need to reform our citizenship laws is real, but has nothing to do with the sale of citizenships."

One of the major shortcomings in the citizenship regime, according to Azzopardi, is the unofficial policy - which has been in force for the past 15 years - which effectively allows for the granting of citizenship only granted after 17 years... even if this is not stipulated by the law itself.

"Should we establish this required period of residency before naturalisation in the law? Should it be 17 years, or should we reduce it to, say, six years? What I insist is that this period of residency should be established by law so that things remain clear for everyone. Obviously, we need to discuss the amount of years a foreign national would need to spend in Malta before citizenship is finally granted."

Despite all the Opposition's legitimate objections to the new law, there is a distinct possibility that the scheme will result in a good revenue flow for the government. Politically, will this not give the government the chance of portraying the opposition as a spoiler which wants to deny the country of this easy stream of revenue?

Azzopardi insists that this is ultimately a question of values.

"Through this scheme this government is sending one strong message. The only important thing is money. Their mentality is summed by the Prime Minister's own declaration in London that the scheme is aimed at attracting "talented" people. This reveals that for the PM, being rich automatically means that one has talent... the same prime minister who repeatedly said that Malta has too many immigrants, and that it cannot carry the burden anymore is now saying that we are open to everyone with €650,000 to spare."

Does the PN exclude an abrogative referendum to repeal the new law? Azzopardi would not jump the gun.

"We have started discussing this subject internally and we are not excluding gathering signatures for a referendum."

He makes it clear that Opposition to the sale of citizenship cuts across partisan divides.

"I have received many emails of support from Labour voters who oppose this scheme."

Muscat has lambasted opposition to this scheme based on anachronistic nationalism. Departing from his hawkish stance on immigration during the summer months after being stopped by the European court of justice from pushing back a group of migrants to Libya, Muscat now insists that Malta should be open for rich and talented foreigners.

In this context, Azzopardi accepts the "nationalist" label with pride.

"For us nationalism is not motivated by exclusion of others but by love for the country. We are not willing to sell our country in the same way as Faust was willing to sell his soul to the devil.  Labour is presently practicing an extremely right wing policy: if you have money we give a red carpet treatment, while if you are poor you get pushed back."