Cyprus Investment Program problematic from the start

by Yannis Ioannou

Much ink has been spilled over the Cyprus Investment Program (CIP).  From its inception in 2017 until its abolition, the CIP was a scheme wherein the Cyprus Government granted Cypriot citizenship to investors, "golden passports" as it is well-known.

The "golden passports" are now a thing of the past but the use of the investment program caused damage to the image of Cyprus internationally and identified the island with corruption, abuse, tax evasion and persons - who were granted the Cypriot passport - known for their role as... fraudsters - sometimes also as internationally or regionally wanted persons.

The Audit Service Report published today summarizes, in its 192 pages, that of the 3,517 citizenships granted to investors, a very large number did not meet the criteria of the program and were therefore the result of its abuse.  It, therefore, came to summarize what everyone knew about the CIP from the start. And that along the way, despite adjustments in terms of control and implementation issues, it was not corrected - until its abolition. The issues that the Report summarizes qualitatively could be categorized as:

• Transparency issues. That is, the ignorance between the cabinet and the ministries involved (Ministry of Interior, Ministry of Finance) of aspects that would lead to the rejection of an application or its approval by the cabinet knowing that the criteria of the CIP were not met
• Serious issues of loss of public revenue since, illegally, the use of a reduced VAT rate was standard practice in cases of naturalization of relatives of investors (i.e. 3,810 additional people)
• Corruption issues regarding the virtual transactions that were taking place

The Audit Service, in fact, in its Report refutes the argument for the adjustment of the CIP, pointing out that it remained "fragile" throughout its implementation until its abolition, while pointing out that issues of corruption/abuse and criminal offenses arose, with the former extending beyond the pretexts of the program to persons who exercised public authority. It even concluded that the negative image of Cyprus stemming from the "golden passports" could have been fixed through accountability.

The passport issue at pre-election time

The Report of the Audit Service summarizes what is essentially pointed out in the conclusion of the Investigative Committee appointed by the Attorney General on 7.9.2020 - which showed that the CIP, as a whole, was extremely problematic. The Report even mentions that the Audit Service could have carried out a relevant audit earlier and that there is no mutual exclusion with the Investigation Service.

Inevitably, the interesting question that arises after the Report of the highest auditing institution in the country is whether the "golden passports" file will be reopened:

• As a topic on the pre-election agenda and to what extent it will be the subject of controversy or revelations
• Regarding the criminal prosecution of those involved and, finally,
• Regarding the discussion on how the Republic of Cyprus will regain its lost credibility at the international and European levels in relation to the granting of European citizenship

[This article was translated from its Greek original]