The citizenship planning firm, Henley and Partners, has seen its share of distributed funds from the Individual Investor Programme (IIP) increase by over 500%, calculations by Newsbook.com.mt finds.
The firm is a leader in the process more commonly known in Malta, as the selling of Maltese passports.
Comparing the reporting by the Office of the Regulator for the IIP for the Third and the Fifth Reports (2016 – 2018), the firm has managed to make a significant sum of money through the IIP. The reporting period ranges between the 1st July and 30th June.
In the Third report which includes the profits from the start of the IIP to the 2016/17 reporting period, Henley and Partners managed to make €5.8m from their services.
The publication of the Fifth report last month, now shows that that this number has grown to €28.8m, 500% since the IIP process began
As with previous years, the sums of money that the firm receives come via a Suspense account which is set up to receive the financial contributions, property purchases, rents and investments generated from individuals seeking citizenship. These elements are written into the Laws of Malta.
Once the individual(s) have made the Oath of Allegiance, these funds are then distributed under IIP guidelines. Henley and Partners is entitled to receive 4% of the contributions as well as 4% of the investments made under the Investment Requirement.
MEPs speak to Henley and Partners
The firm is by no means the only entity in Malta carrying out this process of ‘citizenship planning’ and it is clear from the reporting periods that Identity Malta generates more from the IIP. H&P are however a prime mover and shaker in the investment visa field, a field said to still be in need of proper regulation.
During their investigations into the murder of Daphne Caruana Galizia, and wider concerns about Malta, an EU delegation of MEPs from the Committee on Civil Liberties, Justice and Home Affairs, spoke to the firm trying to understand more about how the process works, and the firm’s role in it.
Malta and Cyprus are the only two countries which operate the ‘Golden citizenship programme’ within the EU, and according to their discussions with a representative of Henley and Partners, they found that they facilitate only 40% of the total number of applications for Malta.
With EU sanctions imposed on Russia and Russians being one of Malta’s citizenship clientele, the delegation raised concerns about a number of those blacklisted under EU sanctions who had managed to receive citizenship through their programme. H&P insisted that their due diligence processes were ‘very reliable’. The continued saying that the process is, ‘extremely serious and rather lengthy’ and that, ‘it is not easy to get citizenship rapidly’.
The representative added that they cooperate with the government and other organisations in cross checking the identities and backgrounds of those making applications.
The delegation report states that rejection rates for Russians have been going up and this is consistent with the 25% overall rejection rate that currently stands in Malta.
Applications are down but demand is steady
The latest regulator report shows that numbers of applications have dropped in the yearly reporting period, standing at 330, 47 less than the last year.
However, numbers from Europe remain high at 141 applications, 42.7%. Asia has also grown to 107 this year, 32.4%. This is 11% greater than last and four times greater than 2015 figures (8.6%).
The Middle East has seen a 5.6% drop its numbers with only 26 applications made. Individuals from African states on the other hand, submitted 30 applications this year (9.1%), almost 4% more than 2016/17 reporting.
Overall, the number of approved applications was 223, making the total to June 2018, 961. This offsets the number of rejected or withdrawn applications which currently sits at 75.
Turning serious money into solid investment
Investment clients ‘are obliged to invest in a residential immovable property in Malta, either by acquiring and holding one having a minimum value of €350,000 or by taking one on lease for a minimum annual rent of €16,000.’ This is stipulated under the IIP Regulations.
Over this year’s reporting period, the total amount of property purchased as part of the IIP’s investment regulations sits at €29,600,500. This covers the value of 25 properties averaging €1,184,020 in value.
Sliema and St Julians are the most favourable places for this property, accounting for 72% of those purchased.
According to the 2016/17 report, there were 80 properties purchased, more than this year. The favourable locations of those properties remains consistent with this year.
Over 200 (231) other properties were being leased for a contractual duration of 5 years. This amounts to a total of €23,062,687.64, averaging €95,695.80 per contract and €19,139.16 per lease.
These leased properties are found across 26 different areas in Malta with Sliema and St Julians emerging as the most favourable again, 35% and 21% respectively.
Last year’s figures show that the number of leased properties was over double that of this reporting period. 483 properties were leased by investment clients. Their locations are also as varied as this year’s report.
They didn’t speak to me, they didn’t look at the reports
This year’s report opens with some criticism from the regulator, Mr Carmel DeGabriele. In his foreword to the report, he talks about his disappointment that members of the EU delegation that visited Malta, did not consult with him or look at the previous reporting or frameworks that the IIP use to vet potential citizenship candidates and use the funds.
He says that, ‘none of the fact-finding missions which came over to Malta from both the European Commission and the European Parliament as well as other institutions that have decided to criticize the running of this Programme have even bothered to request a meeting with the undersigned or any of the members of my Office or seem to have at least carefully studied any of this Office’s past Annual Reports before expressing in one way or another their deep concerns over this Programme.’
He also readdressed the question that the contributions that are paid in through the regulations go towards the country’s improvement.
‘It has already been spelt out that the income which the Government is and will be deriving from this Programme will in the coming months and years play an extremely important role in the country’s infrastructural boom and social development.’