A Rogues’ Gallery of Scoundrels, Fugitives and Tax Cheats

[dropcap]O[/dropcap]ver a year ago we featured prominently in the STAR our discomfort with the Citizenship by Investment Program. Typically, we were almost alone in our effort to underscore the risks involved. The day’s House opposition was as silent on the matter as were the rest of the media. (See Due Diligence Begins At Home . . . on page 6 in this issue.) To be altogether fair, having read the Lewis report entitled ‘Establishment of a Global Residence and Citizenship Program,’ the Association of Management Consultants (St. Lucia) Inc did put forward a number of rattling questions, among them: “Do the benefits outweigh the risks?”

While dishing out fulsome praise for a report seemingly well put together, the AMCS suggested possible hazards seemed to have been glossed over, “creating the impression that potential risks can easily be managed by engaging an appropriate third-party to undertake due diligence. Articulation and treatment of these risks also seem euphemistic in some cases.”

Referencing the following from the report—“For immigrant investors looking for greater ease of travel, an exit strategy or tax planning options, competition becomes a greater factor”—the consultants declared it “reasonable to speculate it referred to persons who currently find it difficult to travel to certain countries; persons who have an urgent need to exit their own country or residence; and others who wish to engage in tax avoidance.”

AMCS was not reassured by what the report stated about “reputable third-party service providers with relevant experience, who have the resources and the equipment to screen for ties to negative references . . . at reasonable cost.” The above seemed “to reflect the general theme of the report: that any perceived risks can be successfully addressed by engaging a third-party entity to scrutinize applicants”—hardly reassuring.

In January 2016 Saint Lucians learned the then government had launched its CIP in Dubai. The group’s chairman explained that that was where the money was. In effect, if the mountain wouldn’t come to Muhammad then Muhammad had to go to the mountain. Last Sunday the CBS program 60 Minutes featured a segment entitled Passports For Sale. This is how it opened, with correspondent Steve Kroft:

“If you have been thinking about leaving the United States, moving to another country and changing your nationality, it’s never been easier to do . . . Passports have become just another commodity to be bought and sold on the international market. All you need is money and a willingness to contribute a few hundred thousand dollars to the treasury of a cash-starved country, or acquire a piece of real estate there.

“It’s called citizenship by investment and it’s become a $2 billion industry built around people looking for a change of scenery or a change of passport, a new life or maybe a new identity, a getaway from the rat race, or perhaps an escape from an ex-spouse or Interpol. In any event, it’s brought in huge amounts of revenue for the sellers and attracted among the buyers a rogues’ gallery of scoundrels, fugitives, tax cheats and possibly much worse.”

Kroft spoke on-camera with opposition MP Lennox Linton who confirmed that all it cost to become a citizen of his native Dominica was $100,000 “and you don’t even have to come to Dominica to get the citizenship. You pay the money wherever you are.”

“Sorta just mail order citizenship?” asked Kroft.

“Sort of,” Linton replied. “Something like that.”

Also appearing on last Sunday’s 60 Minutes was Chris Kalin, chairman of Henley & Partners, a consultation company with offices in Zurich. Kroft introduced him as “the man who more or less invented the business.” Kalin said he helped countries set up their programs, rewrite their citizenship laws and recruit people of means looking for a second, third, or fourth passport that Kalin considered “just another travel accessory.”   

A citizen of Switzerland who resides in Dubai, Kalin admitted on-camera he carried twelve foreign “passports of convenience.” When Kroft suggested passports of convenience must cost a lot, Kalin said: “Yes, absolutely. It’s for wealthy people, of course. Often these wealthy customers come from politically problematic countries where their passports don’t work very well, making it difficult for them to get where they want to go.”

As for background checks, Kalin seemed fairly certain his verification programs worked. On the other hand, Kroft pointed out, the only way to identify people who have purchased St. Kitts citizenship is “if they happen to turn up on a list of international fugitives or get in trouble with the law, and St. Kitts and Nevis has more than its share for two sleepy little islands. Its passport holders include a Canadian penny stock manipulator, a Russian wanted for bribery, a Kazak wanted for embezzlement, two Ukranians suspected of bribing a U.N. official and two Chinese women wanted for financial crimes.”

Kalin’s reaction: “I think it’s no secret that these islands have made decisions that are not always optimal.”

“What about crooks?” Kroft prodded.

“It goes all the way down to crooks, yeah, absolutely,” said Kalin. “And it tended for some time to attract quite a few people that I would never let into the country. But I’m not the government of St. Kitts,” he chuckled.

“But you set up the program,” Kroft reminded him.

“Well,” Kalin shot back, “we helped set up the program. But you know, as it is, advisers advise, ministers decide.”

Until 2014, Peter Vincent was the top legal adviser for U.S. Immigration and Customs Enforcement, a part of Homeland Security, which he says is well aware of the vulnerabilities. Additionally, that the person in line to take over Homeland Security, General John F. Kelly, had “expressed concern in a report last year that ‘cash for passport programs could be exploited by criminals, terrorists or other nefarious actors.’ ”

In my opinion,” Vincent told Kroft, “the global community has established a very effective global security architecture to prevent terrorist attacks. I see these cash for citizenship programs as a gaping hole in that security architecture.”

He said the program was nevertheless multiplying across the Caribbean, with Dominica, Grenada, Saint Lucia and Antigua all competing with St. Kitts for customers and badly needed cash—customers from such places as Syria, Iran, Libya, Pakistan. Meanwhile, there’s DSH—at the heart of which is Saint Lucia’s “passports for cash” program set up by the Kenny Anthony administration. Interesting to note, shortly before his party was reelected to office, Anthony had expressed concern about Saint Lucia’s citizenship laws, which he thought “need tightening.” As for the Citizenship by Investment Program, Anthony stated that “a Labour government would be vehemently against it.”

Prime Minister Allen Chastanet, meanwhile, has embraced the CIP with some modifications, mainly “to make Saint Lucia more competitive.” More on that next issue!