Al Jazeera published a leak (The Cyprus Papers) of about 2,400 Cyprus Citizenship investors who applied under the Cyprus Investment Programme (CIP) between 2017 to 2019. Almost 100 profiles were flagged as being high-risk or politically exposed persons. Several investors’ profiles deemed ‘risky’ were also published in a redacted form.
CIVITAS POST explored Al Jazeera’s findings to assess which of these case files (both of Politically Exposed Individual’s) PEPs and non-PEPS were in fact worthy of such ‘bad press’. We analyzed which of these cases were reported to have convictions or sanctions against them and detail our findings throughout our series on ‘The Cyprus Papers’.
The Cyprus Papers and the fall of the Cyprus Investment Programme
In summary, CIVITAS POST found that 54 of Al Jazeera’s Cyprus Paper cases had no reported criminal records or convictions- this equates to over half (55.7%) of those listed.
None the less, the ‘Cyprus Papers’ published just over a week ago on the 23rd of August 2018, came at the untimeliest moment.
A myriad of issues were concurrently occurring when this ‘leak’ went viral and blew the top off the Cyprus Investment Programme.
- Geopolitical Tensions: Cyprus, a divided island since 1974 has been at the heart of tensions in the region between Turkey and Greece (as well as other regional players) – all vying for rights to the resources of the Mediterranean.
- Smear Campaign Accusations: Al Jazeera being a Qatari media channel is being accused of its motives in pursuing this campaign as Qatar has strong ties to Turkey (politically) as well as militarily (hosts Turkish bases).
- Pressure from Europe: The Cyprus Investment Programme, as well as other European Union investment migration programmes had just come under the (repeated) magnifying glass. The Council of Europe recently issued a draft resolution reiterating that investment migration programmes of Member States should respect the standards set out by them and limit high-risk investors from obtaining residency/citizenship in Europe.
- Cyprus Property Prices: There was a lull in demand caused by the travel ban limiting investors real estate visits to Cyprus. The Residential Property Price Index (RPPI) rose by 1.8% in Q1 of 2020 versus 2.2% in Q4 2019 and 2.83% in Q3 2019 and although apartment prices showed resilience and signs of growth throughout the island, house prices in Limassol (one of the most coveted locations in Cyprus) fell by 0.2%.
- Revised CIP Law: the ink had yet to dry on the new changes to the legislation when the ‘Cyprus Papers’ campaign went out. These changes included an increase in the compulsory donations (by a total of EUR 50,000) as well as changes to the qualification of PEPs who are ineligible to apply if they have held an important public office in the past 12 months.
Each of these factors all played a critical role in how the ‘Cyprus Papers’ were received by the general public (globally), the Cypriot and EU authorities, prospective investors in the CIP and the electorate of Cyprus.
Even within Cyprus there was and is substantial division as to whether the Cyprus Investment Programme should or should not continue and what benefit it brings to the nation itself.
Prioritizing Enhanced Due Diligence
There has been pressure on all the Investment Migration Programmes over recent years, predominantly in Europe, to enhance due diligence and investor screening. The Investment Migration Council, service providers and industry stakeholders have all voiced their support of this.
Yet, what is also unquestionable is the quintessential role that citizenship by investment and residency by investment programmes play in attracting foreign direct investment (FDI). Whether given the misnomer of ‘golden visas’ or ‘golden passports’ or not – these are legal frameworks by which governments can draw in much needed funds. In these pandemic times, FDI is paramount to small countries who are safeguarding their economies from the impending fallout of covid19 and fiascos like these put these programmes at risk unnecessarily.
Have strict processes and procedures in place to screen all applicants and ensure there is cohesive collaboration between the respective government, police (national, EUROPOL and INTERPOL), banking institutions and regulators. It is imperative to raise the bar in terms of the level of transparency with which these programmes operate, in full compliance with AML directives and regulations.
What implications could this have on investment migration programmes beyond Cyprus?
The question the industry now faces is – what will come out of this media frenzy surrounding the ‘Cyprus Papers’? Will this result in new regulations (instead of recommendations) that governments must adhere to when operating their citizenship schemes?
More importantly to what extent does the EU have power over what criteria Member States apply when granting citizenship of their own country. This is a complex point for further analysis and debate but in an interview with Al Jazeera, Ms. Praxoula Antoniadou, President of United Democrats political party and former Minister of Commerce, Industry and Tourism of Cyprus did touch upon this critical question, “To clarify that the issue of citizenship still remains within the competence of a Member State in the European Union, it is not regulated on an EU wide basis yet though of course if the EU proceeds to introduce EU wide criteria that might be to the benefit of all because many other countries run citizenship schemes.“
Now it is understood by Al Jazeera that the European Commissioner for Justice, Didier Reynders is exploring the legal framework under which to start an infringement procedure. Adding to this Laure Brillaud, Transparency International’s senior policy officer stated:
“The EU must waste no more time, initiate infringement proceedings against Cyprus, and potentially other countries that sell EU citizenship, for violating the principle of sincere cooperation between the member states.
Was this a smear campaign by Al Jazeera?
Due to the tensions in the region linked to exploration rights and political fissures, the Qatari-Turkish ‘bromance’ and the fact that Turkey has a booming citizenship programme, the Cypriot media and government officials, including Minister of Interior – Nouris have questioned Al Jazeera for their purportedly biased reporting.
“Al Jazeera is based in a country known for its pro-Turkish positions… and is trying to hit the Republic of Cyprus with distorted and misleading information,” the minister added.
Al Jazeera has retorted to such claims stating that it is entirely unbiased.
On the whole, in Cyprus there is a consensus that the somewhat distasteful caricatures videos and click-bait titles like ‘Cyprus’s Dirty Secrets’ do have an evident goal – to taint the reputation of Cyprus.
As Ms. Praxoula Antoniadou highlighted in her interview with Al Jazeera it is not right “to generalize and attack the whole program as if everybody that invests in Cyprus is a criminal and whoever invests elsewhere is not”.
The counter argument to this position is that regardless of whether there is motive behind the ‘Cyprus Papers’ leak by Al Jazeera – the deed is done and the ‘truth is out’.
How much of it is factual though?
We delve further into how accurate the reporting on these cases was – for the sake of balanced journalism and to shed light on the programme, both its evolving governing laws and its fallacies.
The editor of the Cyprus Mail recently issued an open letter to the European Commission threatening legal action against Cyprus and highlighted that numerous cases listed were incarcerated or convicted after having been granted Cypriot Citizenship.
In our analysis report we clearly state the date of Approval (always listed first) and subsequently we note the date a sanction / conviction was issued, as per Al Jazeera’s data.
Extracts from the Cyprus Papers
In our research, which we will be releasing in further coverage on our series ‘The Cyprus Papers : A Balancing Act’ – CIVITAS POST agreed with the Cyprus Mail’s editor on the point that several Politically Exposed Persons had no convictions or crimes yet were added to the Al Jazeera list. This approach inflated the number of cases that actually merited criticism and, in our opinion, should not have been flagged, taking into consideration they were legally eligible investors with no criminal record.
Read more: How Will Cyprus Respond to the Leaked ‘Cyprus Papers’
Should PEPS ever have been permitted as eligible investors?
That – is another very distinct discussion on ethics, security, procedures and due diligence – but up until July 2019 the Cyprus Investment Programme allowed PEPs to apply. Those individuals broke no laws in doing so from the perspective of the Cypriot authorities, considering they had no criminal record.
Regardless, Al Jazeera achieved what it (may or may not have) set out to do: damage the reputation of a nation and cast a gigantic cloud over one of its leading sources of Foreign Direct Investment, the Cyprus Investment Programme.
This ‘leak’ which is being investigated by the Cypriot authorities, has created a snowball of an unknown parameters, a snowball which is still rolling in fact…
Opening an (Old) Can of Worms
Considering the current state of affairs and considering that on the 18th of August 2020 changes to the Cyprus Investment Programme were just announced – this Al Jazeera report opens up an old can of worms and detracts from the positive changes to the CIP legislation. Included in these latest updates was the clear process by which citizenship can now be revoked retrospectively for individuals deemed ineligible.
After the storm that the Jho Low Malaysian fugitive -generated last year, as well as a few dozen other contentious cases, Cyprus has been implementing changes to fortify its AML procedures and appease critics within the EU.
As discussed with a Cypriot lawyer that has extensive experience with foreign investors applying for the Cyprus Investment Programme – a supervisory body, the ‘Naturalization Control Unit’ has been granted the right and “responsibility to examine whether the CIP applicants comply with the terms and the conditions following the approval of their applications.”
This includes reviewing cases where individuals have been convicted / imprisoned for serious crimes (5+ years), are wanted by EUROPOL or INTERPOL, are subject to sanctions amongst other grave offences.
Cyprus is determined to uphold its reputation on the global stage and as a law-abiding member of the European Union. In fact, as informed by a Cypriot investment migration professional
the Audit Office announced the launch of a probe on citizenships granted after the programme’s criteria were amended in May 2018, a period which a three-member Committee appointed by the Council of Ministers had not been tasked with examining. Based on the findings, the investigation might cover other periods as well.
The audit’s objective is to investigate the procedures applied by the Ministries of Finance and Interior in granting citizenships to foreign investors, and whether these individuals, and others who were involved in transactions, had been handled properly by the tax department.
Analysis Release: Analysis on the Cyprus Papers Report
We will be continuing our series on the ‘Cyprus Papers’ releasing our detailed analysis on the actual cases Al Jazeera flagged, which should be there and which shouldn’t. Stay in touch by following us on LinkedIN or X.
