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A Murdered Journalist and Malta’s Passport Racket

The Daily Beast logo The Daily Beast 15/04/2019 By Anna Nemtsova Barbie.Nadeau@thedailybeast.com (Barbie Latza Nadeau)
a close up of text on a black background: Photo Illustration by Lyne Lucien/The Daily Beast/Getty © Provided by The Daily Beast Photo Illustration by Lyne Lucien/The Daily Beast/Getty

Russia’s Millionaire ‘Refugees’

Russian elites fear they’ll be locked behind the new iron curtain: punished by Western sanctions on one side, by Russian courts on the other.

VALLETTA, Malta–One scoop that muckraker Daphne Caruana Galizia was absolutely sure about before she was killed by a bomb under her car in October 2016 was a scheme in which Russians were buying Maltese passports. She believed it was a cover for something very sinister indeed, and her death offers abundant proof that she was right.

Before the bombing, Caruana Galizia had peeled back the cover on an underworld that put millions of euros into the pockets of some of the most powerful people in Malta. And in spite of international outrage about the scheme, Malta continues selling European Union passports to millionaires. The transactions are legal on their face, but the corrosive corruption of the Russians involved is undermining the rule of law.

Behind some of the Baroque-era doors on the sleepy streets of the Maltese capital of Valletta are dozens of licensed agencies quietly peddling citizenship of this Mediterranean state to those who can afford the price tag of at least $650,000 (£496,000).  

The Maltese passports carry with them what amounts to a VIP pass to the whole of the European Union, of which Malta is a member, but their holders are ghosts who rarely set foot on the island nation.  A woman holds a mock passport of Malta. © Getty A woman holds a mock passport of Malta.

The apartments rented by thousands of wannabe Maltese—to meet a “residence” requirement—mostly remain empty. In fact, some aren’t habitable at all and amount to nothing more than an address with a mailbox should the lease owners ever want to visit. Others were built as low-income apartments whose owners can ask much more rent from passport-seekers than they have to pay themselves. The result has created a shortage of affordable housing on the island.

And, again, this is all legal under Maltese law.

The Maltese government has issued licenses to at least 200 agencies that sell passports to Saudi, Iranian, Turkish, and other nationals. Branch offices in those countries, including a new one that just opened in Moldova, provide the initial details and facilitate the necessary steps toward E.U. citizenship.

But it’s Russian millionaires, influential public officials, businessmen, private company owners and managers of state corporations who make up the majority of passport-buyers here.  

Russian elites are terrified by the idea they’ll get locked behind the new iron curtain, punished by the West’s economic sanctions on one side and by Russian courts on the other. The Putin government just this year began a new wave of high-profile arrests and prosecutions of senior public figures.

The Maltese passports, obtained by dozens of Russian families each year, amount to an escape route, allowing them to travel freely to more than 100 countries, including the United States and Israel.  

Related: How Putin is rebuilding the Iron Curtain (Daily Beast)

© Getty

The Daily Beast spoke with managers of Global Information Consulting Group, or GICG, one of the leading companies selling Malta’s “golden passports” who did not want to be quoted directly. Before taking on would-be European citizenship applicants, the group performs due diligence checks including verification of financial assets. Once cleared, the clients come to Malta for 10 to 12 days, where they meet with officials from the Malta Individual Investor Program agency, based in Valletta. If they pass the initial interview, they can then apply for a residency card.

The company’s central office is located in an ornate mansion overlooking Marsamxetto Harbor. The group introduces its clients to a standard process of naturalization, which takes a minimum of 12 months. The primary applicant then agrees to “donate” €650,000 ($735,000) to the government of Malta. Spouses and children under 16 pay a discounted rate of just 25,000 euros. Family members over the age of 16 pay 50,000 euros. A formal address in Malta is also required.

Russian corruption fighter Ilya Shumanov, the deputy head of Transparency International’s bureau in Moscow, showed The Daily Beast a list of 582 Russians who have bought E.U. passports in Malta just since the beginning of 2018. The group has been working to document all new Maltese citizens.

'Without it we'd be broke': Golden passports is a lucrative business for Malta. © Getty 'Without it we'd be broke': Golden passports is a lucrative business for Malta.

“It looks like a Russian parliament member Grigory Anikiyev has bought a Maltese passport for his son Artem; perhaps it was a birthday present for Artem’s 17th birthday,” Shumanov said.

Ironically, it seems that even as Anikiyev was hatching an escape plan for his family, the billionaire MP was preaching to young Russians about the need to love their country. “Grow up to be a patriot!” his personal webpage said above photographs of young children in Russian military uniforms holding a Communist flag.

Meanwhile Anikiyev’s son, Artem, bragged about traveling to Malta by private jet in a video blog.

Anikiyev did not respond to questions emailed by The Daily Beast about his son’s Maltese passport.

The passport-fixing company GICG recently expanded its business to sell Moldovan passports, too. Moldova is the poorest nation in Europe, riddled with corruption, and hardly a desirable haven for the wealthy in its own right. But it benefits from a visa-free regime with the European Union. President Igor Dodon, a friend of Russian President Vladimir Putin, is struggling to stop young, disillusioned Moldovan citizens from emigrating, even though this freedom has become a lucrative enterprise for the country when outsiders buy a passport.  

Those purchasing a Maltese passport are required to own property in the country, © Getty Those purchasing a Maltese passport are required to own property in the country,

The Maltese passport scheme, which is legal, is such a shady business that Caruana Galizia, who first wrote about the Russian connection, continues to pay the price for her work even in death.While there were many stories that Caruana Galizia wrote, the Russian passport scheme was one that was particularly upsetting to Maltese authorities, whom she reported received kickbacks and bribes to expedite the process. Maltese authorities frequently remove a makeshift memorial to her in front the capital city’s war monument.  

On a recent weekend Ann Demarko, an opposition activist, was putting out banners and lighting candles at Caruana Galizia’s memorial even though she knew that Maltese municipal employees will throw the mementos away, and Demarko is not alone. Every day, more messages appear at the improvised memorial. People demand justice for the murdered journalist.

Malta charges hundreds of thousands of pounds for an EU passport. © AP Malta charges hundreds of thousands of pounds for an EU passport.

Demarko makes a comparison with the impromptu memorial in Moscow to murdered opposition leader Boris Nemtsov.

“Russian authorities destroyed Nemtsov’s memorial more than 169 times and Maltese authorities have beat the Kremlin: our memorial has been cleaned off more than 197 times,” Demarko told The Daily Beast. “Last November, our Prime Minister [Joseph] Muscat promised to arrest the masterminds of Caruana Galizia’s assassination, but so far we have not seen justice,” Demarko said. “Meanwhile, the corrupt passport scheme continues to bring kickbacks to the interested parties.”

Maltese parliamentarian Simon Busuttil has been fighting corruption since Malta joined the European Union in 2004. He says he’s passionate about the democratic values promoted in the union: the rule of law, human rights, equality and transparency.

“Daphne exposed people who acquired the citizenships. All 33 opposition parliament members, including myself, are opposing the passport scheme, which was originally introduced by our Prime Minister Joseph Muscat nearly six years ago,” Busuttil told The Daily Beast in a recent interview. The EU is under pressure to crack down on the golden passports scheme. © AP The EU is under pressure to crack down on the golden passports scheme.

In 2017, Busuttil published a report in which he accused Keith Schembri, Muscat’s chief of staff, of taking bribes. “I asked the court to conduct an inquiry,” he said. “Almost two years later I am still demanding the results of this inquiry.”

Schembri has denied the allegations.

The trade in passports is hardly a secret. A delegation of Maltese passport sellers visited Moscow last year and had a meeting with Kremlin adviser Sergei Markov. 

"I told them to always keep us updated on the names of applicants; once they get the names approved with the Kremlin, there should not be a problem,” Markov told The Daily Beast. “Our bureaucrats' families want to have a chance to travel freely around the world so they should have their chance. Malta must keep selling us their passports, to annoy the U.K and U.S.A.”

A press attaché for the Maltese government defended the passport scheme recently. “The legal sale of passports to foreign nationals is a lucrative business for the Maltese government,” he told The Daily Beast. “Without it we’d be broke.”

The European Union does not vet the issuance of passports from individual nations. There is no system in place that currently monitors such activities that are considered policies of individual nations. But the policy might soon change.

A recent European Union report by Euractiv, an aggregation website specializing on E.U. policy dispatches, called attention to the danger of the passport scheme. Currently, only Malta, Cyprus and Bulgaria sell citizenship to foreign nationals. The report pointed to “shortfalls” among all three of these countries.

“The countries did not allow easy identification of those who bought their passports,” the report said, referring to an internal E.U. Commission report. “Although individuals who purchase citizenship and residence in E.U. states can do it for legitimate reasons, the commission said, the schemes posed risks of infiltration of non-E.U. organized crime groups in the economy, money laundering, corruption and tax evasion.”

E.U. Justice Commissioner Věra Jourová, who authored the commission’s report, warned that the era of the “golden passport” may soon be over. “We are looking at it with concern,” she said when the E.U. Commission report was released. “Crime has no borders.”

And borders are no barrier if you can buy the right passport.

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