Must Peter Pay for Putin? A Case of Nationality Based Discrimination and Big Stick Diplomacy

An opinion piece written by Geoffrey DuBoulay IMCM, Managing Director and Keith Isaac IMCM, Chief Operating Officer of Polaris Citizenship & Investment Consulatncy Services for the IM Yearbook 2023.

Geoffrey DuBoulay and Keith Isaac of Polaris Citizenship & Investment Consultancy Services argue against a blanket ban of Russian and Belarusian nationals following Russia’s invasion of Ukraine.

While citizenship by investment (CBI) started some 38 years ago in St. Kitts & Nevis, this industry first landed on the shores of Saint Lucia in 2015 through the Citizenship by Investment Act (No.14 of 2015). As mandated by the Act, the CBI programme is administered by the Citizenship by Investment Unit (CIP Unit). Since officially accepting applicants in January 2016, St. Lucia has welcomed over one thousand persons as citizens via its CBI programme (CIP) and generated more than 60 million Eastern Caribbean Dollars.

Blanketban imposed

Despite the substantial revenue generated, CBI remains a topic of contention both locally and on the global stage. The 2022 invasion of Ukraine by Russia has placed a spotlight on CBI with most CIPs banning Russian and Belarusian nationals outright. Uniquely, while most islands began the suspension of the programme to Russians from as early as March 4th 2022, St. Lucia originally opted to take a different approach and kept the CIP open to Russian applicants even after all CBI offering islands had decided otherwise. Unfortunately, St. Lucia closed its doors on March 18th 2022 due to growing external pressures.

While, at the time of writing, Russian nationals may no longer apply to all but one Caribbean Island’s CIP, as practitioners in an industry which seeks to be a force for good by promoting freedom of mobility, we must ask whether such a blanket ban is necessary or justified. Initial comments from St. Lucia’s government and Unit officials painted a desire to refrain from discriminating against Russian applicants based on nationality. It was stated that mechanisms were in place to ensure that any individual with ties to Vladimir Putin’s regime, on a relevant sanction list or of general bad character, could not obtain citizenship.

Noting that Russia has a population of approximately 150 million persons as well as a diaspora of over 20 million, it is likely that only a fractional percentile falls into the aforementioned categories.

Mechanisms to ensure CIP integrity

Section 36 of the Act mandates that the following persons may not be granted citizenship through the CIP:

• Individuals who have been convicted of a criminal offence;

• Individuals who are the subject of a criminal investigation;

• Individuals who are considered to be a potential national security risk;

• Individuals involved in any activity likely to cause disrepute to Saint Lucia;

• Individuals who have been denied a visa to a country with which Saint Lucia has visa-free travel and has not subsequently obtained a visa to that country; and
• Individuals who provide false information in their CBI application

These rules ensure that individuals of unscrupulous character do not tarnish the reputation of St. Lucia and its CIP. Provided that the legislation is properly administered, it is improbable that any “bad apples” would obtain citizenship.

Compliance with the legislation is ensured through a rigorous enhanced due diligence process. This process is three phased with vetting of applicants undertaken by the Royal Saint Lucia Police Force, the CARICOM IMPACS- Joint Regional Communications Centre and international due diligence partners such as BDO, Exiger and Refinitiv. Once complete, vetting agencies provide comprehensive reports on every applicant so that an appropriate decision to either grant or deny citizenship is made. In fact, St. Lucia’s due diligence process has been praised internationally for its transparency, rigor and integrity. It is further noted that the decision to grant or deny citizenship is taken by a five- person board of skilled, independent, impartial non-executive directors.

The implementation of the legislative framework through the due diligence process described above ensures that only individuals of good character and suitable background, regardless of nationality, may obtain citizenship. This alleviates any concerns related to sanctioned Russians and Russians associated with the current regime misusing CIPs.

Post citizenship safeguards

From the inception of the CIP, dozens of reputable Russian nationals have become citizens with total contributions to St. Lucia’s economy exceeding US$2,000,000.00. Despite this financial impact, many commentators have raised concerned around their continued possession of Saint Lucian citizenship. These concerns are especially relevant as persons may be sanctioned post grant of citizenship and circumstances, such as ties to the Russian regime, which were once potentially acceptable, are now not.

The St. Lucia government, through the Act, has put in place a revocation process which seeks to alleviate the abovementioned fears. Whilst international standards of due diligence ensure that only individuals who demonstrate sound character and can prove clean criminal and civil records may obtain citizenship, it does not prevent these persons from committing crimes or performing nefarious acts post citizenship. Further, misdeeds of now citizens are sometimes only brought to fore after the citizenship process has been concluded. To protect against these possibilities, Section 38 of the Act empowers the Minister with responsibility for the CIP to revoke citizenship where:

• Citizenship was found to be obtained by false representation, fraud or intentional concealment of facts;
• The citizen has been convicted of an offence; and

• The citizen has performed an act which, in the opinion of the Minister responsible for the CBI programme, has the potential to bring disrepute to Saint Lucia.

This revocation mechanism, whilst sparingly used, is an important tool which guarantees that any person, Russian or otherwise, who should no longer hold citizenship, is rightfully stripped of the privilege. Importantly, placing the power of revocation with the Minister responsible for the CIP allows action to be taken expediently where necessary with damage to the CIP’s reputation controlled. Do note that those who have lost citizenship have a right of appeal to the courts which serves as a check and balance against the potential misuse of the revocation provision.

Final thoughts

Through an analysis of the above, namely the legislative framework surrounding the grant of citizenship and the practical application of that framework through due diligence and the revocation procedure, it is evident that Saint Lucia’s CIP is well insulated against potential harm which may be caused by the accepting of nationals of any country. The original decision to not discriminate on the basis of nationality and to continue much needed revenue generation through the acceptance of Russian and Belorussian nationals was therefore an entirely sound one.

While it is agreed that Saint Lucia should support its global partners, the acceptance of Russian nationals by the CIP, who are not sanctioned and not associated with the current regime, does not in any way undermine these goals. In fact, one may argue that an increase in Russian nationals obtaining CBI can hurt the regime as high-net-worth individuals are now able to effectively withdraw from the Russian economy and migrate elsewhere; thereby creating the type of brain drain which has haunted the Caribbean region for decades. Further, by isolating Russian nationals from the rest of the world, are we not aiding and abetting the cause of the current regime? The lessons of World War I, a precursor to World War II, partially due to similar discrimination against a select group of people, should not be lost on the Western Front.

Discrimination of persons based on nationality only, whether in the CBI space or otherwise, has always been and will always be unjust. A most recent example of this was the “Muslim Travel Ban” which was widely critiqued in 2017 for being a near blanket ban of travel to the US by nationals of Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. Article 2 of the United Nations International Convention on the Elimination of All Forms of Racial Discrimination expressly condemns racial discrimination and obliges parties to “pursue by all appropriate means and without delay a policy of eliminating racial discrimination in all its forms”. It should be noted that the convention expressly includes discrimination based on nationality as a form of racial discrimination and has eighty-eight signatories including the United States, the United Kingdom and all EU member states. With this context in mind, the decision taken by the Elite West to exclude Russian nationals, solely on account of that fact, from the global marketplace, and attempts to pressure Caribbean CBI offering states to do the same is equal parts astonishing and amusing.

Role of the IMC

The Investment Migration Council, which seeks to promote ethical standards in the CBI space globally and lobby on behalf of CIPs, has a vital role to play in righting current wrongs. The situation at the time of writing unjustly disenfranchises a select group of persons by stripping them of equal access to investment migration, damages the reputation of our industry by making us co-conspirators to a segregationist status quo and reduces financial viability by excluding over one hundred million potential CBI participants. Of equally great concern is the continued influence of global superpowers on the decisions of supposedly sovereign Caribbean states. The continued meddling in the affairs of these jurisdictions by the “First World” has led to disastrous results such as the destruction of the banana industry in the eastern Caribbean, and the decline of its financial services sector. We must ensure that CBI is not another casualty to the Big Stick Diplomacy which has been extended to the region time and time again. The IMC therefore is implored to fulfil a lobbying mandate on behalf of CBI offering states and by extension, the now marginalised national groups, in both Brussels and the global arena.