Understanding The Cyprus Papers

A leak of government documents obtained by Al Jazeera has revealed that the Republic of Cyprus sold citizenship to dozens of people, many of whom are linked to crime and corruption, through the Cyprus Investment Program (CIP). These documents are now known as the Cyprus Papers and include over 1,400 approved applications to the CIP. The program allows people to purchase a Cypriot passport by investing at least 2.15 million euros into the economy through activities such as the acquisition of real estate. Purchasing a Cypriot passport could be of interest to individuals with restricted access to Europe as Cyprus is a member of the European Union, giving passport holders unrestricted travel, work, and banking in all 27 EU member states. Cypriot passports also allow travel to 174 countries, making it desirable for those from nations where visa-free travel is difficult or restricted. For these reasons, Cypriot passports have been nicknamed “golden passports.”

The CIP began in 2013 in order to keep the nation’s economy from going under and the country has since made over seven billion euros from it. The 1,400 approved CIP applications obtained by Al Jazeera were submitted over a two year period between 2017 and 2019. Some applications include family members, bringing the total number of granted EU passports to about 2,500 people from over 70 countries. In order to be eligible for receiving a Cypriot passport under the CIP, applicants have to prove that they have never been under investigation, faced criminal charges, or had any past criminal convictions. However, as it is up to the applicants themselves to establish this information, it is not necessarily verified by anyone before applicants are approved for the CIP.

In their reports on the Cyprus Papers, Al Jazeera found that among the approved CIP applications, were many individuals who have been convicted of fraud, money laundering, and even individuals who are political figures accused of corruption in their home countries. There were also known politically exposed persons who were approved for the CIP. Politically exposed persons are globally recognized as individuals who may be at a higher risk of corruption because they or members of their family hold a form of government position. An example is Mir Rahman Rahmani, speaker of Afghanistan’s Lower House of Parliament, who purchased Cypriot citizenship for himself, his wife, and their three daughters. Rahmani’s election to speaker of the house was scrutinized by his opponents for allegedly involving vote-rigging. More examples of politically exposed persons who purchased Cypriot passports are Pham Phu Quoc, representative of Ho Chi Minh City in Vietnamese Congress, and Igor Reva, former Russian deputy minister for economic development.

According to Laure Brillaud, senior policy officer of anti-corruption NGO Transparency International, the purchasing of Cypriot citizenship by politically exposed persons has the potential to be problematic. In an interview with Al Jazeera, Brillaud said that “[Politically exposed persons] have access to public resources, they can be sitting on a government contract and be in a position to make decisions, so it presents a high financial risk they are being corrupted or corrupting others.” As reported by Al Jazeera, none of the leaked documents prove any wrongdoing or criminal activities of politically exposed persons, but it is worth questioning why officials holding positions of public office in their countries of origin would seek an additional passport for themselves or their family members. Furthermore, it begs the question as to how these public officials obtained a vast sum of 2.15 million euros needed to acquire Cypriot citizenship.

Since Al Jazeera published the leaked Cyprus Papers, the CIP has garnered international criticism. The European Commission as well as multiple anti-corruption NGOs have called for the CIP to be phased out and claim that the program has facilitated the laundering of stolen assets from Russia and other countries. They also say that the program has eroded trust in European financial institutions.

The government of Cyprus says it has tightened its rules regarding the CIP as of May 2019, and in July 2020, parliament passed a law giving the government the power to strip naturalized Cypriots of their citizenship within 10 years of buying their Cypriot passport if they are found guilty of serious crimes, are wanted by Interpol, or if they are subject to sanctions. This comes after multiple scandals involving Cypriot passport purchasers were publicized. Additionally, Cyprus is reviewing all past CIP applications and has announced that about 30 people will be losing their citizenship but did not publicly name those individuals. It should be noted that this new law will not apply to any politically exposed persons who have already secured their golden passport. In comments to Al Jazeera, Cypriot Member of Parliament Eleni Mavrou stated that “the way the program was implemented the last few years was obviously a procedure that allowed cases for which the Republic of Cyprus should be ashamed.”

The CIP can be seen as a success for the Republic of Cyprus. It accomplished what it was set out to do: boost the Cypriot economy, and it did so by over 7 billion euros since its creation in 2013. However, it has simultaneously acted as a backdoor entrance into the EU for very wealthy individuals who may be involved in illicit activities both in their countries of origin and internationally. As discussed, Cypriot citizenship provides the ability to live, travel, and work freely in EU member states, and beyond that allows for visa-free travel to 174 countries. By giving wealthy, potentially corrupt or criminal, people this vast access, it could put a large number of civilians in harm’s way. It could also potentially put the citizens of a Cypriot passport holder’s home country at risk, as politically exposed persons often hold keys to large sums of taxpayer money. The European Union itself has criticized the CIP as a security risk multiple times since the program’s founding.

It is important that going forward the government of Cyprus continues to tighten guidelines on who is permitted to purchase Cypriot citizenship via the CIP. Individuals who participate in illicit or corrupt activity should not be allowed to buy the access a Cypriot passport provides simply because they have the wealth to do so, especially if that creates a security risk for the EU. Furthermore, previously approved CIP applications should be reevaluated and those found to be participating in criminal or corrupt activities should have their citizenship revoked. If the Republic of Cyprus chooses to continue the CIP, they should be wary of granting golden passports to any politically exposed persons.  What the Cyprus Papers exposed is that the CIP was an easy way for corrupt wealthy individuals to protect themselves, and therefore had the potential to act as a medium for more corruption to take place. If the Republic of Cyprus sees the CIP as a necessary part of their economic policy, they must understand the responsibility they have to thoroughly and critically vet all applicants to the program.

Source: theowp.org
Published: 26 August 2020

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