Two years from the introduction of Malta’s first ‘cash-for-passports’ scheme, officially known as the Individual Investor Programme (IIP), Christian Kalin, group chairman of Henley & Partners, had a frank conversation with Ivan Camilleri.
Until 2013, the name Henley & Partners – a firm offering services in residency and citizenship planning globally – was relatively unknown in Malta. However, the company got close to becoming a household name just a few months after Labour were elected to power in March 2013.
The Individual Investor Programme (IIP) was the first tangible economic initiative which the new administration came up with a few weeks after the election.
Henley & Partners, who had already designed similar schemes for two Caribbean islands, won a government tender for one in Malta.
“This wasn’t our idea,” Mr Kalin said. “It was the Maltese government which wanted this programme and we won a tender to provide our service. That is what we did.”
Refuting the suggestion that his firm had some sort of pre-electoral deal with Labour, Mr Kalin insisted there was no way the firm would make any financial contribution to the Labour Party in exchange for the introduction of the scheme.
“This is all political nonsense. Our firm has very strict polices and absolutely does not make any political contributions,” he said.
At the same time, Mr Kalin conceded that, before the election, he did discuss this type of programme with Labour and that he did “once or twice” meet Keith Schembri, today the Prime Minister’s chief of staff.
However, meeting with both governments and Opposition parties was part of his firm’s usual business and there was absolutely no sort of deal struck, he added.
Describing Mr Schembri as “one of the people in government who is the mind behind many things”, he said Joseph Muscat’s chief of staff was one of five interlocutors with whom he used to discuss the scheme.
The programme was amended as a result of pressure from the EU which of course was entirely illegal
“We never interacted with Konrad Mizzi however,” Mr Kalin made sure to point out.
“It was Keith Schembri, Owen Bonnici, the Attorney General and the Prime Minster himself,” he said when naming the key people behind the passport scheme.
Mr Kalin said he had held similar discussions on the programme and other citizenship initiatives with the previous Nationalist administration, which had used his services for a previous residency programme.
“However, no government in the world would introduce such a politically sensitive scheme just before an election,” Mr Kalin added.
Officially launched in February 2014, the scheme seems to be leaving the desired results envisaged by H&P.
“So far there are some 1,200 main applicants in the pipeline,” Mr Kalin revealed, with about 600 of them having been submitted by H&P alone.
This means that these applications have the potential of generating some €1.5 billion towards the Maltese economy, although Mr Kalin said not all of them would eventually get the green light.
Complaining that the due diligence process being adopted by Malta “is a bit too much”, Mr Kalin said this however showed the island was taking the running of the programme very seriously.
“From a practitioner’s point of view I think that the process (of due diligence) is a bit too much. They (the government) are extremely careful on how to handle the programme and that is a positive thing for its integrity and is also a good thing for us.”
Asked whether the fact that Malta sold its passports might negatively impact its international reputation, Mr Kalin said: “I don’t see it that way even though I fully understand these arguments.
“If you look at our society today we have many things that should not be for sale but they are.”
He said that, at the end of the day, these were choices which a country made and there were arguments both in favour and against such choices.
When it was pointed out to him that serious European countries like France or Germany would not even dream of selling their passports, Mr Kalin was unfazed.
“These are large economies and don’t need such incentives for investors. Typically (these programmes) are for small states with few resources which want to attract new investment.”
Originally, what H&P proposed to the government was a straight cash-for-passport deal which did not even require a client to have any permanent residency connection with Malta.
This was later changed following the intervention of the European Commission and a deal struck with the government. Mr Kalin believes there was no need for the EU to intervene and described this as “an abuse by Brussels”.
“The programme was amended as a result of pressure from the EU which of course was entirely illegal,” My Kalin argued.
“If you look at the law there was no way that the Commission could intervene as citizenship is entirely a national competence.”
According to Mr Kalin, it was the Opposition’s lobbying with the EU “against the island’s own interest,” which made the Commission exert pressure on Malta.
However, he acknowledged that at the end of the day, even though he did not agree with the EU intervention, Malta now had a stronger programme.
Our firm has very strict polices and absolutely does not make any political contributions
“The EU simply abused Malta and took advantage of the political situation of Malta,” he insisted.
“However, from a political point of view, the government did the right thing (to concede) and the outcome is very good because the programme is now a more rounded one and it has clearly more support in the country, which is important.”
Another significant digression from the original proposal was that Henley and Partners would not be the sole and exclusive agents for the programme. Maltese agents were also allowed to sell the scheme and to submit applications on behalf of their clients.
Mr Kalin said that as they had designed and promoted the programme globally the government paid them for every application that went through. This means that the firm gets a cut even for applications submitted by one of the other 131 agents.
“We get paid on the basis of all applications because we designed this programme and promote it globally. So there is a lot of collateral impact through our promotion,” he argued.
Asked whether this made H&P the preferred choice of potential clients, Mr Kalin was prompt to point out that although they had the most experience, “we are also the most expensive”.
According to a commitment made by Malta, the scheme will be closed when 1,800 applicants are approved.
Asked for his views on whether the capping should be removed, Mr Kalin was very clear.
“That is entirely up for the Maltese government to decide. Our advice would be to continue and lift the capping. It’s obviously in our interest,” he said.