Stockbrokers were “stunned” to learn that Henley & Partners, the company running the cash-for-passports scheme, received a four per cent commission on government bond sales, this newspaper has been told.
Apart from paying €650,000 for their passport, applicants also have to buy €150,000 in government stocks and a property worth at least €350,000 or rent a property for a minimum of €15,000 a year.
Elaine Bonello, chairwoman of the College of Stockbrokers, said the four per cent commission was 10 times what licensed stockbrokers received.
She said stockbrokers and financial intermediaries had to follow strict regulations and pay licence fees to offer a service. She added she had no problem with strict regulations, as required in a serious industry that was a pillar of the Maltese economy.
This is an incentive to the concessionaire to bring investment
“It beggars belief that a company can just come along and conduct an activity it has no apparent licence for while receiving a commission well above industry rates to boot,” Ms Bonello said.
Another stockbroker, who preferred not to be named, said the four per cent commission given to Henley & Partners was “unorthodox”.
He was dismissive of Dr Azzopardi’s claims about the legality of the commission. “It is not so much a question of legality or otherwise. What the law disallows is the provision of an investment service by someone other than a licensed stockbroker, not the receipt of a commission,” the stockbroker noted.
The stockbroker said the main point was that commission on government bonds generally ranged from 0.25 per cent to 0.50 per cent.
The government giving a four per cent commission directly to a third party introducer was unorthodox, did not constitute best practice and was exaggeratedly high, he said, adding he could not see the motive behind such a payment.
Asked if there was any breach of the law in granting such a commission, a spokesman said the Malta Financial Services Authority had no evidence and was not in a position to confirm any such breach.
Henley & Partners does not appear on the MFSA’s financial services register.
Questions sent to Justice Minister Owen Bonnici on the legality or otherwise of such payments and the reasons behind such a high commission were not answered by the time of writing.
Defending the commission during a television programme on Wednesday, Dr Bonnici denied suggestions that the government was subsidising Henley & Partners.
He said the government wanted to attract investment and was willing to give €4 for every €100 brought over by the company. “This is an incentive to the concessionaire to bring investment,” Dr Bonnici said.
Henley & Partners also receives a four per cent commission for each successful applicant under the scheme. According to a report tabled in Parliament last week, the company made €5.8 million from the scheme over the past three years.
jacob.borg@timesofmalta.com