Cyprus said on Tuesday (13 October) it will scrap its controversial “golden passports” scheme for foreign investors next month over alleged abuses uncovered in a television programme.
Government spokesman Kyriakos Koushos said the cabinet had agreed in an emergency meeting to abolish the scheme as proposed by the finance and interior ministers.
“The proposal of the two ministers was based on long-standing weaknesses, abuse and exploitation of the provisions of the investment programme,” Koushos said.
Koushos said the scheme, which has generated seven billion euros, would be brought to an end on 1 November.
The Cypriot government would “fully examine its policy to encourage investment”, he added, after the completion of an investigation into the scheme.
The move came hours after Qatar-based broadcaster Al Jazeera aired an hour-long programme showing its reporters pretending to represent a Chinese businessman keen to acquire a Cypriot passport despite him having a criminal record.
Exclusive: We go undercover to expose how a criminal can obtain a European passport. It involves an alternative, unofficial route through the Cyprus Investment Programme, and carries a higher price tag.
The #CyprusPapers Undercover pic.twitter.com/xVORmPpPB8
— Al Jazeera Investigations (@AJIunit) October 12, 2020
“Posing as representatives of a fictitious criminal character, our undercover reporters were ushered through the application process for the Cyprus Investment Programme by lawyers, property agents, leading eventually to high ranking politicians,” Al Jazeera reported.
Those involved — a Cypriot lawmaker and the parliament speaker — denied any wrongdoing.
But the lawmaker, Christakis Giovanis, later resigned from parliament and the positions he held in the left-wing AKEL party.
And the speaker, Demetris Syllouris, said he was standing down until a police investigation into the claims was completed.
Last month Cyprus’s audit office said thousands of passports could have been granted without proper authorisation under the island’s citizenship-for-investment scheme.
European Commission spokesman Christian Wigand said, “We watched in disbelief how high-level officials were trading European citizenship for financial gains.”
Cyprus began offering citizenship in exchange for substantial investment as far back as 2007, but the scheme was stepped up following the Mediterranean island’s 2013 economic crisis.
The country has faced pressure from the European Union to reform the scheme over concerns it may have helped organised crime gangs infiltrate the bloc.
‘Outrage, anger and concern’
The European Union welcomed Cyprus’s decision to abolish the scheme.
“I welcome the decision take by #Cyprus to phasing out of the existing Investment Program from 1st november,” EU Justice Commissioner Didier Reynders tweeted.
France’s Europe minister Clement Beaune, who also reacted on Twitter, hailed the move as “very positive”.
Cyprus’s attorney-general George Savvides said there would be an exhaustive probe following “outrage, anger and concern” among the public in response to the Al Jazeera programme.
“We will do whatever is deemed necessary with the aim of safeguarding the public interest,” Savvides said in a statement.
Cyprus’s move came after police in Malta, another EU member, arrested former prime minister Joseph Muscat’s chief of staff last month as part of a probe into alleged kickbacks connected to a golden passports scheme.
Keith Schembri, who had been accused of corruption by murdered investigative reporter Daphne Caruana Galizia, was taken into custody after a court issued an order for all his assets and companies to be frozen, police said.
Malta started selling passports to wealthy foreigners in 2014 and Caruana Galizia had published several investigations into the scheme on her blog.
In August, Al Jazeera reported that dozens of people who had applied for Cyprus’s golden passports were under criminal investigation or international sanctions, or serving prison sentences.
The Cypriot government had tightened its rules since 2007, including a ban on cash payments in 2014.
Under the soon-to-be-scrapped scheme, the government grants a passport in exchange for an investment of €2.5 million.
Even before Al Jazeera published its story in August, some 30 people had been referred for investigation to a special committee.
Last week, Cyprus said it was revoking seven passports for “false representation” by investors on their application.
The country is re-examining the cases of all roughly 4,000 people who successfully applied for a passport under the scheme.