Opposition hits out at explanation of blacked-out clauses in Henley contract

The government has not provided enough information as to why fourteen clauses in the contract signed between the government and Individual Investor Programme (IIP) concessionaries Henley & Partners were blacked out, Nationalist MP Tonio Fenech said.

Fenech was chairing a Public Accounts Committee meeting tasked with scrutinizing the fourteen blacked-out clauses in the government’s contract with Henley for the sale of Maltese citizenship for €650,000.

Justice Minister Owen Bonnici gave the Public Accounts Committee an explanation of as to why the 14 clauses were blacked out. However, the explanations given simply stated that the clauses were commercially sensitive, or could affect the competitivity or marketability of the programme.  

Fenech questioned whether the first clause that was blacked out has a financial impact on the programme and Nationalist MP Mario de Marco asked whether it put limits on the concessionaries’ contract obligations.

De Marco also asked whether any of the blacked-out clauses prohibit Henley and Partners from helping other governments to set up similar schemes that could “ultimately be competitors to Malta’s IIP scheme.”

Bonnici told him to refer that question to Identity Malta.

“The government only blacked out fourteen out of 206 clauses, and while I understand it’s an unpopular decision, it’s necessary for the programme to work,” Bonnici said. “This is a competitive programme and I don’t want to serve the details on a plate to competitors.”

Fenech argued that the Opposition weren’t requesting details that could benefit competitors and accused the government  of non-transparency.

Bonnici accused the Opposition MPs of going on a ‘fishing expedition’ with their line of questioning and retorted that the government must sometimes conceal information for the sake of national security.

He pointed to two clauses in the contract, one saying that the government and Henley ahree to keep the contract strictly confidential and another saying that the government shouldn’t be limited in performing its public law transparency obligations.

“That clause was introduced because the government wanted to provide this committee with as much information as possible,” Bonnici said. “If we had wanted to, we could have published nothing.”

“Then the government would have simply enhanced its reputation as one that keeps vital information hidden,” Fenech responded.

Backbencher Charles Mangion said that the Speaker’s ruling had clarified that the blacked-out clauses were the result of an executive decision.

“The executive has the authority to decide not to publish clauses for the sake of national security, and neither the PAC nor the Speaker should question this executive decision,” Mangion said.

De Marco said that, while the government has every right not publish commercially sensitive clauses, they should explain exactly why the blacked-out clauses will affect competitiveness.

“Bonnici’s explanation of why some clauses were blacked out doesn’t give us any information which we hadn’t already known,” he said. “How can we agree with the government’s executive decision or not if we don’t even know why the clauses have been deemed commercially sensitive?”

Quoting a Speaker’s ruling, the Opposition MPs said that Bonnici should explain why the blacked out clauses were blacked out and that, in the case of disagreement over the sufficiency of his responses, it would be up to the Speaker to make a decision.

However, the government MPs present interpreted the ruling differently and argued that it was up to the PAC to determine whether Bonnici’s response was sufficient or not.

 A vote was taken and passed 4-3 in favour of the government MPs.

‘IIP applicants can build a genuine link to Malta without living here’

Successful IIP applicants will be able to build a “genuine link” to Malta without having to live on the island for 12 months, Bonnici said.

“While some applicants will spend a lot of time in Malta, we’ll be unrealistic if we expect multi-millionaires to live in Malta for a year,” he said. “We are speaking about high-network individuals who live in several different residences in all parts of the world.”

Jonathan Caruana, the chief executive of the IIP, had earlier told Bloomberg Business that he had little hopes that the global rich buying Maltese citizenship are going to move to Malta. He was portrayed as being unable to explain what the 12-month residence period for IIP applicants meant in real terms.

“It doesn’t say physical residency,” Cardona said. “We expect an individual to be in Malta for a number of days; we don’t go into the specific number. If you’re asking me, are these people going to move here entirely, I would say, ‘Listen, let’s not fool ourselves’.”

Agreeing with Cardona, Bonnici argued that the residency clause did not require IIP applicants to physically reside in Malta and pointed out that Cyprus’ citizenship scheme does not include a residential status clause.

De Marco questioned whether the government is obliged to pay Henley more than the 4% market and processing fees. He referred to two clauses, saying that Henley “will be entitled to…other fees payable by the government in connection with an application in…a case whereby citizenship is granted, but then subsequently revoked.”

He asked Bonnici what those ‘other fees’ consisted of, to which Bonnici simply responded that they won’t result in cash flowing into Henley’s pockets. He said that it involves a second company, not Henley, of international repute, who will screen IIP applicants for due diligence.

“It is a vetting company on the level of Thomson Reuters,” Bonnici said. “Identity Malta wants to ensure that every applicant is truly of due diligence, which is why the government is in direct contact with an independent company that will be involved in the screening.” 

The Public Accounts Committee will continue scrutinising the remainder of the blacked-out contracts in a later sitting.