Malta to start process to strip citizenship off fraudster convicted of money laundering in US

Egyptian charged with securities fraud in US will be stripped of Maltese citizenship, but IIP Malta refuses to comment on possible action against Chinese billionaire Liu Zhongtian, also indicted over unpaid US tariffs

Mustafa Abdel-Wadood pleaded guilty to charges of misappropriating funds
Mustafa Abdel-Wadood pleaded guilty to charges of misappropriating funds

The Maltese authorities have “initiated the process” to withdraw Maltese citizenship acquired by Mustafa Abdel-Wadood under the Individual Investor Programme, after pleading guilty to charges of misappropriation of funds in the United States last month.

A spokesperson for IIP Malta, the agency responsible for the sale of Maltese passports, said that together with the parliamentary secretariat and Identity Malta, it had “initiated the process for the deprivation of citizenship of [Mustafa Abdel-Wadood] and his dependents according to Article 14 of the Maltese Citizenship Act”.

The spokesperson declined to comment further, insisting the agency could not discuss individual cases.

Abdel-Wadood, 49, a former executive at Abraaj Group, pleaded guilty to conspiracy charges and agreed to co-operate with a US investigation of a scheme that helped lead to the world’s biggest private-equity insolvency in 2018. He also holds Egyptian citizenship.

He is one of six former Abraaj executives facing racketeering and securities fraud charges following an investigation by New York prosecutors.

The executive was arrested in April in New York while on a college-shopping trip with his wife and son. Since then, he has been confined to his home in New York and subject to a $10 million bond. Abdel-Wadood is the only defendant to appear in court in the US.

Under Maltese law, anyone who within seven years after becoming naturalized is sentenced to jail for over 12 months, is liable to have their citizenship removed by the government.

However, in this particular case, the minister responsible must ensure they are satisfied that the person will not be rendered stateless once Maltese citizenship is removed.

Before making such an order, the minister will have to give Abdel-Wadood notice in writing informing him of the grounds for deprivation. In turn, Abdel-Wadood will have a right to an inquiry before the Committee of Inquiry (Deprivation of Maltese Citizenship), which is chaired by judge emeritus Philip Sciberras.

Indeed, the IIP Agency was less clear about the fate of Chinese billionaire Liu Zhongtian, also a Maltese citizen who acquired his passport under the IIP, and who was indicted in the US amid allegations that he avoided paying up to $1.8 billion in aluminum tariffs.

In this case, it is unclear whether Zhongtian, if found guilty, would lose his Maltese citizenship since Chinese law does not allow dual nationality, meaning the billionaire would risk statelessness – a condition that could protect him from deprivation of citizenship.

The IIP Agency spokesperson said it could not comment because the case was still “sub judice”.

Asked what measures were in place to monitor individuals who have been granted citizenship and whether it can guarantee the programme’s integrity in light of such cases. The spokesperson said the agency took “all possible legal steps to safeguard the integrity of the programme”.

“Instances do occur where the agency becomes aware of facts or evidence of wrong doing after due diligence is completed and citizenship is granted.  In such a case, the Agency takes the necessary steps to re-evaluate the case, and where appropriate advice the Parliamentary Secretary to initiate citizenship deprivation process,” the spokesperson said.

Under Malta’s Individual Investor Programme, wealthy individuals can purchase Maltese citizenship for €650,000, in addition to a commitment to having an “immovable residence” in Malta for at least five years, either through purchasing property valued over €350,000 or by renting property at €16,000 a year equivalent to €1,333 a month.  

Earlier this year, the European Commission said it would continue to monitor similar passport schemes across the EU through a group of experts from various member states.

The Commission has repeatedly raised concerns about such schemes, which it said opened the EU up to money laundering, corruption and organised crime.

Similar concerns were raised in a Council of Europe report into the rule of law in Malta which noted that the scheme granted “golden passports, giving the right to live and work throughout the EU, via non-transparent, unaccountable procedure, to persons of questionable background”.

More in National