Chris Fearne committed to replace current scheme to sell Maltese passports

Labour leadership contender says new scheme should replace IIP in full agreement with European Commission

Deputy PM Chris Fearne
Deputy PM Chris Fearne

Labour leadership contender and deputy Prime Minister Chris Fearne has committed a future Labour government with him as PM to scrap the Individual Investor Programme and replace it with a new scheme negotiated with Brussels which “does not harm Malta’s image abroad.”

In an interview to the Times of Malta, the aspirant Labour leader described the controversial sale of citizenship as a “good source of income” both for Malta and the practitioners working in the field. 

But Fearne is now committed to start a new scheme “which is different from the one in place together” following discussions with European institutions – including the European Parliament – and local practitioners. 

The IIP, alongside similar ones in other EU members states like Cyprus, had been repeatedly condemned by the European Parliament. 

Although the European Commission had in 2016 ‘endorsed’ the scheme following the introduction of a 12-month residency clause, it has increasingly expressed concern on the inherent risks, in particular as regards security, money laundering, tax evasion and corruption related to golden passport schemes.

The reform will take place once the current scheme reaches its cap, something which expected to happen within the first 100 days of his premiership.

Under Muscat, the government had taken no commitment on what it would do with the scheme after the cap is reached. But in a clear indication that the government’s intention was to retain the scheme, in January 2018 the government commenced a public consultation through an online poll with the first question being whether the number of applications under the IIP should be capped at law or left at the open discretion of the government. The main objective of the updating and revision of the Programme was “to ensure it remains at the forefront in reputation, attractiveness and rigorousness”.

The current programme is capped at some 1,800 main applicants: that does not include dependants.

Fearne’s misgivings on the IIP is in synch with the views of the majority of respondents in opinion polls. A recent MaltaToday survey found that 56.3% disagree with the Individual Investor Programme.

The IIP was recently at the centre of controversy after a French TV sting recorded one of the passport agents boasting about his close connections with people in power and how authorities can close an eye. The agent’s licence has been suspended and all his applications, past and present, are being probed.

Citizenship Parliamentary Secretary Julia Farrugia had defended the scheme saying that this resulted in €544 million being poured into the National Development and Social Fund (NDSF), a good portion of which is used for social causes to help the vulnerable.

Applicants for a Maltese passport under the IIP should have at least a 12-month residency status in Malta although this has never been understood as implying physical presence on the island. The other requirements are the purchase (minimum €350,000) or lease (minimum €16,000 per annum) of property; a contribution of €650,000 per main applicant plus a contribution in respect of the spouse (€25,000) or other dependants (€25,000 – son/daughters under 18, €50,000 – unmarried sons/daughters between 18 and 26 and parents or parents-in-law above 55) accompanying the main applicant; and the purchase of Malta Government Bonds or locally listed securities and equities amounting to not less than €150,000.

The contract with Henley & Partners, the concessionaire of Malta’s IIP’s passport sale scheme, obliges the Maltese government to send, whenever requested, appropriate high-ranking government representatives, or other senior government officials, to speak at the events and represent the Programme and the government.  The Prime Minister himself had participated in these road shows.