Boastful passport agent’s licences remain suspended after IIP regulator report

Passport agents Chetcuti Cauchi’s licences to promote the Individual Investor Programme (IIP) scheme remain suspended following the publication of a report which debunked claims by one of its lawyers that he enjoyed privileged access to the authorities.

A report issued on Tuesday by the IIP regulator Carmel Degabriele found that claims made by a lawyer from Chetcuti Cauchi Advocates during a French TV sting – that he could obtain citizenship for people with a criminal record – were unfounded.

Chetcuti Cauchi’s licenses as IIP agents remain suspended, a spokesperson for the citizenship parliamentary secretariat told BusinessToday, however.

A magisterial inquiry into Jean Philippe Chetcuti, a senior partner in the law firm, is currently under way, having been given the green light by Magistrate Caroline Farrugia Frendo earlier this month, following an application by NGO Repubblika.

Farrugia Frendo decided Repubblika had provided sufficient facts to satisfy the prerequisites for an inquiry.

In comments to this newspaper, the spokesperson noted that citizenship parliamentary secretary Julia Farrugia Portelli had welcomed the independent report and the conclusions published by the Office of the Regulator of the Individual Investor Programme on the number of allegations reported by the French TV programme Enquête Exclusive.

“The independent report clearly stated that there was no collusion whatsoever between the agent and the responsible Minister, or that the former, since the start of the programme, had ever received any preferential treatment,” the spokesperson said.

“The independent report also stated that no applicants with a criminal background were ever included in an application presented by the agent. The licence of Chetcuti Cauchi has not been reinstated and with immediate effect the parliamentary secretary has ordered an analysis of the recommendations put forward in the report.”

“Hon. Farrugia Portelli is committed and determined to continue working so that this programme continues to be successful,” the spokesperson added.

A spokesperson for Chetcuti Cauchi told BusinessToday that the firm had not had any contact with the IIP regulator since the report was published on Tuesday.

The firm would be issuing a statement today, the spokesperson said.

Regulator finds no red flags

The Office of the Regulator for the IIP (ORiip) reviewed all IIP applications submitted by Chetcuti Cauchi Advocates with the aim of identifying potentially unusual patterns which could either prove the veracity of, or lend a degree of credibility to allegations made during a French TV sting.

The regulator’s analysis did not uncover any red flags which supported in all or in part the purported allegations.

Most saliently, no records were found of applicants having a criminal record or of applications being presented for the consideration by the responsible minister more than once.

There was nothing which indicates collusion between Chetcuti Cauchi and the minister, or that Chetcuti Cauchi ever received preferential treatment.

There also was no indication of an attempt to find a way to circumvent the selection criteria, with the regulator noting that any such effort would have been “futile” anyhow due to the stringent checks and balances in place.

Key takeaways from the regulator’s report

16% of agent’s IIP applications refused

Out of a total of 164 citizenship Chetcuti Cauchi submitted, only 84% were approved, with 16% not receiving approval. This negates the claim of the agent’s official filmed in the French TV programme that the firm’s success rate was 100%.

The regulator also carried out a comparative exercise by determining the success rates of “other main agents”. The agent with the highest success rate had 93% of their applications approved. Two other agents also had higher approval rates than Chetcuti Cauchi, with 91% and 86% respectively. The lowest approval rate amongst the agents included in the exercise was of 13%. Also contrary to the allegations made, no agents hold a 100% success rate.

Claims on the TV sting that Chetcuti Cauchi could resubmit refused applications were also disproved, with none of the applications presented by the agent having ever been submitted more than once.

No applicants had a criminal record

Contrary to the allegations, an analysis of all applications submitted to Chetcuti Cauchi revealed that none of the applicants ever had any criminal records.

When considering all applications submitted by all IIP agents in Malta, the regulator said it was aware of only one incident when the main applicant had a criminal record. The agent in question was not Chetcuti Cauchi, and the applications was refused outright.

No concerning communication exchanges

The regulator found no noteworthy issues concerning communication exchanges between Chetcuti Cauchi and the IIP agency. Most communications related to requests for extensions, and there were also others regarding specific points of contention. There was no indication of any preferential treatment, however, as evidence by certain instances, such as when the IIP agency did not accept the agent’s request for document to be certified by a legal procurator instead of a lawyer or notary.

Cases where less wealthy spouse appointed as main applicant

The regulator noted that, while in general the persons appointed as main applicants were the economically wealthiest of a group applying for citizenship, there were “a number of instances” where the less wealthy spouse was appointed main applicant.

In some of these cases, the due diligence process uncovered “damning information” about the wealthier dependent, triggering a prompt application refusal or withdrawal the moment questions started being asked.

Requesting minister to reassess application ‘implausible’

The regulator noted that, based on experience and on the analysis of Chetcuti Cauchi’s applications, “the very notion of an agent meeting up with the minister and convincing him/her to reassess a refused application is implausible”.

This appears to put paid to allegations in the TV programme that the agent could attempt to request that the minister reconsider a rejected application following the submission of more information.

The regulator detailed a number of hindrances which prevented this from happening, including the impossibility of the agent knowing exactly when the minister considers the application, making it “highly improbably” that they meet them to discuss the outcome, and that, during the consideration stage, the agent would only be roped into the process at the end process, when the decision has already been made and communicated to the IIP agency, at which point all further communication it between the agency and agent, with no ministerial involvement.

Moreover, if the agent did manage to communicate with the minister, the regulator noted it was “not clear” how the agent would be able to produce new information which would “benefit the client”, considering no reasons are given for refusal of dossiers.

Even if the agent hypothetically convinced the minister to change their mind on a decision, the minister could theoretically either opt to overturn the IIP agency’s recommendation, or have the application reprocessed. No such instances ever happened with Chetcuti Cauchi, the regulator noted.

Recommendations

• Since some applications might be resorting to the tactic of placing the less wealthy partner as a main applicant, the regulator recommended that the IIP agency accept only more economically wealthy partner as a main partner - although, in theory, this is redundant, since rigorous due diligence checks cover all a group’s applicants
• IIP agency should invest in comprehensive ICT system which would improve security and accountability, since any amendment inserted by a user would be recorded without the possibility of it being deleted, therefore ensuring an application can be tracked
• Long overdue revision of IIP regulations should take place, including the removal of the provision allowing for a loophole for persons with criminal records to become Maltese citizens (although this has never been invoked)
• The roles of issuing and revoking an agent’s licence should be assigned to an third party which independently monitors and evaluates licensed agents
• An international network of countries operating citizenship by investment schemes should be set up to allow sharing of refused and withdrawn applications