City of Dreams Mediterranean Caught in “Golden Passport” Scheme in Cyprus

The Citizenship for Investment scheme is a common and successful method a number of countries use to attract foreign funding. However, Cyprus is dealing with drama over its implementation that could leave the integrated resort (IR) with a scar.

A couple of years ago, thanks to an undercover exposé by media outlet Al Jazeera, Cyprus cut off its citizenship program. The report found a number of instances where officials in the government were selling the golden passports, or hiding details about applicants.

Those details, in many instances, would have otherwise prevented the individuals from qualifying for the program. Moreover, a new report the Cypriot Audit Office just released yesterday shows how corrupt the scheme was.

The Audit Office determined that the golden passport program was rotten as it investigated the scheme. In addition, it determined that several government officials may be guilty of having conducted criminal acts in approving applications.

The agency investigated 3,517 applications, according to the Financial Mirror. What it found was that many of those didn t qualify for the program. In addition, because officials rubber-stamped the applications, another 3,810 people received naturalized citizenship because of their relationship with the primary applicant.

Of the total, 27 cases have ties to the CoD Med IR. The property could open by the end of this year.

The Interior Ministry was in charge of vetting applications. It would then send them to then-Interior Minister Constantinos Petrides for further submission to the House of Representatives.

Prior to that submission, the Finance Ministry would weigh in on whether the applicant met the investment criteria. However, the Interior Ministry routinely left out key details when sending the applications forward. That information, if included, could have been grounds for automatic rejection.

In the case of CoD Med, Petrides allegedly left out that the individuals were investors in the IR. When the Audit Office completed its investigation, it determined that the string of omissions was reprehensible and illegal. It added that a number of applications received approval despite not meeting the program s eligibility requirements.

The Al Jazeera report provided evidence that high-ranking government officials actively bypassed controls for the golden passport program. Two individuals, then-House speaker Demetris Syllouris and MP Christakis Giovanis, provided passage for a Chinese businessman the media outlet conjured up.

The aspiring Cypriot investor and citizenship-seeker had a criminal record. However, the two government officials conspired to falsify the paperwork in order to guarantee approval of the application.

Once the news broke and an investigation began, a public inquiry determined that 53% of the 6,779 passports issued through the program were illegally approved. As a result, Cyprus reportedly lost around €200 million (US$199.36 million) in VAT, as well as €25 million (US$24.92 million) in fees it wasn t able to collect.

The Cypriot attorney general s office is already planning on prosecuting four individuals who helped perpetrate the fraud. However, the Audit Office could push for more. Auditor General Odysseas Michaelides plans on holding others accountable.

He could even seek the forfeiture of a number of passports. Among those may be some of the investors Melco brought in to help finance its projects.