By Stelios Orphanides
Cyprus needs to safeguard the confidential handling of personal data of beneficiaries of its controversial citizenship-by-investment scheme, the benefits of which have exceeded expectations, the chairman of the Cyprus Investment Promotion Agency (CIPA) said, two days after an accidental leak.
“In the past three to four years, more than €4.5bn has flowed to Cyprus via citizenship-by-investment,” Michalis Michael, chairman of CIPA said in an interview with state-radio CyBC on Wednesday, a day after a list of beneficiaries of the scheme leaked to local media, angering the Cypriot wealth-defence industry.
The scheme, said Michael, who is a managing partner at the Cypriot division of the auditing firm KPMG and was appointed as chairman of the state-sponsored CIPA on January 9, “is paying off” and Cyprus needs to strengthen it.
Under the scheme, he continued, no investor with a “questionable character or level or financial prominence” ever managed to obtain Cypriot citizenship, while the council of ministers decided -on the very day of his appointment- to further strengthen the process.
According to a report Tuesday on Stockwatch, the leaked list includes Rafael Akopov, identified as the former director of Russia’s Prof-Media Management LLC and Dmitry Zimin, described as founder of Russia’s non-for-profit Dynasty Foundation which funds scientific research, and chairman of Vimpelcom, a Russian telecommunications company.
Also on the list were Saudi sheikh Abdulrahman Mahfouz, the Rwandan tobacco tycoon Tribert Ayabatwa and Yulia Guryeva, daughter of the Russian billionaire Andrey Gureyv, and his grand-daughter Valeriya, who also happens to be the wife of Alexei Motlokhov, an investment fund manager. It also includes the name of Aleksander Krasnenkov, chairman of JSC Northgas.
A separate leaked document lists the main four accounting firms Deloitte, Ernst & Young Cyprus, KPMG and PwC Ltd, as well as the law firms Nicos Chr. Anastasiades, founded by the Cypriot president, Tassos Papadopoulos and Co, founded by the late president, as providers of this type of service to foreign investors.
Other companies included on the list are Leptos Estates, Pafilia Property Developers, Coast & Hills Development Ltd, Crowe Horwath and Fiduciana Trust (Cyprus).
The number of beneficiaries of the scheme, first introduced ten years ago and modified on several occasions in the past, is around 3,300, according to the Cyprus News Agency.
According to other press reports, the number of beneficiaries is 3,383, broken down to 1,732 actual investors and 1,651 family members. The number of other individuals who received Cypriot citizenship after marrying a Cypriot national or after spending seven years in Cyprus since 2008 was 5,516 while the number of honorary naturalisations was 45.
According to Green Party lawmaker Giorgos Perdikis, who on Monday tabled a draft law to introduce more transparency into the scheme, the leak occurred when parliament workers distributed the list of the beneficiaries, which was not described as confidential.
While applicants for Cypriot citizenship, including those who invest as little as €2m to benefit from Cyprus’s fast-track naturalisation scheme, need to publish – ahead of filing their application – their intent to do so in the Cypriot press, the government subsequently treats the name of beneficiaries with utmost confidentiality, refusing to disclose this type of information to the public.
The scheme allows investors to receive Cypriot citizenship within months, while other foreigners need to spend at least seven years on the island before they can apply.
CIPA’s Michael who rejected Perdikis’s proposal, said that it would help nobody to engage in “coffeeshop gossip whether one sheikh” or any other investor benefited from the scheme.
According to a statement on the website of the council of ministers, last month’s decision provides for the setting up of a “Supervision and Control Committee” comprised of officials from the ministries of interior, finance, and from CIPA. The committee’s terms of references, described in an annex, are not available on the cabinet’s website.
The decision also provides for the setting up of a register of “Investors’ Naturalisation Scheme Service Providers” in which individuals and legal entities that offer related services will be registered after meeting certain “entry criteria,” included in a separate annex.
Applications filed on behalf of investors by unregistered individuals or companies, which may include “real-estate advisors, land developers, and banking and credit institutions,” will not be accepted.
The cabinet’s decision provides also for the introduction of a “code of conduct” prepared by CIPA that will include guidelines governing the promotion of the scheme and the banning of public and online advertisements, and also penalties for offenders.
In addition, both applicants and service providers will have to sign declarations confirming their compliance with the terms of the scheme and the correct application of practices, according to the cabinet’s document.
According to a September report in the Guardian, Cyprus has extended Cypriot citizenship to several Eastern European high-net-worth individuals, including Russia’s Dmitry Rybolovlev and Leonid Lebedev, Ukraine’s Igor Kolomoisky and Gennady Bogolyubov.