Douglas Todd: Wooing the ultrarich with ‘Golden Passports’ and flattery

Good column on citizenship-by-investment schemes:

I regret to inform readers that few of you are likely to receive an alluring invitation to buy a “Golden Passport.” That is because you are not a “High-Net-Worth-Individual,” also known as an “HNWI.”

Chances are you are just not moneyed enough to be targeted by the glossy magazines, online ads and emails designed to entice a certain class of people to join the elite club of “global talent” eager to purchase their way into a new “opportunity oases,” or, as some of us still like to call them, nations.

No, since you are not worth many millions, if not billions, of dollars, you are not the market for the jargon, euphemisms and flattery that would otherwise urge you to advance the interests of yourself and family by becoming an international “investment expatriate” or “investor immigrant,” while being lauded as “the best and brightest.”

Instead, this exclusive circle of passport and visa purchasers is for the super-rich, especially those who don’t trust their own governments, who seek the “competitive advantage” of multiple passports, who are keen on avoiding taxes and who are looking for a haven for their families. Stable, clean welcoming Canada, and Metro Vancouver, are among the most sought-after destinations of this jet-setting club.

Alas, watchdog agencies are beginning to warn that some of these trans-national migrants also want to hide their ill-gotten gains. They are collecting second, third and more passports, or at least permanent resident cards, from multiple nations as they strive for an immigration status that can provide the real-world equivalent of what the game of Monopoly calls a “Get Out of Jail Free” card.

The number of investor migrants is expanding rapidly. Economist magazine says “thousands of passports are bought and sold every year, almost always by the wealthy. The number of commercially acquired residence permits runs into the hundreds of thousands.” It’s an industry that the public widely suspects of diminishing the rights and privileges of citizenship.

There is also gnawing worry the governments busy selling passports and visas — typically in exchange for an “investment” in government bonds, businesses or real estate in the value of anywhere from $200,000 to $2.5 million — are playing into the hands of international crooks, terrorists, money launderers and oligarchs.

The European Union has gained nearly 100,000 rich new residents and 6,000 new citizens in the last decade through poorly managed, semi-secret passport-sale schemes, says Transparency International and Global Witness. The watchdog organizations have concerns about Spain and Britain, but they’re especially alarmed by the European Union’s smallest countries, Cyprus and Malta — because anyone who buys a passport from one of these yacht-filled nations gains access to all 26 countries of the EU.

Canada designed one of the first investor-immigrant schemes in the late 1980s, which soon became known for luring hundreds of thousands of affluent Hong Kong residents to the country. And, along with the United States, Canada remains among the most popular destinations for ultrarich trans-nationals hunting for extra visas and passports.

Thousands of lawyers and immigration specialists now strive to ingratiate themselves with these upper-crust clients. The most influential firm promoting the value of trans-nationalism is Henley and Partners, founded by Swiss lawyer Christian Kalin, which has offices in 20 nations and claims to have created “the concept of residence and citizenship planning.”

Kalin is editor in chief of The Global Residence and Citizenship Review, a glossy magazine that sings the praises of the “aspiring migrants” who take advantage of extra passports and the mobility they provide. One glowing ad in his magazine pumps the value of paying to “secure your family’s future with European citizenship.” It features a posh father knotting the private-school-like tie of his son. Arguably the world’s second biggest firm centred on securing a safe haven for investor migrants is Arton Capital, which has its headquarters in Canada.

Vancouver-based Johann van Rooyen, who runs the Citizenship by Investment Research Consultancy, says the global rich are buying “powerful passports” because they want to have the potential to escape political problems, preserve their wealth, reduce their taxes and travel more freely to more countries.

“While political instability and violence forces most investor-class emigrants to physically move to their host countries, for many others a second passport is seen as an insurance policy against future risks. They prefer to stay in their home countries, but like to have an alternative in case things go wrong,” says van Rooyen, citing how high-net-worth migrants are worried about rising political danger, crime, pollution and authoritarianism in places such as the Middle East, Russia, China and South Africa.

“Many Hong Kong residents who left before the China takeover in 1997 returned within a few years, after they obtained a second passport (mainly from Canada),” says van Rooyen, explaining how a lot of migrants don’t actually move to the country they bought their way into. “And thousands of Lebanese Canadians returned to Lebanon after obtaining Canadian citizenship.” More than 250,000 people now living in Hong Kong, and at least 50,000 in Lebanon, have a Canadian-passport lifeline.

The federal Conservatives finally stopped Canada’s immigrant-investor program in 2014, after determining most of the affluent who took advantage of it didn’t intend to live in Canada and those who did paid few taxes while receiving free health care and subsidized higher education.

But Quebec’s buy-a-passport scheme continues to this day.

The Quebec Immigrant Investor Program — which attracts nine out of 10 of its millionaire applicants from Asia — does not actually lure many foreign rich to the French-speaking province. Instead, the vast majority of the roughly 5,000 migrants a year who exploit Quebec’s plan move to Metro Vancouver and Toronto, where their foreign-sourced dollars pump up the cities’ already high-priced real estate.

Radio Canada journalists this fall reported that fraud, forgery and money laundering are rife in the Quebec Immigrant Investor Program. And this appears to be the norm with many Golden passport schemes. More media outlets are beginning to detail the corruption in such programs, which often make it possible for high-net-worth individuals to evade taxes and in many cases the law-enforcement officials trying to track dirty fortunes.

Trans-national scoundrels, for instance, can dodge tax reporting rules in their home country by taking citizenship or residency in a second country and opening a bank account in a third, claiming tax residency in the second. The list of scams goes on. One Chinese investor caught up in a rare crackdown on immigration fraud in Vancouver was found with seven different passports.

The passport-for-sale industry needs to be more diligent in corralling abuse and pitfalls, say watchdogs. And so do receiving and sending countries. The Economist recently speculated about a possibly bad fate, for instance, befalling some of the tens of thousands of newly wealthy Chinese nationals, who have become the world’s leaders at snapping up Golden passports and visas

“Only about half the countries in the world allow their citizens to hold dual nationality. China is not one; and it has strict exchange-control rules,” warns the Economist. “It seems unlikely that all Chinese investment migrants have alerted the authorities to their plans, or gained permission to take their money out.”

Many politicians in the West have gone wild for passport-buying schemes, most of which are new. But law enforcement officials, the public and even the investor immigrants themselves are only learning now about the real price that may have to be paid for such dubious schemes.

Source: Douglas Todd: Wooing the ultrarich with ‘Golden Passports’ and flattery