Wednesday, July 05, 2017

The Price of a Passport

The little-known immigration arrangement provided British residency in exchange for a £2m investment. 3,000 wealthy people entered the country under the scheme – with no Home Office checks. For some, it may come as a surprise to learn that residence or citizenship can effectively be bought. But the idea has been around for some time, first being pioneered by the tiny twin islands of St Kitts and Nevis in 1984.

Officially called a “Tier 1 investor” visa in the UK, unofficially "the golden visa", the scheme gives individuals residency in exchange for investing £2m in UK bonds or shares through a bank, with applicants eligible for indefinite leave to remain, and even full citizenship, after five years. That is, unless they can stump up more cash: those offering £5m can settle after three years, and those with £10m after just two.

In 1994 the then home secretary Michael Howard faced a minor political scandal after a leaked white paper on improving the UK’s “competitiveness” included a provision for ‘immigrant investors’. Labour slammed the scheme as a plot to allow wealthy Tory donors to “jump the queue” into the UK. But after that brief outrage, the scheme receded from public view, and has never played any major role in the country’s years of bitter discourse about foreigners or immigrants. The system has tended to assume that the more money an applicant has, the better an immigrant they will be, without ever quite explaining why. The Highly Skilled Migrant Programme, a points-based system introduced under Labour in 2002, awarded more points for those with higher earnings. Golden visas simply take this principle to its logical extreme: the only merit an immigrant need demonstrate is their wealth.

Because the original investment is returned to the applicant along with any interest accrued, the state technically makes a loss on each visa. But supporters of the scheme argue that as well as an investment in gilts – effectively a loan to the government – the country attracts people with substantial sums of money to spend on goods, hire workers or pay taxes.
Plenty of other countries, Malta, Cyprus and Portugal among them, offer rival schemes, with varying terms. The US’s EB-5 pathway, for instance, exchanges passports for a $1m investment in any business that will create at least 10 jobs (the former company of Jared Kushner was recently found hawking these visas in China). But all are fundamentally offering the same trade: show us the money, and in return receive residency, citizenship or passports. Right now, he says, Portugal offers the best deal. Half a million euros investment in real estate gets you residency. Most people don’t live there. Most people use it to invest, rent the property out, but they’ve got it as a sort of security policy.
What sort of people buy a golden visa?
 “The common trait is they’re very successful business people,” says John Hanafin, chief executive officer of Arton Capital, which specialises in what is known in the trade as “investment migration”. Many of his clients, often from the Middle East or Africa, want the mobility that a second passport entails, with those granting EU access especially highly prized.
For others, alternative citizenship can offer a bolthole in times of trouble. “It’s a bit of a barometer of strife and turmoil in the world,” says Paul Williams of La Vida Golden Visas, whose firm used to focus on those looking to invest in overseas property.
“This is an area where successive governments have allowed rich people to jump the queue. It’s the sort of thing that tax havens do to encourage inward investment,” says Lord Wallace of Saltaire, a Liberal Democrat member of the House of Lords. “We have in effect been selling off British citizenship to the rich from often non-democratic countries who otherwise one would not regard as desirable immigrants.”
“The problem with these kind of schemes, and the one in the UK in particular, is that it’s letting people in without sufficient security checks,” says Naomi Hirst, a senior campaigner at the anti-corruption group Global Witness. “We’ve long had concerns that applicants who came through in the blind faith period were not subject to proper security checks.”

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