Addressing the European Parliament’s Committee on Economic and Monetary Affairs last Thursday, Malta’s Finance Minister, Professor Edward Scicluna, admitted that “it was a mistake” that the Individual Investor Programme, better known as the citizenship for sale scheme, was rushed through Parliament the way it was, adding that the government and opposition are now in talks to rectify the situation. This was in response to a question by German MEP Sven Giegold.
Prof. Scicluna said the government had already withdrawn the secrecy clause that was initially suggested. The clause Prof. Scicluna was referring to is still technically part of the law because it has not been officially withdrawn. After Parliament approved the law, the implementation of the legislation is still to be made effective via the publication of a legal notice. The government and the opposition are holding talks on how the scheme could be enacted in the best interests of the nation.
This morning, when asked on the scheme, Prof Scicluna also gave the first indication that the government will be accepting suggestions made by the Opposition to have the scheme linked to some “bonding”, as the minister described it. The people buying a Maltese passport will be coming to Malta and “ideally have property” here too, he said.
Malta “being short of… certain people of calibre” could therefore be an attraction for some people, Prof. Scicluna said, mentioning footballers in particular. “But it has nothing to do with taxation, and if the people who get a Maltese passport do not reside here for long they will still pay their taxes elsewhere.”
He also said that there will be some kind of capping to limit the number of people purchasing a Maltese passport every year. While Henley and Partners – who are contracted with the scheme – said they are expecting between 200 and 300 new Maltese citizens every year, Prof. Scicluna said the number 50 is being “seriously considered”.
So there will not be an invasion of Europe by Chinese with Schengen passports, the minister said, at one point referring to the company involved as “Henley something associates”.
He said that no due diligence is carried out on people who marry Maltese nationals and obtain a Maltese passport in due course. These marriages often end up being broken, he said.
Prof Scicluna said that the scheme is not linked with the budget which “has to stand on its own”. The money to be generated, which the minister put at being between €8 and €15 million, “is just a token”.
Prof. Scicluna said he did not blame anyone who questions the citizenship scheme Malta wants to introduce. “If I was an MEP here and I hear that in Malta they’re selling passports… I would say, I wouldn’t expect that from Malta.”
The relevant part of his address is available for viewing on the Facebook page of Nationalist MEP Roberta Metsola (click here to view).
Government Press Release
In the meantime, the minister’s admission of a “mistake” was not mentioned at all in the government press release which is reproduced in full below:
MEPs in the European Parliament’s Economic and Monetary Affairs Committee gave a warm welcome to Minister Edward Scicluna, a former MEP and Vice-chair of the Committee during an Exchange of Views (EV) held with the ECON committee on Thursday 5th December 2013.
The coordinator of the EPP Mr Gauzes together with the S&D coordinator Elisa Ferreira had encouraging words for the challenging work that he was undertaking.
“I am very pleased with the overall positive feedback and encouragement received from MEPs from the various political groups sitting on the Committee on Economic and Monetary Affairs,” remarked Finance Minister Prof. Edward Scicluna after the meeting.
Prof. Scicluna spoke of the Government’s economic and social priorities and how these influenced this year’s Budget. Among the main areas earmarked to be tackled as a matter of urgency include Malta’s dependency on oil, its low labour participation rate, its early school leavers and illiteracy, and other non-fiscal reforms including those for the courts and the health sector.
Prof. Scicluna also underlined the Government’s priority to introduce fiscal responsibility, and its goal to closing 2013 with a deficit of below 3%, and said that the divergence of opinion on this forecast between Malta and the European Commission will be resolved by the end of the year when the financial report will give a clear picture of the situation.
Prof. Scicluna also fielded questions on the budget coordination process at ECOFIN level, Malta’s cooperation with China as a strategic partner in the energy sector, the Banking Union and the Single Resolution Mechanism, the Common Fund, and the Individual Investor Programme.
With regard to the Draft Budget which was submitted to the Commission in mid October, Prof. Scicluna noted that while transparency is essential and that it is positive that EU Ministers are for the first time coordinating budget efforts, the publication of certain aspects of the Maltese Budget ahead of time caused some market disruption due to the speculation of impending changes to excise duties.
Speaking about Malta’s banking sector, Prof. Scicluna underlined how the stability and resilience of the Maltese Banking system showed itself during the financial crisis, when other banks in other Member States required assistance.
Speaking about the Individual Investor Programme, Prof. Scicluna said that Government wanted to set up a Development Fund which such a scheme could tie with. What had happened was the marketing team completed their work prior to the setting up of the Development Fund.
He added that useful talks are being held between the Government and the Opposition prior to the publication of the respective legal notices about the detailed workings of the scheme.
In its initial reaction, the Nationalist Party said that the Finance Minister had admitted before the European Parliament what Prime Minister Joseph Muscat did not want to admit to the Maltese people – that the citizenship scheme is a mistake.
In spite of the disapproval shown by the opposition and civil society before the scheme became law, the PM was stubborn and insisted that the scheme is approved, so much so that it started to be marketed abroad.
The opposition now expected the government to continue discussing amendments for the law to eventually reflect what the Maltese people wanted – that Maltese citizenship should not be put up for sale.
On Friday the Nationalist Party sent a letter of complaint to the Public Broadcasting Services for not reporting the statement made by Finance Minister Edward Scicluna to members of the European Parliament on the sale of Maltese citizenship.
PBS, the party said, also failed to report what the PN said about the matter.
PBS had, yet again, opted to censure those who believed the government was wrong, who in this instance was the Finance Minister. This was another clear case of imbalance and the PN was requesting an effective remedy.
Minister incorrect about Citizenship by marriage
In an update published today by The Malta Independent, quoting civil service sources as saying that Finance Minister Edward Scicluna was “completely wrong” in his argument about citizenship by marriage which he made at the European Parliament’s Econ Committee.
Speaking to MEPs on Thursday Prof. Scicluna said that Malta does not carry out a due diligence process on people who obtain Maltese citizenship by marrying Maltese citizens. He also implied that many marriages are of convenience, with people abusing the system to obtain a Maltese passport.
The minister’s exact words were: “Even small Malta gives 1,000 citizenships every year, mostly by marriage. We don’t do a due diligence whether the one will be happily married and whether his intentions are good or whether he comes in Malta just because he wants to find work and found a marriage of convenience. We find that three years later we go into the courts and see the separations. And then they will say that the reason for separation was because he married for citizenship.”
But sources in the civil service said that the minister “got it all wrong.” Prof Scicluna gave the impression that foreigners obtain Maltese citizenship as soon as they get married. But in reality, foreigners who marry Maltese people must wait at least five years after the marriage to be eligible to apply for citizenship.
“During these five years the authorities – including the Police, ETC, Citizenship Department and Social Services – carry out various background checks. When the first five years of marriage are up, the due diligence process intensifies before citizenship is granted,” the sources insisted.
The sources told the Malta Independent that every year there are a number of applicants who are refused citizenship because they do not pass the due diligence. Apart from this, the mandatory five year marriage period is both a deterrent to abusers and a due diligence in itself. “Who would be willing to get married for five years and then separate just for a passport?”
Other persons who spoke to the Malta Independent asked why the minister had voted in favour of the IIP in Cabinet and again in Parliament only to say later on that this was a mistake. One source said: “All members of cabinet must have been aware of the implications and the harm that the IIP would do to the country. They were warned repeatedly by the opposition and by the people but they still voted for it. And now they admit that they were wrong. Why did they not listen in the first place?”
Another source said: “Edward Scicluna is the second most powerful man in the cabinet. If he thought that the scheme was rushed and flawed – as he has admitted to MEPs – why did he vote for it in the first place?”