Wealthy Americans Rush to Buy New Identities
According to Forbes, many wealthy Americans are scrambling to obtain new identities. Government schemes allowing foreigners to secure second passports are driving this trend. Eric Schmidt’s New Identity
Eric Schmidt, the former CEO of Alphabet Inc., is a prime example. In addition to a superyacht, a Gulfstream jet, and a Manhattan penthouse, Schmidt also possesses a second passport and a new identity. A Cypriot newspaper recently announced Schmidt’s citizenship in Cyprus, highlighting a shift in American interest in “golden passports.”
The Rise of “Golden Passports” Among Americans
Traditionally, Americans showed little interest in purchasing these so-called “golden passports.” Previously, they were more prevalent among citizens of countries with limited travel freedoms, such as China, Pakistan, and Nigeria. However, this trend has changed dramatically.
“We’ve never seen anything like it,” said Paddy Blewer, director of citizenship and residence advising at Henley & Partners in London. “The demand surged late last year and has only grown stronger.”
Benefits of a Second Passport
A second passport can be obtained for as little as $290,000. The benefits include reduced taxes, increased investment freedom, and hassle-free travel. Despite these advantages, Americans were previously less interested because the U.S. taxes its citizens regardless of residency. However, recent events have changed this perspective.
Increased Demand Due to COVID-19 and Political Instability
The surge in demand began before the coronavirus outbreak but has accelerated due to the pandemic. As lockdown measures increase, people seek freedom of movement. “I want to move swiftly and not be trapped,” said Nestor Alfred, CEO of St. Lucia’s citizenship-by-investment unit.
Additionally, the prospect of a Biden presidency and a shift in the Senate, potentially leading to higher taxes on the wealthy, has further fueled interest. Apex Capital Partners reported a 650% increase in clientele since the November 3 election, driven by concerns over potential societal instability.
Citizenship-by-Investment Programs
Several countries have adopted similar schemes since the first citizenship-by-investment program in St. Kitts and Nevis in the early 1980s. Malta, for example, has raised $1 billion through its program since its inception a decade ago. Dominica has collected almost $350 million in five years.
High-Profile Case Studies
Roman Abramovich’s Portuguese Citizenship
Russian billionaire Roman Abramovich, known for owning Chelsea FC, acquired Portuguese citizenship in 2021. This move was facilitated by Portugal’s citizenship law, which allows Sephardic Jews to become citizens if they can prove Sephardic Jewish ancestry. Abramovich, who is Jewish, took advantage of this program, highlighting another pathway to a new identity for the ultra-wealthy.
Boris Becker’s African Gambit
Former tennis star Boris Becker sought diplomatic immunity through his appointment as a sports envoy by the Central African Republic (CAR). Facing bankruptcy proceedings in the UK, Becker claimed his diplomatic status should shield him from legal action. Although this case involved diplomatic rather than citizenship-by-investment schemes, it underscores the lengths the wealthy might go to secure protections and new identities.
Igor Kolomoisky’s Cypriot Connection
Ukrainian oligarch Igor Kolomoisky, once a significant figure in Ukraine’s energy and media sectors, secured Cypriot citizenship through investment. This allowed him to enjoy the benefits of EU citizenship and distance himself from legal troubles in Ukraine. His case illustrates the strategic use of second passports to navigate complex legal and political landscapes.
American Case Studies
Peter Thiel’s New Zealand Citizenship
Billionaire entrepreneur Peter Thiel, co-founder of PayPal and an early investor in Facebook, acquired New Zealand citizenship in 2011. Thiel’s application, granted despite spending only 12 days in the country, sparked controversy and debates over the integrity of New Zealand’s citizenship laws. Thiel’s case exemplifies how the ultra-wealthy can leverage investment and influence to secure citizenship.
John Malone’s Irish Citizenship
John Malone, chairman of Liberty Media, obtained Irish citizenship through investment. Malone, one of America’s largest landowners, took advantage of Ireland’s favourable tax regime and citizenship-by-investment program. His move highlights the appeal of European citizenship for wealthy Americans seeking new identities and investment opportunities.
Denise Rich’s Austrian Citizenship
Songwriter and socialite Denise Rich renounced her U.S. citizenship in 2011 to obtain Austrian citizenship. Rich’s decision was partly motivated by the desire to reduce her tax burden. This case underscores the financial incentives driving wealthy Americans to seek new identities through citizenship-by-investment programs.
Controversies and Legal Challenges
These programs are not without controversy. Jho Low, a fugitive Malaysian banker, was one of 96 individuals who lost Cypriot citizenship last year. Additionally, Cyprus’s passport-for-investment program faced scrutiny, leading to its phase-out in November 2020.
Jho Low and the 1MDB Scandal
Jho Low, the fugitive Malaysian financier at the center of the 1MDB sovereign wealth fund scandal, was granted Cypriot citizenship in 2015. Low, who allegedly masterminded the misappropriation of billions of dollars from 1MDB, used his Cypriot passport to travel freely and evade authorities. The scandal resulted in widespread condemnation and highlighted the risks of selling citizenship.
Demetris Syllouris and the Cypriot Parliament Scandal
In a 2020 undercover investigation by Al Jazeera, Demetris Syllouris, then the Cypriot House of Parliament speaker, was caught on camera offering to help a Chinese businessman with a criminal record obtain Cypriot citizenship. This scandal forced Syllouris to resign and led to increased scrutiny of Cyprus’s citizenship-by-investment program, which was subsequently terminated in November 2020.
Malta’s Golden Passport Controversies
Malta’s citizenship-by-investment program has also faced significant criticism. In 2017, journalist Daphne Caruana Galizia, who was investigating corruption related to the program, was assassinated. Her work revealed that several high-profile individuals with criminal backgrounds had acquired Maltese citizenship. The Maltese government faced pressure from the EU to reform the program, leading to increased transparency and stricter vetting processes.
Golden Passports and Immunity?
A recent London event showcased “golden passports,” with three prime ministers promoting citizenship for as little as $190,000. St. Lucia’s Prime Minister, Allen Chastanet, highlighted the benefits of St. Lucian citizenship, including visa-free travel to 145 countries.
While golden visa programs offer numerous benefits, they have also been exploited by fugitives seeking to evade justice. Here are some notable cases of fugitives who were captured while holding golden visa passports:
Jho Low – Cypriot Citizenship
Jho Low, a Malaysian financier at the center of the 1MDB scandal, obtained Cypriot citizenship through a golden visa program in 2015. Low allegedly misappropriated billions of dollars from Malaysia’s sovereign wealth fund. Despite using his Cypriot passport to evade authorities, his citizenship was eventually revoked after his involvement in the scandal was exposed. Low remains a fugitive, with authorities still attempting to bring him to justice.
Viktor Kozeny – Antiguan Citizenship
Czech-born financier Viktor Kozeny, known as the “Pirate of Prague,” secured Antiguan citizenship through its citizenship-by-investment program. In the 1990s, Kozeny was implicated in a massive investment fraud scheme that resulted in significant financial losses for investors. Despite living in the Bahamas and holding Antiguan citizenship, he was eventually apprehended and faced extradition attempts by the United States and Czech authorities. Kozeny’s case highlights the complexities and challenges in prosecuting international financial crimes.
Rami Makhlouf – Cypriot Citizenship
Rami Makhlouf, a Syrian businessman and cousin of President Bashar al-Assad, obtained Cypriot citizenship through investment. Makhlouf was sanctioned by the European Union and the United States for his involvement in the Syrian regime’s human rights abuses and financial misconduct. His Cypriot citizenship came under scrutiny, leading to its eventual revocation. The case underscores the potential misuse of golden visa programs by individuals involved in severe human rights violations.
Alexandre Nogueira – Portuguese Citizenship
Brazilian businessman Alexandre Nogueira obtained Portuguese citizenship through investment, which he used to facilitate his international movements. Nogueira was involved in numerous financial crimes, including embezzlement and money laundering in Brazil. Despite his attempts to hide behind his new identity, authorities eventually captured him. His case demonstrates how individuals involved in financial crimes can exploit golden visa programs.
Low Taek Jho (Jho Low) – Multiple Passports
In addition to his Cypriot citizenship, Jho Low also possessed passports from other countries obtained through similar programs. Low’s ability to secure multiple identities highlights the vulnerabilities in golden visa schemes, where thorough vetting processes are crucial to prevent misuse by fugitives.
Concerns Over Security Risks
Despite the appeal, these programs pose security risks. “The European Union must not become a haven for criminals and corrupt officials,” stated Vera Jourová, European Commission vice-president. She called for more transparency and better cooperation among member states.
High-Profile Endorsements and Legal Operations
The conference, organized by Henley & Partners, featured a keynote lecture from former CIA Director David Petraeus. This London-based firm has profited significantly from citizenship sales. Although legal, the trade has drawn scrutiny, especially with cases like Jho Low’s Cypriot citizenship.
A Growing Trend
As more wealthy Americans seek new identities, the demand for citizenship-by-investment programs is expected to rise. These programs offer a legal pathway to a second passport and the benefits that come with it. However, they also bring challenges and controversies that need addressing.
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