How Wealthy Russians buy Maltese Citizenship

Lily Dobrovolskaya, Yulya Pavlovskaya, Ilya Shumanov, Emanuel Delia (Malta)
8 december 2017

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The list of persons who have been granted the citizenship of Malta was published in Gazzetta tal-Gvern ta’ Malta in 2016.

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Russian investors receive the passports of the European Union countries in record time. Among them are persons who connected with authority and those who are accused of corruption. We decided to figure out how and why it became possible.

To obtain a passport under the "golden visa" scheme, you need to invest in the economy of the European Union. Russian investors who have received passports under the investment program are endowed with all the rights and freedoms of EU citizens, including the right to unhindered residence in any EU country. But the most compelling reason to acquire a "gold passport" is the fear of losing money and business in the unstable political and economic situation in Russia. For example, over the past two years, Cyprus has issued about 2,000 passports in exchange for investment in the country's economy. According to the international consulting company PwC, almost half of these passports were issued by the Russians.

When registering a second citizenship, Russian investors tend to remain anonymous. The government of Malta especially diligently takes care about the confidentiality of its investors represented by the state organization Identity Malta, which oversees the local program of economic citizenship.

Management Identity Malta insists on anonymity in compliance with the law "On Citizenship", therefore, in the published list of persons in the Maltese newspaper, which received the citizenship of the country in 2015, "economic citizens" are not separated from persons to whom passports were obtained through naturalization or by birth.

53-year-old Maltese journalist and blogger Daphne Caruana Galicia was killed on October 16, 2017. A powerful bomb was exploded in her The photo: daphnecaruanagalizia.com

Journalist Daphne Caruana Galizia is one of the first who began to identify people from the published list. She wrote about the widespread practice of selling Maltese passports, which accounts for the bulk of the shadow income of Maltese officials.

In May 2017, the Times of Malta newspaper described how three Russian families who bought Maltese nationality through local accountant Brian Tonna received a vote, despite the fact that the Maltese constitution does not provide for such an opportunity for anonymously "economic citizens." To get the right to vote, they need to refuse from anonymity, and these Russian citizens did not do.

According to the Times of Malta, one of these investors was the former Director General of "Svyaztransneft" JSC Viktor Vashkevich with his family (Viktor Ivanovich, his wife and two sons) who, together with two other Russians, paid Tonne 166 thousand euros for passport processing services by investment scheme. 100 thousand tons immediately transferred to the account of the head of the administration of the Prime Minister of Malta Keith Schembri.

Keith Schembri is the Head of the Office of the Prime Minister of Malta
The photo: www.independent.com.mt

In their statements to the Electoral Office of Malta, members of the Vashkevich family claim that they did not reside in Malta for six months during the previous 18 months (the minimum period of stay envisaged by the country's constitution for suffrage) and do not have the right to vote. In September 2016, they were excluded from the Republic of Malta's electoral lists.

Despite the fact that only the names of new citizens are indicated in the same list published by the State newspaper of Malta, we were able to identify a few more Russian citizens who purchased a passport from a Mediterranean country. Among them are top managers of state companies, "kings of state orders" and a deputу of a Moscow region.

"Deputy from Lobnya"

Correction, 10 December 2017: Our publication contained an unfortunate mistake: we confused a deputy of Moscow region Alexei Borisovich Mazurov with his full namesake, who allegedly bought a luxurious property in Malta for €1,5 mln. We apologize for it to Mr Mazurov and his family.

The full namesake of businessperson and deputy of the Lobnya urban district of the Moscow region from the party "United Russia" Igor Vitalevich Khodin has already been a citizen of Malta for two years. Apparently, the wife of deputy Evgenia Konstantinovna Khodina, his daughter Anna (27 years) and son Grigory (20 years old) also received Maltese passports under the investment scheme. Igor Khodin was elected to the Council of Deputies of the Lobnya city in 2011 and re-elected in 2016.

Image 1 Image 2

Igor Vitalievich Khodin and his son Gregory // Photo of the driver's license of Grigory Khodin. Photos of Gregory Khodin from Instagram.
Photos of Gregory Khodin from Instagram.

There are 36 million rubles indicated in the declaration on Khodin's income for 2015. The wife of the deputy earned only 260 thousand rubles. Last year, the deputy earned only 20 million rubles, his wife's income amounted to 178 thousand rubles.

Tenants from "VEB-leasing"

The Maltese program of investment citizenship was launched in 2014 and already then aroused a wave of discontent from the European Union. The European Commission approved the program only after it was added a rule to have a residence permit in Malta throughout the year. In fact, to obtain a residence permit does not need to live on the island for a year, just enough to rent an apartment. From 143 investors who received passports under the investment scheme until April 2016, 116 signed a five-year lease contract, and only 27 purchased property.

Most investors rent cheap apartments, but in fact do not live in them, thereby violating the terms of the investment citizenship program. This method allows to significantly save: investors spend about 100 thousand euros, renting apartments for a five-year term, rather than buying property for 350,000 euros. This is exactly what Vyacheslav Sergeevich Solovyov did. The full namesake of the disappeared former Director General of the state leasing company "VEB-leasing" Vyacheslav Solovyov, we also found in Malta. More.

"VEB-leasing" JSC was established in 2003 with the participation of "Rosoboronexport" FSUE. Vnesheconombank controls 100% of AO shares. The photo: Oleg Kharseev/Kommersant

In March 2016, the media reported the disappearance of the general director of Vnesheconombank's subsidiary, company "VEB-Leasing" Vyacheslav Solovyov. The management of the state corporation first stated that they did not know where looking for Director General, but later the chief of Vnesheconombank Sergey Gorkov explained that Soloviev was allegedly in treatment in Switzerland and still remains the Director General. Nevertheless, three weeks later, a native of Sberbank, Alexander Dymov replaced the disappeared Solovyov as general director of "VEB-Leasing". Now Yuri Nikolaevich Gaichenya is appointed as Acting Director General.

In order to issue "golden passports" for himself and three family members, Vyacheslav Sergeyevich rented a small house in the city of Sao Paulo-il-Bahar. As it appears, Solovyov does not live at the indicated address. The mailbox and the door are not even indicated by his name.

The photos: Еmanuel Delia https://manueldelia.com/

In 2015, another head of "VEB-Leasing", the former president of the company, Oleg Vladimirovich Muradyan, became the resident of the republic. The registration address that he indicated is located in a small village of Mgarr in the north-west of the island. According to the neighbors, nobody lives in the house.

The photos: Еmanuel Delia https://manueldelia.com/

Oleg Muradyan. The photo: www.africana.ru

Correction. We confused Oleg Muradian of "VEB-leasing" with his namesake from Gazprom Neft.

Since the village is not included in the electronic land cadastre of the republic, we were not able to find out whether the top manager rents the property or acquired it. In any case, the price of renting a property in a small agricultural village is unlikely to satisfy the conditions of the program of economic citizenship.

"Kings of state orders"

The founder and owner of Transugstroy Managing Company LLC Anatoly Dmitrievich Antipov and five members of his family are the owners of the passports of the European Union. According to the rules of the Maltese investment program, the main applicant invests 650,000 euros in the form of a gratuitous grant to the state fund of the country. Spouses and children of the applicant must pay 25,000 euros per person, or 50,000 euros for each child at the age of 17 to 26 years.

Anatoly Antipov. The photo: munscanner.com

Fortunately, Anatoly Dmitrievich with no material ambition. In 2015, Forbes Russia included Transugstroy Managing Company in the rating of "kings of state orders" As the newspaper emphasizes Antipov should thank for his business success his business partner Oleg Tony, who is now vice-president of Russian Railways for the construction complex. Antipov and Tony together owned Transstroibank, controlled by the Baltic Construction Company and personally Oleg Tony. When Tony moved to Russian Railways as vice president of construction, Transugstroy received one of the most highly-budgetary contracts for the Olympic construction (preparatory work for the construction of a combined railway and road from Sochi to Krasnaya Polyana for 29 billion rubles) and won a tender for 13 billion rubles for the construction of part of this road. Now Transugstroy is executing a contract worth 53 billion rubles to equip the Eastern Russian Railways landfill. The total amount of government procurement Transugstroy has made since 2010 is 90.2 billion rubles.

In 2014, the nephew of Russian President Roman Putin accused Transugstroy of using a corruption scheme in which the company won a tender from the state monopoly, instructs the work to be performed by subcontractors, leaving to himself for "intermediary services" sometimes up to a quarter of the total amount of orders, according to the newspaper Republic. According to Roman Putin, he especially abuses such schemes of Trasnugstroy, which "bites off" at least 35% of each contract. The president's nephew was particularly outraged that the owner of Transugstroy is (was at that time until 2015) the Cyprus company Apelsino Holdings Limited, and its real owners were hidden behind a chain of off-shores.

Roman Putin. The photo: wikimedia.org

The Maltese League of General Contractors and partners of Russian Railways is also represented Konstantin Khromushkin by the head of the region "Russia, the CIS and the Baltic States" of Bombardier Transportation.

According to The Malta Government Gazette, along with Mr Khromushkin, his wife Elena Khromushkina, their son Nikolai and daughter Irina received the EU passports.

It is interesting that the authorities of Malta rejected the application of Deputy Khromushkin - Yuri Sergeyevich Danilov. Having been refused, Danilov decided to sue the local government in an attempt to cancel the decision. During the public meeting, he told the court that he had submitted all the necessary documentation together with a petition for citizenship for himself, his wife and daughter. In addition, he signed a rental agreement in the Maltese village of Mellieha and moved there with his wife and daughter, writes Times of Malta. The submitted documents it was stated that Danilov has the status of nearly 2.7 million euros, he worked in the company Bombardier Transportation (Signal) Limited and served as deputy regional manager for Russia, CIS and Baltic countries. However, the court denied Danilov, motivating its decision that the documentation provided was inconsistent with the requirements of the legislation.

Earlier, Konstantin Khromushkin served as general director of the joint venture Bombardier Transportation and Russian Railways in the field of railway automation systems "Bombardier Transportation (Signal)" LLC. The photo: www.eav.ru

Meeting between the delegation Bombardier Transportation with partners in Azerbaijan, 2015 (second from left). Yevgeniy Pavlov (second from right) Thomas Biner (third from the right, questioned in the bribe case). The photo: 1news.az

Earlier in the Panama Papers investigation, the Center for the Study of Corruption and Organized Crime (OCCRP) and Novaya Gazeta wrote that the Russian “daughter” of Bombardier enters into a questionable transaction with offshore companies associated with Alexei Krapivin, the son of a close associate of the former head of Russian Railways Vladimir Yakunin. According to investigators, associated with the Krapivin offshore supplied equipment to Bombardier Transportation for government projects of Russian Railways. A year after the publication, the Swedish police began their investigation around the deal on the reconstruction of the railway in Azerbaijan, from Baku to the Georgian border.

In 2014, Russian Railways questioned the need to build the Bombardier "Engels Locomotive Plant", but the plant designed capacity of 150 locomotives a year still opened in the summer of 2015. The total cost of the joint project of "First Locomotive Company" JSC, Canadian Bombardier and already mentioned by "VEB-Leasing" OJSC amounted to 6.8 billion rubles. Chairperson of the Board of Directors of First Locomotive Company LLC and Engels Locomotive Plant JSC Stanislav Jahparovich Gamzalov, his son Ibrahim and Madina's daughter became citizens of the Republic of Malta in the same year.

The registration address of the Hamzalovs in Malta is 71, Mario, Fl 1, Triq Tal-Ġebel, Birżebbuġa.

The address that the Gamzalovs point out is in the small town of Bierzebudzha in the south of Malta. According to Identity Malta, property prices in this city do not meet the conditions of the investment program. Moreover, property owners claim that they have not seen the Gamzalovs and do not receive rent from them. The married couple bought property last year, and since then, several times received correspondence addressed to Stanislav Gamzalov, which they passed to the previous owner. According to the owners of the property, the previous owner is a co-owner of the well-known construction company Elbros Group in Malta, Charles Ellul, who introduced himself as Gamzalov's friend and handed him mail correspondence.

Conclusions

1

The listed cases of abuse in the purchase of Maltese passports clearly demonstrate the vulnerability of the Maltese "economic citizenship" program. By its nature, the program is a high-risk tool: The lack of transparency and the flaw of proper verification by the EU create additional opportunities for corrupt officials who want to avoid justice.

2

Such a scheme is also attractive in that it allows laundering large sums of money while simultaneously gaining free access to the countries of the European Union. In addition, the EU citizen passport greatly facilitates the movement of money, as European banks consider holders of "gold passports" as local residents, and not as suspicious foreigners. In fact, it is a question of reputation laundering. It is no coincidence that the "golden visas" are the most popular among investors from countries with high levels of corruption, a strong shadow economy and an unstable political system. According to Malta Today, of the 646 people who received Maltese citizenship, more than 40% were Russian citizens. Only 19% are citizens of other EU member states.

3

Corruption risks are also embedded in large cash transactions between the state and the applicants, which are often not transparent in their structure. As a result, people who were supposed to invest in the economy and property of the state, turned into "ghosts" with mailboxes in cheap apartments.

Our actions

1

We will turn to the prosecutor's office of the Moscow region with a request to check the dual citizenship of member of Lobnya municipal council Khodin. If the dual citizenship of the council member is confirmed, he may be threatened with early resignation.

2

We will send an appeal to the Supreme Council of the "United Russia" party to check whether the dual citizenship of Khodin corresponds to the Party's Charter.

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