Friday, 21 September

Gold for Visas


For refugees and poor migrants, travel can be terrifying, with no guarantee of a welcome at the end. For the one percent,​ ​it's a different story, as a growing number of cash-strapped countries invite them in​ ​—​ ​as long as they bring plenty of money.

In the Gold for Visas project, reporters for​ ​OCCRP probe the shadowy business of selling visa-free travel and even citizenship to the rich, including some who would rather not say where that money comes from.

These stories​ ​were​ ​produced as part of the Global Anti-Corruption Consortium, a partnership between OCCRP and  Transparency International, in cooperation with  Global Witness.


READ THE STORIES


Global Firm Has Advice for Armenia: Bargain-Priced Golden Visas

What a deal!

If Armenia ever offers a Golden Visa program, the recommended price for citizenship could be as low as $50,000, according to a report prepared by a leader in the global immigration and investment services industry.

That would make Armenia a rock-bottom option in the Eastern European region, maybe in the world, for citizenship through investment. Even at that low price, the report says, the country could expect $138 million in new revenue over six years.

Arton Capital, which worked up the numbers for Armenia, specializes in citizenship-by-investment programs, commonly called Golden Visas. More than 20 countries now offer such schemes, which are popular with the wealthy and with those eager to evade taxes, including money launderers, corrupt officials, and organized crime figures.

The firm has long experience organizing such programs in about a dozen other countries. It was founded by Armand Arton, an ethnic Armenian who grew up in Bulgaria before moving to Canada, a nomadic childhood which he describes in his TedX talk.

Traveling with a Bulgarian passport in the 1980s was often “challenging and a humiliating experience” that “marked [me] deeply at a very early age and defined [my] future,” he said, and sparked a lifelong interest in simplifying cross-border movement.

Bargain-Basement Golden Visas

The price for Golden Visas in other countries starts at around €100,000 and goes up from there. In really popular places, it can be as much as €10 million.

The Arton report recommends that Armenia keep its price well below that to compensate for several challenges, not the least of which are its closed borders with neighboring Azerbaijan and Turkey. Following a ceasefire in 1994, Armenia and Azerbaijan continue to be technically at war over the mountainous Nagorno-Karabakh region. Turkey closed its border to Armenia during the war.

Armenia has also struggled with corruption. In 2017, it ranked 107th out of 180 countries in Transparency International’s annual Corruption Perceptions Index. That was six places better than the previous year, but still left Armenia mired in the lower half of the world’s countries. (The report describes this problem delicately as “some corruption risks in both official and commercial spheres.”)

Arton candidly lists some of the country’s other negatives: Its population of less than 3 million and its low GDP per capita of about US$3,300.

But it also highlights the country’s positives, such as its strong ties to global economic hubs and its geographic and cultural proximity to strategic markets.

Armenia offers investors access to Russia and almost all the post-Soviet states, which means around 250 million potential consumers, including in Central Asia – plus almost 82 million more in neighboring Iran, with which the country has friendly relations.

And if the country achieves visa-free access to the Schengen zone, which it might in five to seven years, according to the Arton report, it could justly claim to have recreated its historic role as a stop on the Silk Road linking east and west.

As a whole, investors looking for long-term value can be sold on the advantages of Armenia, Arton advises.

“With [visa-free access] to 60+ countries and its special relationship with Russia together with its geographical proximity with Iran, obtaining an Armenian citizenship will be seen not only as a means to secure one’s future and security, but also as a strategic move for one’s business development and positioning,” the report states.

An Experienced Operator

The Arton report notes that while the government could run the program, a better option would be to hire a “professional operator with experience in the field of investment immigration,” described as an “internationally acclaimed company.” The report does not spell out who that might be, or how much that operator would be paid – but Arton would seem to be a likely contender.

The report estimates that about 14 percent of the estimated net cash flow the program would generate over a six-year period would cover its administrative, managerial, and marketing expenses. This would be about $20 million in total, a figure which presumably would include payments to an operator.

Arton clearly hopes that Armenia will choose an operator rather than go it alone.

“Some governments consider this option of program management as they feel that the management, the processing, and the administration of a program must be delegated to an experienced operator who will secure its success and sustainability,” the report says.

The company’s legal representative responded to reporters’ questions, but did not allow that response to be made public.

How to Run a Golden Visa Program

Arton suggests that Armenia offer potential investors two options: a $50,000 direct contribution to a state-owned fund or a $100,000 investment in a fund run by an asset management company chosen by the government, which would offer the possibility of some return.

It further suggests that Armenia sets two types of fees. The first would be a non-refundable processing fee of up to $10,000; the second fee, the amount of which is not specified, would cover background checks into applicants’ records and sources of income.

Arton sees no downside to Armenia offering Golden Visas.

“On the contrary – the overall economic impact is very high. The average investment amount with which we have probed (US$50,000) comprises 13 times the average annual household income and has the potential to cover the average external debt of 33 Armenian nationals.”

The report suggests setting other criteria for applicants, such setting a minimum age of 18, requiring excellent character, and excluding those with convictions for crimes against humanity, sexual offenses, human trafficking, drug trafficking, money laundering, terrorism and terrorism financing, migrant smuggling, or other offenses.

Why Arton?

The International Centre for Migration Policy Development (ICMPD), an international organization based in Vienna that works on migration policy, paid for the Arton report as part of an EU-funded project, Support to Migration and Border Management in Armenia.

Arton Capital was unknown in Armenia before a delegation from the firm arrived in May 2017 and the Armenian Ministry of Economic Development and Investments announced that it was there to help attract foreign investment.

Representatives of Arton Capital meet with Armenian officials during their first visit to Yerevan in May, 2017.Credit: MIBMA

Deputy Minister of Economic Development and Investments Tigran Khachatryan described the company at the time as experienced, with offices in more than 15 cities, and said that it had attracted over $3 billion in citizenship projects.

Carel Hofstra, who heads the ICMPD office in Armenia, told OCCRP partner hetq.am that Arton had been chosen after a “competitive process” involving several consultancy companies that provide similar services, based on Internet research, and Arton’s “competitive pricing and previous experience.”   Hofstra, the ministry, and Arton Capital all refused to disclose the cost of the initial contract, but the EU delegation to Armenia disclosed a price tag of €18,500 (excluding VAT).

It is not known yet if or when an Armenian program offering citizenship in return for investment might be launched.

On its website, Arton says: “In support of its philanthropic commitment, Arton Capital has pledged to donate the consulting fees awarded by the contract to help refugees in Armenia.”

According to the website, an estimated 20,000 refugees from Syria, many of whom are ethnic Armenians, have arrived in the country since the war broke out in 2011.

This story was produced as part of the Global Anti-Corruption Consortium, a partnership between OCCRP and Transparency International.


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Comments (1)
1. SHABO19:50 - 5 March, 2018
If Armenia is to offer a passport for investment scheme, it should mirror the successful model offered by Cyprus which obliges the investor to invest 2 mln into the real economy of the country and also oblige investors to park money in low yield government bonds for 10 years to finance infrastructure development projects, something that is badly needed. Suggestions of paying a lump sum in a government fund will lead to more corruption and ruin the good name of ROA.
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