“How do I abuse thee? Let us count the ways.” ~ with apologies to Elizabeth Barrett Browning
By Caribbean News Now contributor
BASSETERRE, St Kitts — At a press conference last week, St Kitts and Nevis Prime Minister Dr Timothy Harris and CEO of the Citizenship by Investment Unit (CIU) Les Khan again attempted to reassure the media of the integrity of the country’s citizenship by investment programme (CIP).
“The CIU processes applications which on the face of the documentary evidence submitted to it had only the authorized amounts. There has been not one case that has come to [Khan] and his unit that the amounts that are indicated on the purchase and sales agreement were not authorized,” Harris said.
“In relation to private party transactions, that is a matter in which [Khan] is not a party to and is not privy to and when evidence surfaces he will do as he has done in the past, the necessary investigations to determine where there is any truth and the appropriate action would be taken. In fact, the CIU, where such cases have been brought, has already delisted a number of agents from participating in our programme,” he added.
These assertions are, however, demonstrably false or misleading based on documentary evidence provided to the CIU, some of which has previously been published.
The St Kitts and Nevis CIP has been and apparently continues to be subject to rampant fraud and abuse by citizenship agents and local developers, none of which would have been possible without government officials being at worst complicit or at best turning a blind eye to the situation.
Let us count the ways
There are a number of variations but most rely on a subsequent switch from an approved application under the donation option (currently US$150,000) into the real estate option, which requires an investment of at least US$200,000. In at least one case, as evidenced by copies of documents in the possession of Caribbean News Now, such a switch was accomplished illegally by means of a forged letter of approval.
We have previously reported one specific case where an approval letter from the CIU was clearly forged. This may be proved conclusively by the simple expedient of superimposing the signature block of the original genuine CIU letter on the forged version and noting that the two placements match precisely — something that is otherwise inconceivable given the inevitable variations between two genuine signatures.
Furthermore, the supporting agreement with the developer in question (also in the possession of the CIU) clearly indicates an unauthorized investment amount, contrary to Harris’s statement last week. However, no action has been taken by the CIU pursuant to the relevant laws against the foreign agent in question (Savory & Partners) or the principals of Belmont Holdings, the developers apparently benefiting from the forgery.
The attorney general, Vincent Byron, has also been in possession of the same fraudulent documentation since November of last year but, again, no action appears to have been taken in response to this clearly criminal offence under St Kitts and Nevis law.
Byron, in common with Harris and Khan, has not responded to requests for an explanation of their ongoing failure to take any effective action.
The Discount Divas
As previously reported, Savory & Partners is one of number of foreign citizenship agents that explicitly offer St Kitts and Nevis citizenship for a single applicant at a discounted rate ranging from US$99,000 to $113,347 “all inclusive”, which presumably refers to the government’s additional due diligence fee of $7,500. This compares to the government’s published total of $167,500 ($150,000 + $7,500) for the donation option. Similar discounts are offered for family applications.
Of the firms named in our earlier report and brought to the attention of the CIU, only one, Multi Passports, a low-level firm of which hardly anyone had heard and was not in any case an authorized agent, has been blacklisted by the CIU, notwithstanding Harris’s claim that all such incidents will result in the agent involved being “delisted”.
Once again, neither Byron nor Khan has responded to requests for an explanation.
The No Money Down
Even more startlingly, one of the agents involved in offering unsanctioned discounts, AAA Associates, has recently been offering citizenship with “no money down”.
Given that there are certain up-front expenses payable before any citizenship application is approved, the government has again failed to explain why AAA Associates believe that they can safely finance such expenses apparently secure in the knowledge that their clients will be approved and why this should not be viewed as prima facie evidence of some kind of inappropriate or possibly corrupt arrangement between AAA Associates and St Kitts and Nevis public officials by which such clients are guaranteed acceptance.
Tangled up in Bluemina
Another foreign agent, Bluemina, has, as recently as last week, also been promoting St Kitts and Nevis citizenship at illegal discounts based on an arrangement with local developers. Caribbean News Now has been provided with a recording of a telephone conversation between a Bluemina representative and a potential client clearly articulating this possibility, notwithstanding the denials by Harris and Khan that this type of arrangement is not permitted and his corresponding assertion that “The government ensures that we get the amount that is intended for us through the purchasing sale agreement and subsequently the escrow agreements.”
As we have outlined in earlier articles, the government does NOT get the amount that it should receive because, out of the $150,000 a single applicant thinks he is donating to the Sustainable Growth Fund (SGF), the government receives only the real estate investment fee of $35,000 for a single applicant. Not only is the government defrauded out of the additional $115,000, the remaining funds are pocketed by the agent and the developer and no actual construction ever takes place to benefit the St Kitts and Nevis economy as a whole.
Yet another variation of the ongoing abuse of the St Kitts and Nevis CIP is the so called “financing option” whereby the government is again defrauded out of the requisite $150,000 donation.
Typically, this arrangement requires citizenship applicants to pay a “discounted” price to the developers notwithstanding that the minimum real estate investment under the law is $200,000 plus government fees.
The balance is “financed” either by the developer or a third party but, in return for such financing, the applicant will be required to transfer or pledge back to the lender all of his interest in the development, thereby enabling the same real estate investment to be resold any number of times.
In other words, the applicant receives nothing of value in return for his payment except for St Kitts and Nevis citizenship, as would be the case if the applicant had instead made the optional contribution to the SGF. However, the developers and the agents involved split the money, thereby depriving the government of the full amount of the donation without giving anything of value in return.
Again, this fraud is still being perpetrated. According to copies of messages in our possession, when asked recently by a citizenship agent if “the financing option is still available,” one of the employees of Caribbean Galaxy Real Estate, the developers of the Ramada project in St Kitts, responded, “Yes.”
The Galaxy Far Far Away
Not only is the completion and opening of Caribbean Galaxy’s Ramada project far, far away, so may be investors’ money.
All 300 investment units in phase 1 of the Ramada project have reportedly now been sold and, as previously reported, construction is nowhere near completion. According to construction industry experts, it is likely to cost between US$60 and 70 million to complete and open from the current state of construction out of an estimated total cost of $105 million and take two years to finish, far removed from the latest completion date given of September 2019, the fourth such date promised since groundbreaking in 2014.
Neither Caribbean Galaxy nor the government has responded to requests for confirmation that the funds required for completion of phase 1 are currently on hand and derived only from investors in that phase, or if the developers are planning to finance the completion of phase 1 from new investors in phase 2 and/or other related projects now approved by the government.
In other words, is it Caribbean Galaxy’s intention to use money from new phase 2 investors to meet its commitment to existing investors to complete phase 1? If this is in fact the case, this is the classic hallmark of a Ponzi scheme.
The CIU announced on Monday that senior officials from St Kitts and Nevis, including Byron, Khan and Mark Brantley, the premier of Nevis, will be visiting Dubai on January 28 and will be hosting an “evening of meet and greet” for citizenship agents and their clients.
Perhaps interested parties will take the opportunity to ask them to explain why no action has been taken to prevent this ongoing fraud and abuse, which has the potential to damage the St Kitts and Nevis CIP beyond repair as well as negatively impact the reputation of similar programmes operated by other Eastern Caribbean countries.