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Concerns for years in Department of Justice over immigrant investor programme

Concern about the escalating level of applications from China was a key driver of the decision to close ‘golden visas’ scheme for millionaire immigrants

There were 1,275 Chinese applications to the immigrant investor programme in 2022 alone, a rate close to 25 each week every week

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Arthur Beesley
Fri Apr 26 2024 - 06:00

More than 14 months after the Government scrapped “golden visas” for millionaire immigrants, new information has come to light about concerns in the Department of Justice that lingered for years before the scheme’s shutdown.

The immigrant investor programme (IIP) was closed with one day’s notice in February 2023 when Simon Harris, now Taoiseach, was Minister for Justice during Helen McEntee’s maternity leave. The abrupt move followed a warning that a phased closure could prompt a flood of last-minute applications.

The IIP opened residency in the State to non-Europeans with “at least €2 million” in personal wealth. They were, in return, required to invest €1 million in an Irish business or to make a big philanthropic donation. Some €1.25 billion was raised, but the scheme came to be dominated by Chinese millionaires. There were 1,275 Chinese applications in 2022 alone, a rate close to 25 each week every week that year.

Concern about the escalating level of applications from China was one of the key drivers of the decision to close the IIP. Some successful Chinese beneficiaries of the scheme are known to have engaged Irish-based Chinese property agents to buy homes in south Dublin “sight unseen” because of their proximity to fee-paying schools.

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Although Mr Harris cited “very clear, emphatic advice” from the Department of Justice that the scheme had served its purpose, a 2019 internal audit report shows officials had been raising concern about the programme for years.

“Our view of a sample of 18 applications identified that in each of the 18 instances applications were not recorded appropriately in accordance with the systems and controls outlined in the IIP guidelines,” the report said.

It went on to call for scheme controls to be strengthened on several grounds, including the recording and processing of applications; reviews of sources of funding; checks to confirm applicants’ background and any criminal history; and internal systems and investment criteria.

The auditors called for a formal strategic review, leading to a November 2020 report by accountants EY which expressed anxiety about IIP due diligence and anti-money laundering checks. Due diligence providers “may come under pressure” to provide favourable reports, EY said. The firm went on to say immigration officials had encountered “some challenges in establishing appropriate controls to mitigate the risk of financial crime”.

Although issues raised by EY were clear enough, the scheme remained in place and applications surged.

A redacted copy of the department’s internal audit report was provided to The Irish Times as part of a freedom-of-information appeal to the Information Commissioner for IIP records, held by the department. The redactions were removed this week after submissions by the newspaper to the Information Commissioner, whose office has yet to make a final determination on the wider appeal for IIP records.

The original redactions obscured audit findings that suggested none of the 18 files had evidence to verify the legality of the source of funds. Also blanked out was the fact that 12 of the 18 files did not have affidavit evidence attesting to the applicant’s good character. It was the same for 11 of the 18 files which lacked “sufficient evidence” of background checks.

“The review highlights a need for the programme to clarify the requirements in the IIP guidelines around (a) ‘source of funds’ and (b) ‘net worth requirements’ of applicants as both appear to be misinterpreted by applicants and IPP processing staff,” the internal audit report said.

“The file review indicated a need for clearer detail (including evidence and independent verification) to be provided with each application as to the source of the funds and the criminal/security status of the applicant and their family,” it added.

The document cited “significant complexities” around the verification of the legality and authenticity of the funding sources being provided as part of the investment proposal. That was compounded by the fact that the funds came from countries outside the European Union with different financial systems.

“The review highlights the difficulty in assessing the value of assets included as evidence of an applicant’s net worth, ie foreign property, equity investments, etc. The values attributed by the applicants to going-concern business ventures and equity investments cannot be relied upon as the nature of the business and value of investments could be subject to ongoing fluctuation.”

It went on to say the processes for verifying the authenticity and accuracy of applicants’ information should be strengthened.

Although controls were tightened, concerns about the scheme never really went away.

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