The head of the Office of National Drug and Money Laundering Control Policy (ONDCP), Lieutenant Colonel Edward Croft, made some obvious but important remarks to agents and managers of the Citizenship by Investment Programme (CIP) at a recent conference.
Col Croft used the occasion to stress the importance of proper due diligence to the integrity of the CIP and the reputation of the country. He linked the programme to the banking sector and stated, “With the existing challenge within the region of maintaining correspondent banking relationships, any breakdown of our due diligence process has the potential to compound the issue by increasing the jurisdiction’s level of perceived risk in the eyes of our international correspondent banks.”
To many onlookers, this and other statements made by the ONDCP head made sense and were obvious. What is interesting is that Col Croft deemed it necessary to state the obvious for all to hear.
For example, we all know, as he said, “There is so much at stake that we must do our due diligence. The alternatives would not be desirable or even bearable.” The “alternatives” that the good colonel speaks about are the repercussions of a bad character, or characters, slipping through the cracks and becoming involved in some nefarious activities using our cherished passports. These have been and continue to be the major risks of the CIP programme. After all, one incident is all that it takes.
We have always had concerns about the manner in which we do due diligence, and although the powers-that-be have sought to erase our concerns, we remain uneasy. Before anyone thinks that we are trying to stoke dying embers into a raging fire, we ask that they set aside their political lens and take a quick look at a recent case regarding the application and approval process of the CIP.
We refer to the case of Lihua Tian, a Chinese businesswoman, who was at the centre of a legal case involving the issuance and then withdrawal of her CIP passport. Lihua’s case was again in the news recently, when it was reported the case that she brought against the government was withdrawn in the face of the dismantling of the Committee of Inquiry which was set up to investigate the handling of her CIP application.
According to Lihua’s lawyer, Dr David Dorsett, there was no reason to pursue the matter any longer since the committee collapsed with the resignation of a committee member, attorney Hollis Francis Jr, and no replacement was appointed. To be precise, he said, “The member against whom there was an allegation of conflict of interest has resigned and by virtue of that, the committee cannot function. The committee [is unable] to function [because] it does not have the requisite membership. So, the case has ended and is no longer the subject of active litigation, except for costs.”
We hope that we are not the only ones that find this bit of news disturbing. A committee, which is part of the larger mechanism to ensure the integrity and reputation of our CIP, crumbles because one member resigns? How can this be? Are the CIP and our global reputation not important enough to see this matter through?
The story behind this case is very interesting. Lihua Tian is or was (we are not quite sure) under investigation for withholding material facts on her application for CIP – that she had been identified on Interpol as a person wanted for questioning by Chinese officials. A big deal in our books!
From the onset, Lihua rejected the claim against her, citing in court documents that she disclosed everything to the client advisor. She apparently backed up her claims in court with email exchanges which had, she alleges, occurred between her and Client Advisor Bata Racic. Those emails are said to contain detailed explanations from Lihua, who was then residing in the United Arab Emirates (UAE), that she learned she was wanted – as well as the reason – when she went to the UAE police station to do “routine stuff” days after she submitted her application in 2015.
In response, there is communication, allegedly sent by Racic, indicating that Antigua & Barbuda could likely deem the issues non-concerning and she should only answer questions if asked and proceed with her application to become a CIP citizen.
So here we have someone who claims to have alerted the CIP system, through an agent, that she was wanted on Interpol, but was told, essentially (and in our words), “no worries … dat dohn concern Antigua & Barbuda … jus keep it under wraps … unless they ask”.
Lihua got her citizenship/passport. The due diligence process did not pick up her listing on Interpol, or maybe, as the agent predicted, it was non-concerning. Later, some time after the approval, the citizenship was revoked and the legal wrangling began, recently ending very unceremoniously. Today, Lihua Tian is a citizen of our bit of paradise and is setting up businesses. The committee to inquire into what went wrong fizzled and we, the public, are in the dark.
One would have thought that with the international eyes on CIP nations, we would have gone above and beyond to deal with this matter, so that the integrity of our CIP and our reputation remain in tact. Instead, there seems to be little, if any, fallout or consequence. The client advisor even declined to give evidence or be cross-examined by the committee. How is that even possible? How can all of this happen and it is business as usual?
If all that we have heard about that story is accurate, then it is no wonder that Col Croft decided to state the obvious. We join him in beseeching all those involved in the CIP to “consider the detrimental effects on the jurisdiction. Consider the consequences such as a downgrade in the country’s credit rating. Consider Antigua & Barbuda’s reputation being undermined in the international community.” Please, listen to the colonel, he knows of what he speaks.