A second home for the rich-but-dubious

Every year, several thousand people spend a combined $2bn or more on buying a second citizenship.


Trump: would you buy a second passport from this "funny character"?
(Image credit: Copyright (c) 2017 Shutterstock. No use without permission.)

Imagine you're a Chinese entrepreneur or an Arab sheikh. You've made your millions, but are worried that the state could confiscate your wealth, or in the case of the sheikh, the government itself could fall. So what do you do? One answer is to become a "citizen of the world" and buy a second passport. Indeed, between 30 and 40 countries have active economic-citizenship or residence programmes, and another 60 have provisions for one in law, says Matthew Valencia in 1843 magazine. Every year, several thousand people spend a combined $2bn or more on adding a passport or residence permit to their collection.

Some of those people are undoubtedly doing so for legitimate reasons, but even the brokers who help the wealthy acquire passports admit that some of the industry's clients are "human-rights violators, money-launderers or other fugitives from justice", says Valencia. In one case, "an Italian businessman on an Interpol most-wanted list bought himself a diplomatic passport from Dominica and tried to claim diplomatic immunity on the grounds of being the island's permanent representative to the UN Food and Agriculture Organisation". This incident hasn't stopped Dominica "pumping out passports at an estimated rate of around 2,000 a year for as little as $100,000 a time".

One favoured bolthole for those who are rich but potentially vulnerable to getting on the wrong side of the political situation in their own countries, is Cyprus. Thanks to its status as an EU member state it can command premium prices, enabling its cash-for-citizenship scheme to bring in more than €4bn in investment since 2013, says a team of researchers in The Guardian.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The programme, says the paper, has been driven primarily by "interest from the Russian and Ukrainian elite", with "prominent businesspeople and individuals with political influence" snapping up properties and making other investments in their eagerness to become freshly-minted Cypriots citizens.

Of course, the US wouldn't stoop to such shenanigans, would it? Don't be so sure. Thanks to the EB-5 programme, "investing $500,000 in areas deemed economically distressed" means prospective immigrants can get temporary US residence for themselves and their families, says Peter Robison on Bloomberg. As a result, the US now gives out around 10,000 visas a year, with 85% of them going to Chinese.

With opposition from both left and right, you'd think that ending the scheme would be an easy win for US president Donald Trump. However, despite vowing to be tough on other sorts of immigration, he has been strangely reluctant to stop it, granting it yet another three-month extension, and promising to "curtail family preferences while maintaining those based on skills or wealth". Coincidentally or not, Trump and his son-in-law have benefited from the programme, using it to raise $50m in financing for a project in New Jersey in 2013. The only reason that Trump didn't make more was that, according to one visa "fixer", investors saw him as "a funny character... He was no [Warren] Buffett, and leveraging on him could not be convincing".

Tabloid money no flights is a cut-back too far even for Ryanair

"I would rather pay more for a free drink and a tray of inedible food on a flight than endure the ignominy of being fleeced out of five quid for a tiny packet of Pringles by [Ryanair], an airline that once suggested customers should pay to use the toilet," says Camilla Tominey in the Sunday Express. It's surprising boss Michael O'Leary didn't charge journalists to hear his mea culpa over the airline's stranding of 400,000 passengers due to its errors in planning staff holidays. "You'd like to sit right at the front to hear my grovelling apology," Tominey imagines he'd say. "That will be £25 please!" "Flying budget these days is a bit like being stuck in a windowless house, surrounded by double-glazing salesmen. The upselling starts before you've even paid the 2% credit-card fee."

Indeed, says Lorraine Kelly in The Sun, Ryanair bosses are said to be running around trying to salvage the company's reputation. "To which we can only utter a baffled cry of, What reputation?'." "For years passengers were considered to be little more than cattle to be herded together and milked for cash." But real people have had their holidays, wedding plans and celebrations ruined thanks to the airline's "monumental cock-up" over pilot rotas. As customers, we have come to accept a "no-frills" service. But to cut back on flights is surely a cut-back too far. Sure, everybody knows that Ryanair is a byword for "cheap and not very cheerful", but you get what you pay for, says Kelly. "Except in this case, you don't."

Engaged couple Ben Farina and Clare Moran are to bill the 80 guests they invited to their wedding £150 per person plus an extra £50 for kids. "I don't want to rain on their marquee, but wouldn't it be better to scale it back have a few friends and a nice meal rather than a three-day dream' wedding that guests pay to attend?" asks Karren Brady in The Sun on Sunday. "I know which I'd prefer to go to."