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Golden Visas are ripe for abuse in fraud cases

The issue of Golden Visas has been in the news recently, mainly linked to the ongoing saga of Mehul Choksi, a billionaire businessman, diamond trader, willful loan defaulter and alleged fraudster from India.

At the time of writing, I understand that the Indian government is trying to apply diplomatic pressure on its Antiguan counterparts, who appear reluctant to apply to the Antiguan High Court for an order to extradite Mr. Choksi to face the music back in his home country.

In Antigua’s defense, there is the rule of law to consider. There is no bilateral extradition treaty between India and Antigua. Extradition, if it can happen, will have to fit inside a 1933 Antiguan statute governing extradition between Commonwealth countries.

Mr. Choksi is one of the suspects in the Punjab National Bank scandal, which has become one of the biggest frauds to afflict the sub-continent. Since early 2018, there have been hundreds of reports in the Indian national press about Mr. Choksi and his nephew, Nirav Modi, both of whom have been implicated in this huge scandal. The Antiguan government has stated that it granted Mr. Choksi citizenship following extensive vetting procedures, none of which appear to have flagged-up Mr. Choksi as a potential criminal.

The Golden Visa schemes that operate across the globe vary in their characteristics (they typically offer a permanent residence to individuals who invest, often through purchase of property, in a particular country), but all of them are open to abuse if they are not regimented properly. The Caribbean is one of the locations of choice for those fleeing their crimes across the globe. It is a beautiful, peaceful and potentially luxurious location to see out your days with your ill-gotten gains, instead of seeing them out in jail. 

The Citizenship by Investment Unit of Antigua & Barbuda confirmed that: “After extensive vetting, Mehul Choksi was granted citizenship by registration in November 2017.”

The Antiguan scheme involves a choice among making (a) a contribution of a minimum non-refundable amount of $100,000 to its National Development Fund (NDF), or (b) an investment of at least $400,000 into one of its approved real estate projects, to be held for a minimum period of five years, or (c) a prospective new citizen may opt to provide a minimum investment of $1,500,000 into an eligible business as a sole investor. There are additional business investment routes the new resident can choose to take.

There is no suggestion at this time that any Antiguan officials have done anything wrong. As a lawyer I work quite extensively on the investigation of international fraud and cross-border asset recovery matters across the Caribbean. I have visited Antigua on numerous occasions connected to my work. It is a lovely part of the world, inhabited by friendly, gregarious people. But there appear to be real issues and concerns arising out of its Citizen by Investment program, which was set up in 2013.

Any developing nation, Antigua included, is always seeking investment in order to mature and improve its economy. But unless these schemes are policed properly, they are open to abuse; inevitably you can attract the wrong sort of applicants.

I have a vested interest in this area, as I have firsthand experience of pursuing fraudsters around the globe, often only to see them hunker down in jurisdictions less than friendly to those of us trying to bring them to justice. Global Witness has been campaigning on this issue: while I don’t always see eye to eye with them on some issues, I respect them and their objective of ridding the world of corruption.

In this instance, I certainly support Global Witness. While I am not against Golden Visas per se, I do advocate that meaningful scrutiny be applied to ensure that countries doesn’t become bolt-holes for those who have successfully defrauded innocent victims out of their hard-earned cash: nobody should be a willing party to providing a safe-haven to a criminal.

I appreciate that fraud is often seen as a victimless crime, and in the case of Mr. Choksi, his alleged crimes do not involve violence. But if the allegations are true, then he must be returned to India to face justice. (On December 12 India’s Central Bureau of Investigation finally managed to extract a Red Corner Notice — RCN — from Interpol against Choksi, a request to locate and provisionally arrest an individual pending extradition which is likely to add pressure on the Caribbean nation.)

If this was a terrorist who had committed an atrocity elsewhere, he would not be receiving the same favorable treatment. India would be supported in its quest for justice by most of the free world. Simply because one type of crime (terrorism) provokes outrage and the other (bank fraud) does not, should not make any difference to how an extradition is considered.

Global Witness and other campaigners had also welcomed the suggestion that the UK was about to suspend its own Golden Visa scheme, in part due to the concerns they’d raid (though later press reports said that the UK Home Office had failed to carry through the suspension). If the system is flawed and if the UK Government does rectify any due-diligence flaws, then I would have no issue with the UK relaunching its scheme as soon as that is done.

Essentially, I have no problem with Golden Visa schemes as long as they are not open to abuse. Due diligence then becomes key. All of us need to up our game here. And we are all watching with interest to see how Mr. Choksi’s position plays out. Hopefully common sense will prevail and he can be returned to India to face his accusers in a fair trial.

With thanks to Tony McClements, Senior Investigator at Martin Kenney & Co, for his assistance with this post.

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Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI, focused on multi-jurisdictional fraud and grand corruption cases www.martinkenney.com | @MKSolicitorsIn 2014 he was the recipient of the ACFE’s highest honor: the Cressey Award for life-time achievement in the detection and deterrence of fraud. He was selected as one of the Top Thought Leaders of the Legal Profession in 2018 and 2019 by Who’s Who Legal International and as the number one offshore lawyer for asset recovery in 2017 and 2018.

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1 Comment

  1. Martin Kenney is right on the money here. It would not be beyond the capacity of governments to conduct the kind of enhanced Due Diligence checks urged on banks when looking for adverse media commentary etc on existing and potential clients. Perhaps this was done in this case, but nations who offer Golden Visas – including my own – cannot reasonably complain if others view their schemes with skepticism when they subsequently do not cooperate with reasonable international mutual legal assistance efforts that are not requested in bad faith or by regimes that do not respect human rights.


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