Poor oversight and vetting issues marred 'cash-for-citizenship' scheme, report finds

One issue noted was that the residential address of investors was not held by the Irish immigration service once citizenship was granted, nor was the geographic location of received investments recorded. File photo: iStock

Ireland’s ‘cash-for-citizenship' programme suffered from poor oversight, a lack of “any real vision”, and issues surrounding the vetting carried out on applicants, a report compiled for the Department of Justice found.

Consultancy EY was commissioned by the department to evaluate the Immigrant Investment Programme (IIP) in 2019, and delivered its final report in November 2020, though it is only now being published.

The report noted that ‘tracking’ the investments made under the programme was difficult due to a lack of “available and useful data”, making the scheme’s economic benefits hard to measure.

The programme did “not have a formalised strategy or purpose”, the report found, together with stated objectives which were “too high-level to support the effective operation of the scheme”, it said.

The scheme’s over-reliance on investors from China, who at the time of its closure in February of this year accounted for 97% of all applicants, was also criticised for creating “a reliance upon China’s economic performance”, it said.

However, EY warned against ending the scheme due to the “significant” reputational and economic risks involved, given Ireland’s branding as “an open economy” and heavy reliance on international investment.

The Department of Justice has been contacted for comment.

The IIP was first created in 2012, similar to schemes in other European nations at the time seeking to stimulate inward investment in the wake of the economic crash. Since the programme’s inception, a total of nearly €1.2bn had been committed up to the end of 2022 by investors applying for the programme, the Department of Justice said.

Meanwhile, the State received nearly 1,400 applications for the scheme in just six weeks at the start of 2023 after it was announced that the programme was to close in February.

EY found that “the purpose” of the scheme was “not clearly understood”, given the lack of “any real vision” to assist the immigration services in administering it.

Its report noted “concerns around the accuracy” of some of the information held on applicants to the scheme, given how differently due diligence requirements were applied to individual investors. One issue noted was that the residential address of investors was not held by the Irish immigration service once citizenship was granted, nor was the geographic location of received investments recorded.

Where issues emerged in the course of vetting, there was “no formal protocol” in place to set out what “appropriate action” was required in response, EY said.

The report further noted that the scheme’s objectives had not established “a target for the number of people to attract” as applicants.

Issues surrounding oversight of the IIP had seen some applications ending in dubious circumstances, such as an abortive €43m investment in the Nuremor Hotel and Country Club in Co. Monaghan dating from 2020, which saw an IIP visa given to applicant investors despite the business subsequently entering liquidation.

Regarding ongoing investments, EY said that in 2020 there had been “no robust process in place for verifying evidence of good character”.

The report said that while evidence of inward investment was gathered, there were no controls in place to ensure the money was not subsequently withdrawn, nor was there a “requirement for applicants or agents to provide evidence” of what the funds were actually being used for.

It said that while guidance was in place for administering the scheme, much of it had “not been enforced in practice”, for example in the case of investment funds which were not supposed to have been ‘pre-cleared’ as investments, but which nevertheless had been so cleared in order to minimise costs to the investors themselves.

In a statement, the Department of Justice said: "The EY report made a number of recommendations concerning the governance of the IIP, and noted the continuing benefits brought by the scheme.

"Since then the profile and scale of the applications has continued to evolve, as has the broader international context in which schemes of this type and the risks associated with them are assessed.

"In light of this, and it has been said previously, it is important that we keep all programmes under review including any implications for wider public policy, such as the continuing appropriateness and suitability of this programme for cultural, social and economic use.

"When the decision to close the IIP Programme was taken reports and findings from international bodies such as the EU Commission, Council of Europe and OECD on similar investment programmes were taken into account."