Ambassador Peter deSavary is advertising Citizenship by Investment as a means of attracting investment in his Mt. Cinnamon Resort and Private Beach Club.
Is Amb. deSavary pre-empting Parliament? Mt. Cinnamon’s CBI brochure advises that “the legislation was recently amended by the Parliament to reflect a clearer focus on citizenship by investment”.
It further advises, “The legislation is documented and is a part of the laws of Grenada having been passed by Parliament”. What legislation is the CBI brochure referring to? The Citizenship by Investment Bill, 2013 is due to be debated in the Parliament this month.
How can Amb. deSavary be advertising the sale of citizenship before the relevant bill has been debated in the Parliament? In what capacity is he acting since an Agent’s licence is to be issued under the Citizenship by Investment Act which has not yet been tabled?
Is it reasonable to conclude that the “green light” has already been given to Amb. deSavary, even before the “debate” has taken place? Is the debate merely “rubber stamping” the Bill? After all, there is no opposition in the Lower House and it should be noted that the Rt. Hon. Prime Minister has already given his endorsement with his welcome remarks which appears on page 5 of the brochure.
The following outlines some of the highlights of the CBI as advertised in the brochure and concerns/issues pertaining to this programme under which Amb. deSavary intends to expand his resort.
Peter deSavary came to town in 2006. An agreement in respect of Mt. Cinnamon development was signed in January 2007. He was “marketed” as a millionaire investor by then Minister of Finance, Anthony Boatswain. Now some six years after, Amb. deSavary has been made an Investment Ambassador and is resorting to selling Grenada’s citizenship to support the financing of his project!
2. Citizenship or Real Estate:
What is Amb. deSavary selling? Is he selling citizenship or is he selling real estate? According to the brochure, the minimum investment required will be US$1m. which will include a one-room bedroom apartment at Mt. Cinnamon and two citizenships (the primary applicants) to be used either for the investor and spouse or the investor and a bona fide business partner.
3. Application for Investment/Citizenship:
The brochure describes the application process as an efficient and uncomplicated process. It outlines the following application and escrow procedure. “Full and detailed documentation” in respect of the following is required:
*Application Form: A completed application form with Know Your Client information.
*References: Two references – one from the applicant’s banker and the other from an accountant, lawyer or financial advisor.
*Current Passport: Certified copy of current passport
*Criminal Record: A sworn affidavit declaring that there is no criminal record in any country
*Declaration of Health: A Declaration of Health confirming that there is no communicable diseases
*Source of Funds: Proof of bona fide source of funds
3.1. Escrow Procedure: Agreement and Escrow Agent: The applicant is required to sign the escrow agreement and deposit with the escrow agent the full value of the CBI contract.
*Minimum Amount: The minimum amount is US$1m. There is no maximum amount.
*Non refundable: Should any document be found to be fraudulent, citizenship will be withdrawn and all fees and expenses be non refundable.
*Release of Funds from Escrow Account: The escrow agent is authorized and obliged to release funds as follows:
*10 % on Application to the Government: Ten percent on submission of the application to government. To whom is this amount released?
*40 % on Issuance of the Citizenship and Passport: To whom is this 40 % released?
*25 % once relevant real estate structure reaches dry stage – to whom is this amount released?
*25 % when real estate structure is complete – to whom is this amount released?
3.2. Due Dilligence and Regulation:
*Conduct of Due Diligence: How is due diligence to be conducted? Who is responsible for conducting due diligence?
*To Whom Are Funds Released: It is noted that the full amount of the CBI is required to be deposited with the escrow agent before application has been processed. To whom is the 40 percent released upon issuance of the passport? What happens to the funds if an applicant is not accepted?
*Use of Funds: How will the use of funds be monitored?
4. Veritas Legal and Conflict of Interests:
How can the spouse of the Minister of Foreign Affairs and International Business be recommended as the legal representative for this programme (Ref. page 28)? Whatever happened to “conflict of interests” ?
According to the brochure, Veritas Legal has agreed to a fixed fee for representing clients of Mt. Cinnamon. This is also more shocking given that proposed representative has also been a member of Grenada’s Integrity Commission. (It is unclear whether or not the Commission has been reconstituted or whether there has been any resignations.)
4. No Conditions Required:
It is also noted that there are no conditions to be met by the applicant in respect of the following:
*Presence in the Country, ref. pg. 39: An applicant does not have to visit Grenada during the application process.
*Other Citizenships: It is not necessary to renounce other citizenships.
Delivery of Passport: There is no need to visit Grenada to collect passport. Veritas Legal will courier it to the applicant.
*Renewal of Passport: Citizens are entitled to passport and cannot be denied renewal.
*Citizenship and Residence: You do not have to live in Grenada to be a citizen of Grenada. An address in Grenada is not required for passport renewal.
*Citizenship for Life: Do I need to renounce citizenship if I sell my residence? According to the brochure, “Citizenship is yours for life
5.1. Recourse and Recall:
What recourse does Grenada have? How does Grenada recall the citizenship of persons who might be considered unsavoury and inimical to the image and interests of the country?
6. Tax Free Investment:
The brochure advises that the development at Mt. Cinnamon is supported by the Government and benefits from very favourable fiscal and practical concessions to ensure continued success as a tax-free investment.
*Income Tax and Capital Gains Taxes: Under the CBI programme, there is no tax liability in respect of income tax or capital gains taxes.
*Property Tax: Property tax is capped to a property value of EC$300,000. Tax payable will be about EC$600/US$225.
*Selling Property: A 5-year holding period is required.
*Restrictions and Exchange Controls: There are no exchange controls and no other restrictions on the inward or outward transfer of US dollars. Investments are made and realised in US currency.
6.1. Sustained Revenue over the Long Term:
How does the country earn sustained long term revenue from this programme given the overly generous tax concessions to Mt. Cinnamon over a 25 year period?
7. Management of Property:
In addition to benefiting from investment funds via the sale of Grenada’s Citizenship, Mt. Cinnamon Resort and Private Beach Club is also expected to benefit from annual management fees to be paid by the property owners who purchase via the CBI programme.
*Rental Pool: The property must be in the rental programme. The owner of property will receive significant discounts on the rental rates at the time.
*Management Fees: Annual Management and maintenance fees are payable. These fees are expected to be covered by rental income.
The following make up the management fees, identified in the Operating Pro-forma, ref. pg.34:
*Operator Base Fees
*Operator Incentive Fees
*Rental Owners’ Fees
*Rental Owners Incentive Fees
8. Stand-by Cash Facility, ref. pg. 34:
*Stand by Cash Facility: A standby cash facility of up to US$5 million will be established by the resort owners in the event of any operating cash flow shortfalls.
*Fund Balance at the end of 3 years: Any balance in the fund at the end of 3 years will be returned to the resort owners.
9. Whose Interests?:
Citizens in Defence of Grenada’s Lands and Heritage does not support the selling of our country’s citizenship. The CBI as espoused by Ambassador deSavary is undoubtedly beneficial to HIS interests and will undoubtedly be a “cash cow” to the Mt. Cinnamon Resort and Private Beach Club. However, the long term benefits to the bona fide Grenadian citizen are very unclear.
It is the considered opinion of the Citizens grouping that the Citizenship by Investment programme cheapens the country’s citizenship and puts at risk the credibility and image of the country as happened under the previous ill-fated economic citizenship programme.
(The above was submitted by Citizens in Defence of Grenada’s Lands and Heritage)