St Kitts and Nevis under pressure as CEO of unit Les Khan fails to effectively discipline offending agents

Last month, scandal hit St Kitts and Nevis as several International Marketing Agents, sub-agents, and developers were found to have been promoting economic citizenship of the Federation for prices far below those required by law. Abuse was found amongst those encouraging applicants to invest in the real estate branch of the Citizenship by Investment Programme, with some agents and developers allegedly going as far as forging Sustainable Growth Fund (SGF) approval letters to appropriate the difference between the SGF contribution amount and the purported real estate investment amount.

The real estate thresholds – at US$400,000 for a single application or US$200,000 for a joint application – are inscribed in the regulations that govern St Kitts and Nevis’ Programme, and are set to ensure that the citizens of St Kitts and Nevis benefit from adequate investment in the Federation’s real estate sector.

In reaction to the news, Dwyer Astaphan, a local attorney and former Cabinet minister, decried the matter as an “an affront to public conscience” and a “blatant and brazen breach of the law.” “Most of the money goes to the developer and the agent and we as a country are left with nothing,” he further noted.

Given the magnitude of this breach of trust, and of the law, on the part of agents and developers, one might expect a robust response on the part of the Government and Citizenship by Investment Unit. Yet, to the surprise of many, there has been reticence to chastise the culprits, as exemplified by the largely toothless a notice issued on 10 December by the Unit’s CEO, Mr Les Khan.

The notice, purportedly intended to discourage unsanctioned promotional activity, directs agents to “ensure that there are no advertisements on paper, or social media, that suggest Government-sanctioned discounts and pricing” and not to use imagery of the Federation (or of its passport) other than to promote Government-approved investment options. It then warns that contravention of these directives “could” lead to an immediate suspension of application submissions and to the agent being blacklisted on the Unit’s website. It further states that agents who modify Government-issued letters and provide documentation for one citizenship option instead of another “may” face sanctions. The language of the letter, therefore, is ineffective and largely permissive – the offender “could” or “may” face penalties – but it is possible that he will not.

Charles Wilkin QC, another attorney local to St Kitts and Nevis, proposed a more forceful response: “After due investigation, the government should withdraw the [citizenship by investment] designation and all fiscal incentives granted to any developer who is found to have abused the programme.”

Mark Brown, a former Nevis school teacher, ascribes the recent scandal, and the Government’s failure to take adequate action, to a lack of strong leadership. “Mr Khan became the Head of our Unit after his previous employer, IPSA International, was hired to review and improve the Programme. He had no previous experience managing a Government institution – and certainly not one as important to a country as the Unit is to our own,” he said. “It is unsurprising that he should be unable to face these challenges. Look at the notice he has issued: he tells agents to tackle ‘advertisements’ but not the actual sale of citizenship. Are we to understand that agents are allowed to undersell our citizenship as long as they do it quietly?”

Brown is not, he says, a critic of citizenship by investment in general, or of the real estate arm of citizenship by investment programmes. “All that an economic citizenship programme requires is good governance. In Dominica, over the past three years, the Government has used revenue from the Programme to rebuild homes and infrastructure, and it is now doing so in line with a vision for future sustainability and climate resilience. Skerrit’s Dominica is one that has seen improvement in real estate and in housing for the vulnerable – in ways that St Kitts and Nevis has not.”

This week, Dominica made headlines as families displaced by Tropical Storm Erika were given 38 new homes fully financed by its Citizenship by Investment Programme. The housing project is expected to generate a total of 340 homes in Bellevue Chopin, with most houses being completed by March 2019.