St Kitts and Nevis will revoke citizenship of applicants who underpaid for real estate

The Leader of the Opposition, former Prime Minister the Hon. Denzil Douglas has said that he will revoke the citizenship of any applicant who is found to have underpaid for St Kitts and Nevis’ Citizenship by Investment (CBI) Programme via the real estate investment route.

Last month, allegations of fraud surfaced regarding the real estate investment route of St Kitts and Nevis’ CBI Programme. The claims held that a number of agents and developers were undercutting the minimum price required for the real estate investment option, and instead were offering significantly lower rates not sanctioned by the Government. These discounts took the form of reduced prices, time-limited offers, and incentives in the form of “profit” made from the development, such as rental income. Under the Programme, any income made from the investment must be declared by applicants to the Citizenship by Investment Unit.

In response to the allegations, the Unit, headed by CEO Les Khan, issued a press release dated 28 November 2018, in which it reported having already identified and penalised two agents found to have been undercutting, and committed to investigate the matter further and take appropriate action. However, there has been growing criticism that Khan’s actions were not strong enough to effectively prevent these activities from reoccurring in the future and safeguard the integrity of the Programme. Despite several attempts by WIC News reporters, Khan has not responded to requests for his comments on the matter. The former Prime Minister, on the other hand, has promised strict action, resulting in severe consequences for applicants found to have benefitted from any mis-selling.

He has told WIC News that, upon re-election to office, his government will scrutinise and discipline applicants who applied via the real estate investment route and either did not pay the full amount or did not properly declare any returns made. He has assured that the government will examine all previously approved citizenship applications, including a review of how much the applicant paid, the method of payment used, if they received any return on the investment, and their source of funds. Critically, any applicant who is found to have breached CBI requirements will have his/her citizenship revoked by the St Kitts and Nevis authorities. Their actions will be treated as criminal, and they will be brought to justice under Federation law.

Investigation will also be made into the work of agents who promote the Programme and developers who assist in the construction of the properties. Those found in breach will too be liable under criminal law and be held responsible for their actions. Any Government persons or employees of the Unit implicated by these activities will also be brought to account.

Such commitments are far more rigorous than those that have been previously received from Les Khan. When asked about why he thought Khan has seemingly failed to take more effective action in response to the assertions, the former Prime Minister answered that it was due to a lack of experience. “Being in the role of CEO of the Unit is such an important position, requiring years of knowledge and practical experience. He [Les Khan] doesn’t have that much experience. The only real understanding of this industry he had before entering this post was serving as a compliance officer in my government, which he only did for a few years.”

Having a required minimum investment amount is important because it enables the government to ensure that citizens of the Federation benefit from sufficient investment in the nation’s real estate sector. The amount is stipulated in the St Kitts and Nevis regulations that govern the Programme and is made clear on the official CBI website.

Compliance with these regulations is vital to maintaining the high international standing the Programme currently enjoys. This includes compliance from agents, developers and, significantly, clients who apply for the Programme. As the comments from the Leader of the Opposition indicate, applicants themselves hold a responsibility to ensure that the investment they make is fair and compliant with St Kitts and Nevis law, and that they adequately declare any returns made from their investment. Not doing so not only may cost them their St Kittitian and Nevisian citizenship, but it harms the integrity of the country they seek to join. Proper and effective discipline enables all economic citizens to be treated fairly and applicants and local citizens alike to benefit from continued investment in the Federation’s thriving real estate sector. It is this equality and prosperity for all, he says, that motivates the former Prime Minister’s strong promises.