In PART I of this series of articles on the Citizenship-b-Investment(CBI) Ponzi-like and potentially international money laundering and terrorist funding scheme, we examined the elements of the program that may be facilitating more corruption in our national governance than legitimately promoting investment geared towards the growth of our economy to the benefit of the citizens of the country.
We reviewed the main elements of the CBI scheme as operated in Dominica i.e., the Economic Diversification Fund (EDF), the Real Estate Option, and the questionable MMCE Housing Option. The EDF has been a major component of the national capital mobilization port (not an investment as is said to be the case with the Real Estate Option). That ‘contribution forms part of and is reported in the Consolidated Fund of the country and goes towards improving projects in the public and private sector. Such funds are NOTconsidered as “Special purpose funds” under section 76 of the Constitution.
We also explored the Real Estate Investment Option, which involves the acquisition of a property interest in a government authorized property. A so-called ‘investor’ acquires/purchases our citizenship and the funds that are supposed to be earmarked for funding an approved government project is held in escrow between the government and the developer.
The opinion was expressed that the Real Estate Option functions as a typical Ponzi scheme. Under the scheme, the so-called investor can hold on to his/her ‘investment’ for at least three (3) years from the date that citizenship is granted after which, the ‘passport buyer/new Dominica citizen’ is able to re-sell his real estate interest, thereby recouping his original payment/investment while keeping his prized Dominican citizenship, which was the main objective of the so-called investment in the first place. For the government agent/developer and the government of Dominica, however, the objective is different. It is simply an opportunity to make more money from the resale of property interests– more money without any concern about the increase of persons holding Dominican citizenship in foreign lands and having equal rights of naïve Dominicans to vote, buy land and to do everything as a Dominican.
Although not specifically mentioned in any of the legal instruments reviewed the scandalous, enigmatic and unparliamentarily ‘sweetheart deal’ between the government of Dominica and the Montreal Management Consultants Est. (MMCE) – the Housing Option, was discussed. It was noted that although MMCE appears to be listed an authorized CBI agent to engage only in the EDF option, it is now proclaimed by the Prime Minister of Dominica as the leading revenue earner under Dominica’s CBI program. However, it still remains unclear under what legal Option this government favour CBI partner operates and what are the terms and conditions of the darling agreement with MMCE.
In PART II, the laws governing the CBI program were closely examined. The argument was advanced that the laws governing the CBI program of Dominica appear to be facilitating more political and financial corruption than generating legitimate economic investments.
It was noted that the official website of the Citizenship by Investment Unit (CBIU) of Dominica lists, two (2) recognized options under which an individual can obtain Dominican citizenship pursuant to the laws of Dominica specifically pursuant to Section 101 of our Constitution of Dominica, Sections 8 and 20 of the Citizenship Act of Dominica–Chapter 1:10 and Statutory Rules and Orders (Regulations), S.R.&O, No.37 of 2014. Section 101 of the Constitution, mandates the parliament of Dominica to allow the acquisition of Dominican citizenship by persons who are not eligible or who are no longer eligible to become citizens of Dominica. Pursuant to section 41 of the Constitution of Dominica gives parliament the power to make laws for peace, order, and good government, subject to the provisions of the Constitution. The Citizenship Act, therefore, addresses matters pertaining to the citizenship of Dominica including the governance of the acquisition of citizenship of the country and sets out the basic framework in sections 8, 9, and 20 to allow individuals who participate in the CBI scheme to be granted a naturalization certificate and to become citizens of the Commonwealth of Dominica.
We noted the unfortunate situation whereby unlike other Caribbean jurisdictions like Antigua and Barbuda, with an “affirmative resolution” clause in Section 15 (2) of its Citizenship Act, Chap.22 that provides, “Regulations made under this section shall, as soon as may be after they are made, be laid before each Chamber of the Legislature, and if either Chamber, resolves that any of those regulations shall be annulled, that regulation is void as from the date of the resolution, but without prejudice to the validity of anything done thereunder or to the making of a new regulation”, the parliament in Dominica has less oversight over actions proposed by the Cabinet/Minister responsible for Citizenship to regulate our citizenship as our Citizenship Act contains a “negative resolution” clause that has been unduly manipulated by the DLP Administration in a clever act of legal engineering.
Whereas section 20 (1) of our Citizenship Act gives the Minister discretionary authority to make regulations for the carrying out activities under the Act or of Chapter VII of the Constitution of Dominica, of much greater significance is section 20 (2) of the Act, which provides, that “regulation made under this section shall be subject to ‘negative resolution of the House.” This means that the S.R.&O No.37 of 2014 automatically became law without the involvement or oversight of parliament. This procedure vests wide discretionary authority in the Minister responsible for citizenship in Dominica to make regulations and rules pertaining to the status of our citizenship, albeit within reason as all discretionary powers, especially when exercised unreasonably without the direct oversight of our parliament is subject to judicial review. To reverse such secondary legislation, a motion to annul would have had to be tabled and passed in parliament, which was unrealistic in Dominica with a 15+ majority in parliament.
Consequently, S.R &O No. 37 of 2014 was quietly promulgated under the signature of the Minister responsible for Citizenship at the time, Hon. Alvin Bernard in accordance with his authority under Section 20 of the Citizenship Act of Dominica. Section 3 of the said S.R&O established the Citizenship by Investment Unit (CIBU) with responsibility for administering.
In PART III, we examined the many allegations over the last 6 or so years, mainly by the Opposition, United Workers Party (UWP) both in and out of our parliament. The Opposition has complained that $Billions of revenues from the CBI program remain unaccounted for in the Consolidated Fund of Dominica based on the argument that all revenues generated from the sale of our citizenship (a commodity of the State) ought to be credited and managed via the Consolidated Fund and deemed “public funds” for the purposes of sections 13-17 of the Finance Administration Act and section 34 as amended and section 83 of the Constitution of Dominica pertaining to the responsibilities of the Director of Audit.
In addressing the concern raised with respect to the legal authority under which the monies raised or received from the CBI program but kept out of the Consolidated Fund, we acknowledged section 76 of the Constitution of Dominica authorizes such action. It states that all revenues or other monies raised or received by Dominica under any law for which a ‘special fund’ is established for a ‘specific purpose,’ such funds are not considered to be public money and therefore do not have to be paid into and form part of a Consolidated Fund.
Therefore, since such monies are not public funds they may be deposited into an escrow account and held in trust for the specific purpose of financing earmarked projects. Furthermore, these funds are not subject to the oversight mandate of the Director of Audit pursuant to his authority under section 83 of the Constitution-although the funds should be as they are actually generated from the sale of our citizenship. We, therefore, concluded that where the government has established any ‘special purpose fund’ pursuant to any law such as the secondary legislation- S.R&O No.37 pursuant to the Citizenship Act of Dominica, there is nothing illegal about the diversion of funds generated under the CBI program to special purpose into an escrow account outside of the Consolidated fund.
In Part IV of this series, we shall opine on the issue of the legal ownership of property funded from revenues generated from the CBI scheme with a focus on the Real Estate and MMCE Housing Options, with the understanding that all revenues from the EDF options (both contribution and fees) are credited to the Consolidated Fund and are deemed public funds, in which case there is no question about the legal status of any project or property funded from these funds. These assets are the property of the state. In that regard, the government may dispose of these properties via sale (Fair Market or/Nominal value), transfer of ownership, gifting/donation title or rent/lease the said properties as the legal owner.
To better inform our opinion, we remain mindful that at the time when the Constitution of the Commonwealth of Dominica was drafted and came into effect in 1978, there could not have been any contemplation of having a “special purpose accounts” set up separate from the Consolidated Fund of the country specifically for the sale of Dominican citizenship-and definitely not on the grand international scale as has been exploited over the last few years under a corruptly tainted CBI program, which is by far the largest revenue generator of the country.
By operation of law, the funds held in an escrow account under the CBI program jointly with the government and the agent/developer of a project are held on behalf of the so-called investors (passport purchasers). The funds collected by the agent/developers- minus government fees, which are paid into the Consolidated Fund for the construction of the project being under the Real Estate Option or supposedly housing under the MMCE Housing option. These funds are not public funds. They are not government funds. Hence, the government interest in any property financed via these CBI options cannot be 100% legal interest, irrespective of the terms and conditions of any ‘sweetheart deal’ that may exist. They are only government-approved projects in which the government has a partial equitable interest and new investors may repeatedly invest as existing investors divest after 3-5 years, while keeping their sacred, cherish and highly valued Dominican citizenship.
This, therefore, raises serious questions with regard to the ability of the government of Dominica to fulfill its promise to homeowners of a title to houses funded through the MMCE Housing Option. In September 2018, the DLP Government signed a secret multi-million dollar, no-bid ‘sweetheart contract’ with the foreign company of choice-MMCE for the construction of the first batch of residential units across the island as part of the government’s Housing Revolution. It was said that the large scale project was entirely financed by the CBI Program.
If, in fact, MMCE generates its revenues under the Real Estate Option of the CBI program, and the funds are escrowed pursuant to section 76 of the Constitution, any property that is constructed from these funds (hotels, health center, hospitals, houses and God forbid International airport), the legal ownership must be scrutinized with great suspicion as the ability of the government of Dominica to transfer the legal title would be questionable. However, we are advised by PM Skerrit, as party of the “tricky” sweetheart arrangement with MMCE, the company constructs houses, health and wellness centers etc., utilizing its own funds and is reimbursed thereafter for work completed from monies that the same company generates from the sale of Dominican citizenship. A very dubious, peculiar, and strange arrangement!
This is dissimilar to the case where houses are constructed from grant funding provided by a friendly government like People’s Republic of China or through loan funding from an international institution such as the World Bank-funded Housing Recovery Project, for example, the 221 new homes as part of the so-called Housing Revolution. One notes that according to the Prime Minister and Minister of CBI Housing, His Senior Minister for Other Housing
and other cabinet officials as Mr. Petter Saint Jean reminded those present at a pre-2019 general election handing-over ceremony that the residential properties are presented to homeowners at no cost to them and “the new homes come as a gift; paid for in full, without any charge by the Government of the Commonwealth of Dominica, the Dominica Labour Party (DLP) Administrations and friends, paid for by the CBI Program.”
PM Skerrit confirmed to the recipients that they shall have full ownership of their units. He stated,
“There are people who will come and say well we are giving you apartments, but we won’t give you titles. I will tell you, and I will report to the country that I have instructed the Attorney General, and he has put that in place. We have a State Attorney that will be solely responsible for doing all of the legal preparatory works to ensure that people who receive homes from the Government get a Certificate of Title in their names,”
In fact, while addressing a town hall meeting in New York on 22 June 2019, PM Skerrit explained,
“The majority of the people who are receiving homes will in fact get a title to these homes but there will be certain conditions placed on that and there will be some who will have lifetime access to their homes and if they were to pass on, the homes will revert to government ownership so we can pass it onto somebody else….So, in case we have, for example, a couple in their 80’s or 70’s, who the government has given a home…that couple will have access to that home up until their death and that home will revert to the government so we could pass it to somebody else but the majority of people will have actual titles. Our laws also make provision or it allows for the granting of strata titles, so in a case where we have apartments, you can still have a title so you can use that as security in the bank and own your property and bequeath it to your children etc.,”
He further stated that homes will be given to persons who are the most vulnerable in society such as people who have stayed in the shelters for a long period of time, the elderly and families with children.
Over 2 years have now elapsed since these pre-election political pronouncements were made but no homeowner has to date received a Certificate of Titles, (Strata or non-Strata) for their free government house or apartment, for which they were given keys for their eternal enjoyment, never mind that they are all unemployed and depend on the government to maintain the property, pay their utility bills and to provide daily subsistence via the Red Clinic, NEP or Yes-We-care– the DLP way of promoting economic development and employment.