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Golden visas` are known to attract dirty money around the world. Why does Australia still offer them?

Source: ABC news, 08/10/2023

About 26,000 people have applied for a so-called 888 `golden visa` that grants residency to those investing between $5 and $15 million into Australia
For the agency charged with securing our frontiers and safeguarding social harmony, it`s an annus horribilis like no other. Australia`s controversial Department of Home Affairs is in crisis.
Thanks to dogged reporting by the press, the secretary of Home Affairs, Mike Pezzullo, has been suspended and his conduct is being investigated by Dennis Richardson, the former head of ASIO. Richardson is also examining allegations the department agreed contracts with figures in Nauru suspected of involvement in corruption.
Last month, the former commissioner of Victoria Police, Christine Nixon, found the Home Affairs visa system was being exploited by `criminal syndicates … involved in various serious criminal offending and activities for profit`.
There was some political motivation, but also much truth, when Home Affairs Minister Clare O`Neil recently inveighed passionately against the `rorts and loopholes that have plagued this system`.
A visa program for the super-wealthy
One rort, however, has not received public attention in the ongoing imbroglio, and that was the conception a decade ago of a bizarre and counter-productive visa program targeting the super-wealthy.
Thus far, a staggering 26,000 foreign nationals have been granted permanent access to Australia not because they were a great fit for the community and not because they brought with them much-needed skills or a dose of high culture. They were granted this precious gift simply because they were loaded.
Launched in 2012 by Chris Bowen, we were told the Business Innovation and Investment Visa would usher into the country a new font of working capital. The program required the investment of either $5 million or $15 million or the promise of great entrepreneurship and business activity, and it was branded the 888 Visa.
But rather than `triple fortune` (as the number promises in Chinese numerology), the 888 program was quickly exposed by the Productivity Commission as providing Australia a pitiful return.
All the way back in 2016, it found these significant investor visas may have actually crowded out other providers of venture capital; that, `perversely`, they may have brought people to Australia with `less business acumen` than would otherwise have arrived; and, overall, made a `trivial` impact, accounting for one-fifth of 1 per cent of total foreign investment. Hardly the `boost` Bowen had promised.
Perhaps most galling was the Commission`s discovery that tax concessions available under the program `could amount to the Australian community paying a small group of people to become permanent Australian residents … that is, Australian taxpayers would be effectively subsidising SIV applicants`.
`Golden visas` have been scrapped by most countries
At the time, the government said the introduction of golden visas as they`re known in the business was prudent; other attractive destinations were themselves seeking to lure the world`s high-rollers with similar schemes.
A decade on, Australia is now one of the few Western countries to still offer such a program.
Elsewhere, they have been terminated not just because they`re inefficient but also because they attract dirty money.
Britain`s golden visa arrangements were scrapped last year as part of a `crackdown on illicit finance and fraud`, in part because it was determined they had provided `opportunities for corrupt elites to access the UK`. Ten high-profile Russians who obtained such visas subsequently appeared on international sanctions lists after the Kremlin`s invasion of Ukraine.
In Portugal, meanwhile, half of all golden visa recipients have come from the 30 nations with the worst reputation for money laundering. Concerns that illicit funds made up a significant portion of the 5.8 billion euros ($9.7 billion) it garnered have now prompted its closure.
In Greece, 3 billion euros in offshore funds poured into real estate via its golden visa scheme (much of it from China), distorting Athens`s property market. One Greek cabinet minister had warned that `a lot of it comes from illegal activities … arms trade, smuggling or trafficking`.
Chinese money flooded Ireland through its special investor visa, now also shuttered. Earlier this year, the Irish police launched an investigation into intelligence that multiple Chinese investors had used the same pot of money to game the visa program.
Analysis from the ABC`s experts
Do 888 visas post a risk?
These risks are not unknown to Australian decision-makers. The same Productivity Commission inquiry included warnings that 888 visas carry with them the `potential for money laundering and other nefarious activities`. Surely similar advice has been provided to the government over the years since.
But we are none the wiser. Since their introduction, there has been almost no public accountability by Home Affairs for the effectiveness of the 888 visas. We have never been told how many were issued, nor to whom until now.
Extracted using Freedom of Information, the raw data is stunning, including the headline figure of 26,000 successful applicants. It shows that from its inception in 2012 until May of this year, more than 20,000 Chinese nationals, including those from Hong Kong and Macau, have been granted golden visas to live in Australia.
A path to Australian citizenship
It`s likely thousands of these visa recipients have since obtained Australian citizenship.
By contrast, the British scheme had granted only 2,500 golden visas to Russians over a 14-year period.
Here, China was by far the greatest source of applications, greatly overshadowing the remaining 6,000 or so that have been granted. Considerable numbers applied from Bangladesh (221), Iran (777), Malaysia (1,049) and Vietnam (1,321).
What is stark about the data is that so few applications were rejected �` at a rate of less than 2 per cent (522).
Last year, The Australian reported that not a single applicant from China for the $5 million investment visa had been rejected based on a character assessment.
I checked if that remained true of the entire 26,000 cohort, and it does. Home Affairs confirmed there has not been a single refusal of a 888 visa application under the good character provisions of the Migration Act.
And here is why. Section 501 provides for the denial or cancellation of a visa for those convicted of a serious crime. But what about the very many applicants who hail from the very many countries �` including China �` where bribery and corruption are significant features of the criminal justice system?
The act says an applicant can be blocked `if the minister reasonably suspects` they have been involved in certain criminal activity, from people smuggling to war crimes.
But that provision �` the ability to deny a visa on the basis of reasonable suspicion �` is profoundly silent on white-collar crime. It says nothing about money laundering or the proceeds of graft and corruption.
Just consider for a moment how many people, particularly from poor and developing nations, are sufficiently remunerated to be able to drop $15 million on a foreign visa.

Golden visas were most often granted to people from these five countries in 2018.(Supplied: Moelis)
Australia needs to wake up
My FOI also produced the tiniest sliver of insight into how rigorously Home Affairs has policed the program. Of the 26,000 applications, the department has opened only 11 investigations into the good character provision. The first was not launched until the seventh year of the program.
Clare ONeil has said publicly that the scheme is under review. Why it hasn`t been scrapped already is apparently tawdry internal Labor politics; how to do so without bringing a blush to the cheeks of Chris Bowen, now energy minister?
Over the past decade, the currents of dark money that circulate the globe have been, for the first time, exposed. At home, recent inquiries into the casino and gaming industries have revealed how vulnerable we are to industrial-scale money laundering and the criminal enterprises that fuel it.
Australia needs to ask itself: what money comes for free?

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