Golden Visa backlash

Chinese “lose confidence in Portugal” as SEF inspectors go-slow on Golden Visas

In the wake of Golden Visa corruption investigation “Operation Labyrinth”, SEF border control inspectors are reported to be biting back. Smarting under what they call the “cloak of suspicion” that fell on their department after boss Manuel Palos was arrested along with 11 others in November, the syndicate of SEF inspectors has issued a challenge to the government to “assume its political responsibilities once and for all”.

SEF director Manuel Palos repeatedly claimed when he was arrested that the fast-tracking of visas to wealthy Chinese, Angolans, Russians, Brazilians, South Africans and Libyans – which has brought over a billion euros flooding into Portugal since 2012 – was done “as a favour to those above” him.

Now, a communiqué sent to Diário de Notícias stresses that SEF’s inspectors will not accept to be treated as “scapegoats” in the investigation that still remains under wraps.

Using a careful choice of words, the text from the SEF inspectors syndicate said: “Until the “gold audit”, which takes up resources, analyses situations, looks into legalities but has concluded nothing, comes to an end, we are recommending that all our associates abstain from administrative acts that are not strictly related to their policing functions.”
A syndicate source told DN this effectively means “that the system of processing (golden) visas is going to be blocked”.

Already figures published in Público point to a marked slow-down. From October to December last year, the number of visas conceded dropped from 211 to 86. In January, it dropped even further to 78.

Observador website reports that before the scandal, golden visas were being issued at the rate of 180/200 per month. This has now dropped to more like 120/130, it claims.

But the story is being given short-shrift in business circles – with those dealing in property particularly saying they have seen no sign of a drop in Chinese interest.

Elsewhere, the Portuguese-Chinese Chamber of Commerce is also gung-ho, with figures to show that Portugal is the fourth country in Europe boasting the most Chinese investment. Last year, the chamber reports, Portugal trounced even Germany for attracting Chinese business. Only UK, France and Italy captured more.

“There is huge Chinese interest in Portugal,” say property brokers

While Observador affirms “Golden Visas stalled. Chinese say goodbye and turn to Spain”, the Resident has heard from Portuguese-based businesses dealing every day with foreign investment that “nothing could be further from the truth”.

“We haven’t felt any negative vibes at all,” Martin Date of Credential Partners International (CPI) told us.

CPI describes itself as “a company created to promote inward investment into Portugal via the benefits that now exist through Portugal’s Golden Visa Residence Programme” – and as Date explained, as far as he and his partners are concerned, “the programme is spot on. We have done a detailed analysis of residence permits available throughout Europe, and Portugal has got it right.

“The Chinese are an enormous economic power at the moment,” he added. “We certainly haven’t been aware of any changes in the issuing of golden visas and, in defence of SEF, we have always found them to be nothing less than helpful and very professional.”

Of the same opinion is Charles Roberts of Fine & Country luxury real estate brokers in Lisbon and Estoril – whose company was responsible for an estimated 10% of the golden visa market in 2014.

Roberts told us that golden visa applications are invariably processed within 60 days and that no go-slow will affect “the agents in China, Turkey, South Africa and the Middle East” channelling foreign investment towards Portugal.

Roberts put the programme into perspective, explaining that “99.9% of people issued golden visas won’t live in this country” anyway.

“This is just a piece of paper,” he said. “A Plan B for a rich person who lives in a country that is politically, religiously or economically unstable and who needs to know they can get on a plane if they have to and go somewhere else.

“We are talking about multi-millionaires who will game away the money they spent on a property the day after they bought it.”

Roberts has been selling property in Portugal for the last 30 years and told us that the “golden visa scheme is not in any way corrupt.

“On the contrary, it is superb. It is bringing money into the economy as well as people who may then start up their own large businesses.

“We have a Chinese client, for example, who is investing €100 million in a real estate business. He would never have done that but for the golden visa scheme,” he added.

The business activity cited by Fine & Country suggests there are different levels of Chinese investment. The disillusionment described by Observador centres much more on the lower end of the market – families who actually want their visas so that they can enter Portugal to live.

“There are Chinese who feel they have been let down by the State,” writes Observador. “They have bought a house and now they cannot come into the country.”

Interpreter Bao Hong, who acts as an intermediary for Chinese and Portuguese law firms, described how some people have been left waiting for visas for four months – which would suggest applications have indeed been held-up since the breaking of the scandal last November.

“There are Chinese giving up investment plans in Portugal,” writes Observador – claiming they are even considering selling their €500,000 homes and looking elsewhere.

A legal source who asked to remain anonymous as its firm has “a number of applications waiting at SEF” told the website that the issue is compounded by a “wall of silence” at the authority.

But president of SEF’s investigation and fiscalisation syndicate Acácio Pereira played down the issue, admitting that there was a “scarcity” of human resources, but that the falling numbers of visas being issued “could mean there has been a reduction in demand”.

In other words, it depends very much on what you read and who you listen to as to how you see the situation.

Certainly, Portugal’s golden visa ambassador Paulo Portas – whose mission it has been to plug Golden Visas for all they are worth since the inception of the scheme – insists that “any investment we miss, others will capture, and the positive consequences for the economy will benefit other countries instead of Portugal”.

But what is also true is that Canada dropped its golden visa programme as it simply did not have the resources to process all the applications.

The Canadian government said at the time: “There is little evidence that immigrant investors as a class are maintaining ties to Canada or making a positive economic contribution to the country.”

As Charles Roberts told us, one of the results of Canada’s scheme was “30,000 empty properties bought by Chinese”.

Will that become the case in Portugal? Only time will tell. But for now top-end property brokers are remaining positive.

As Martin Date said: “We all have a good story to tell about Portugal, and should do our best to promote it.”

By NATASHA DONN [email protected]

Photo: Deputy Prime Minister Paulo Portas, also known as the ambassador of the Golden Visa scheme, during the launch of the Portuguese-Chinese newspaper “Diário de Todos”, which focuses on economy and culture, on February 3, 2015 in Lisbon. Also pictured is the Chinese Ambassador to Portugal, Huang Songfu.