In central Skopje, next to a former cinema, there is a hair salon called ‘Charm’.
Modest in size and able to serve only a few customers at a time, Charm was opened in 2019 by a US citizen and resident of the Pacific island of Saipan called Shawn Andre Scott.
The year before, Scott had founded a company in the city, capital of North Macedonia, and transferred 405,000 euros in founding capital from Hawaii. He hired 13 people to staff the salon. And in return, the government of North Macedonia gave him a passport, publishing the decision in the minutes of its June 22, 2021 session.
Under Macedonian law, the government can grant citizenship to anyone willing to invest at least 400,000 euros and employ at least 10 people for a minimum of one year. The finance ministry must judge the investment to be of interest to the country. But was Charm really that interesting?
Some 18 months after receiving citizenship, Scott withdrew 80,000 euros of his original investment, citing reduced business and staff layoffs. Today, the salon is run by a different company; Scott has disappeared; and his company, Best Trading Company, has, on paper, only one employee. The company is managed by a person called Kyhong Peng of Cambodia.
“He’s definitely not in North Macedonia,” said a Skopje lawyer who worked previously with Scott and asked not to be named. But he still has a Macedonian passport. And a Bulgarian one. The question is why, and, given two decades of US media coverage of Scott’s controversial business dealings, how?
‘Trail of lawsuits and allegations’
Scott, 57, is a US citizen, but, according to media reports, left for the Virgin Islands and is now reportedly based in the Northern Mariana Islands, of which Saipan is the largest. From there, he manages two companies – Bridge Capital, which deals in the sale of real estate, and Angkor Capital Specialized Bank based in Cambodia, which provides loans for the purchase of real estate.
In 1994, Scott surfaced in the world of gambling, opening a casino with a limited licence in a suburb of Las Vegas; a few years later, he applied for a permanent licence but changed his mind when the US regulator opened an investigation into his accounting practices. Scott sold the firm.
A decade later, he was attracting the interest of US media.
Describing Scott as a “wealthy young entrepreneur”, in June 2004 The Washington Post reported that he was behind a drive to legalise slot machines in the US capital despite having been denied or failed to obtain gambling licences in five US states after regulators found evidence of “financial mismanagement, irregular accounting practices and hidden partnerships.”
Again, in 2017, Portland Press Herald reported on a bid by Scott, with his sister, to build a casino in the state of Maine. It said numerous investments by Scott across the country, mostly in casinos, had “left a trail of lawsuits and allegations of deceptive practices” but that he had emerged from each of them “mostly unscathed”.
At one point, the newspaper reported, Scott had as many as 140 firms registered in gambling, hospitality, and horse racing. His modus operandi was well established – Scott would buy abandoned buildings, obtain a casino licence, and ‘flip’ them for a profit as soon as investigators began digging into his past.
By 2022, his name was in Bulgarian media, which revealed that in 2017 he had received a Bulgarian passport for investing in the country, just like in neighbouring North Macedonia.
Scott is one of two investors in a promised business complex – featuring a hotel, restaurant, spa, and shopping mall – in the immediate vicinity of Bulgaria’s Kapitan Andreevo border crossing with Turkey. The announced complex is still being built.
Why might someone need so many passports? Often, the answer is “to launder money”, a financial crime investigator told BIRN on condition of anonymity.
BIRN has no evidence that Scott has committed a crime. But so-called ‘golden passport’ schemes have long been flagged as vulnerable to abuse by people looking to evade the law and move the proceeds of crime. Multiple citizenships mean multiple ID numbers, making it more difficult for investigators to trace money being deposited in multiple countries.
“In such cases, it is very difficult to ask for help from colleagues from other countries because the work is extensive,” the source said. “So if they do not have their own interest, they are not interested in entering the investigation.”
More passports also mean more options in the event of an extradition request since not all countries have agreements between themselves to hand over their nationals.
A money laundering expert, who also asked to remain anonymous, told BIRN: “It’s strange that someone with an American passport, to whom almost all borders are open, would take a Macedonian passport. It’s not exactly a highly regarded travel document in the world.”
Little official scrutiny
The so-called ‘golden passport’ scheme was introduced in North Macedonia in 2012, under the right-wing government of Nikola Gruevski, who fled a corruption conviction in 2018 and was granted political asylum in Hungary. The then opposition Social Democrats criticised the move, yet since they took power in 2017 a further 51 passports have been issued to investors on the basis of ‘economic interest’.
Illustration: Pexels.
Under Macedonian law, the finance ministry should make an assessment of whether a foreign investor should be granted citizenship on the basis of state interest.
But the Law on the Prevention of Money Laundering and Financing of Terrorism leaves it to commercial banks to decide whether to check the money that flows through them from abroad into the founding stake of a company created by a foreign investor, in this case Scott. That money can then be withdrawn and spent whenever needed.
“It happens that banks do not report suspicious transactions because they calculate that it pays off even if they have to pay the fine, which amounts to between 80,000 and 120,000 euros,” a second source involved in investigating financial crime told BIRN, also speaking on condition of anonymity.
The country’s central bank, which is in charge of supervising commercial banks, said it only alerts the Financial Intelligence Office, an independent state body, if in its regular supervision of a bank it finds evidence of possible money laundering.
The Financial Intelligence Office said that in the “previous period” it had not received any complaints from the National Bank regarding the founding capital of such companies. It did not specify what period.
BIRN repeatedly contacted the Ministry of Finance to ask about its position via-a-vis Scott’s citizenship but it did not respond by the time of publication.
In Serbia, passports for Russians
Montenegro operates a similar golden citizenship scheme, but, under pressure from the European Union and stung by previous scandals, it has not issued a single such passport this year.
Eyebrows were first raised in 2009, when the government of then Prime Minister Milo Djukanovic, granted a passport to Thaksin Shinawatra, the former Thai prime minister who was ousted in a 2006 military coup and later sentenced in absentia to two years in prison for corruption and abuse of office. Djukanovic said Shinawatra had earned the passport because of his announced investment in tourism.
Passport of the Republic of Serbia. Photo: BIRN
According to official data, so far 651 foreign citizens – most of them from Russia and China – have received Montenegrin passports after buying apartments in coastal and mountain towns or donating money to underdeveloped areas. The government says the scheme has reaped 300 million euros of investment.
Shinawatra’s sister, Yingluck, received a passport from Montenegro’s neighbour, Serbia, media reported in 2019. Yingluck Shinawatra followed in her brother’s footsteps by serving as prime minister of Thailand in 2011-2014 but was ousted after the Constitutional Court ruled she had abused her office in the removal of a national security official.
Serbian President Aleksandar Vucic defended the decision to give her a passport, saying: “I don’t see that it’s any problem for us, especially if the government sees economic or other benefits for us.”
The Serbian scheme operates under the Law on Citizenship, which states that a foreigner can obtain Serbian citizenship if it is deemed in the interest of the state. While the government’s decisions on citizenship are published in the Official Gazette, they do not elaborate on the reasoning.
Between 2010 and 2015, on average between five and 13 passports were issued in this manner each year, mainly to sportsmen and women playing for Serbian teams, artists, political figures, CEOs of international banks and investors.
The numbers began to grow as of 2016, as did the range of people receiving such passports. While some were public figures, many were not, and it remains unclear what particular interest Serbia had in giving them passports.
In 2022, the year Russia invaded Ukraine, Serbia issued a record number of decisions awarding passports based on ‘special interest’ – 64 for the year. The actual number of passports issued is certainly higher given that an individual case can involve several members of one family. Тhis year, the government adopted 70 such decisions. Most have gone to Russians.
Nemanja Nenadic, a program director of Transparency International Serbia, said that, except for cases involving famous sports figures or other public figures, the Serbian public is unable to judge whether the state derives any real benefit from granting citizenship to a particular individual.
“In the absence of this information, it is entirely possible for a person to get citizenship without it being in the interest of the Republic of Serbia, but rather it is in the financial interest of those who propose such decisions,” Nenadic told BIRN.
Albania has been trying to introduce its own scheme for years but has faced resistance from the EU, which Tirana wants to join.
The scheme has been linked to a controversial development project in the port of Durres, where the government proposes to give Albanian passports to foreigners who purchase apartments. The EU warned that such a proposal, if passed, would jeopardise the free movement of Albania citizens within the bloc.
Transparency International says that such passport or visa schemes “do not serve genuine investment or migration but corrupt interests”.
But while the likes of Bulgaria, Portugal and Ireland have scrapped their own versions, the practice continues in EU members Spain, Greece, Italy, Malta and Cyprus.
In 2019, the European Commission acknowledged that golden passports and visas carry the risk of corruption and money laundering, and in 2022 the European Parliament adopted a package of anti-money laundering measures including a ban on the sale of golden passports and the inclusion of strict mandatory checks for obtaining golden visas.
Source : Balkans Insight
