Abolishing the Tier 1 investor visa route that enabled overseas investment into the UK could be “enormously damaging”, lawyers in London who have helped global investors in applying for the ‘golden visas’ have warned.
Calculations suggest that the ‘golden visa’ route has so far brought over £17bn to the UK. This move will jeopardize foreign investments within the UK economy, misleading people into believing that ‘foreign money is dirty money’.
The UK Home Office has scrapped the Golden Visa route, as they believe it failed to deliver for the UK people, instead of giving opportunities for corrupt elites to access the UK. The route It had been under constant review and some cases had given rise to security concerns, including people acquiring their wealth illegitimately and being associated with wider corruption.
It is paradoxical to blame the visa route as one of the primary causes for rising corruption in the UK when the Prime Minister himself is under scrutiny to reveal the source of money for his flat renovation and questions over the distribution of public sector contracts during Covid-19 remain unanswered. It has been reported that UK exported thousands of tonnes of banned pesticides in 2020, with shipments including a wider range of toxic substances than ever previously revealed, a new Unearthed and Public Eye investigation has found.
A hasty decision amid conflict?
The decision by the Home Office comes amid the ongoing tensions between UK and Russia relations, citing which the route for investors has been closed.
On Tuesday, UK Prime Minister Boris Johnson denounced Russian President Vladimir Putin's decision of recognising the independence of rebel Ukrainian territories as "a flagrant violation of the sovereignty and integrity of Ukraine". He further called it a "very robust package of sanctions" that would be triggered "with the first toecap of a Russian incursion or Russian invasion".
In response to this development, the UK ordered sanctions on five Russian banks and three billionaires, under Prime Minister Boris Johnson’s so-called "first barrage" of measures in response to Putin’s take on the crisis.
Hours after Russia ordered troops into two Moscow-backed Ukrainian rebel regions, the British prime minister described this move as "a renewed invasion" of its western neighbour and "pretext for a full-scale offensive".
"The UK and our allies will begin to impose the sanctions on Russia that we have already prepared to sanction Russian individuals and entities of strategic importance to the Kremlin," Boris Johnson said.
Home Secretary Priti Patel said, “I have zero tolerance for abuse of our immigration system. Under my New Plan for Immigration, I want to ensure the British people have confidence in the system, including stopping corrupt elites who threaten our national security and push dirty money around our cities. Closing this route is just the start of our renewed crackdown on fraud and illicit finance. We will be publishing a fraud action plan, while the forthcoming Economic Crime Bill will crack down on people abusing our financial institutions and better protect the taxpayer.”
It is important to note that it was because of the UK investor visa that Nirav Modi, an Indian businessman and fugitive who was charged by Interpol and the government of India for criminal conspiracy, was able to seek refuge in England by tricking Indian agencies.
However, this completely neglects the fact that this visa route allowed foreign nationals to invest more than £2million ($2.7 million) and the cancellation of the route is being deciphered as the government’s attempt to curb the influence of Russian money.
For instance, the owners of some of the largest football clubs in the UK are not British. Chelsea Football Club is co-owned by Russia, Israel and Portugal, and Manchester City Football Club is owned by UAE.
This visa has facilitated nearly 254 Indian millionaires to settle in the UK since 2008. Closing it as a response to one country’s wrongdoings may end up being a costly affair for UK’s own investor economy.
However, Asian Voice reached out to members of the FinTech industry, who may have benefitted from this visa route from within the ethnic minority community in the UK to understand the impact and consequences of the cancellation of the route.
Expert opinions vary
Indians ranked as the 7th nationality of the super-rich to have availed this visa between 2008 to 2020, UK-based anti-corruption charity Transparency International UK revealed in a report. China (4,106), Russia (2,526), Hong Kong (692), the United States (685), Pakistan (283) and Kazakhstan (278) were ahead of India.
In an October 2015 report, Transparency International UK said, “it is highly likely that substantial amounts of corrupt wealth stolen from China and Russia have been laundered into the UK through the UK’s golden visa programme”.
A report in Indian Express said that between June 2009 to April 2015 about 3000 successful applicants got to stay in the UK under this visa and out of these 700 were Russian millionaires.
Statistics suggest that the UK granted more than 12,000 golden visas since the launch of the investor visa scheme in 2008, which also included more than 2,500 Russians. Chetal Patel, a partner at law firm Bates Wells told The Guardian, “A blanket ban would be cutting off one’s nose to spite their face. Since the introduction of golden visas in 2008, the UK has benefited from billions of pounds of investment. It would be enormously damaging to the UK economy if this was to be cut off.”
On the contrary, Immigration Lawyer Shoaib M Khan told Asian Voice, “While this sudden announcement by the government is concerning in many ways, it should not be particularly worrying for many people who want to invest or work in the UK. The government has done what it often does - impose a blanket ban on any activity as soon as it sees a problem arises, but there are other avenues that people wishing to work or invest in the UK can explore.” According to Khan, the most common, and perhaps easiest, is a Tier 2 visa, essentially a 'work permit' which allows the individual to work for a particular employer who sponsors them.
“The 'Golden Visa' or Investor category that has closed down required investment of millions of pounds so was rarely used anyway. Other categories for people wishing to work in the UK, such as the Skilled Worker visa, Health and Care Worker visa, Innovator Visa, Start-up visa, and Entrepreneur visa are all still open. These all have their own requirements, and applications can still be made from overseas and from within the UK, whether someone already has an employer in place or not. So people should not be put off by this announcement, as the routes used by most workers are all still in place,” the immigration lawyer added.
Fin-Tech founders think UK Government has something better planned
In a joint statement, Nayan Gala and Gaurav Singh, Co-Founders of JPIN Venture Catalysts Ltd. (a firm that offers to blend financial capital and strategic consulting) told us, “The UK’s attractiveness as a great stable ecosystem and investment destination has proved resilient amid the pandemic and post-Brexit phase with the FDI reportedly increasing by $24.8Bn in September 2021.
“The Tier 1 Investor visa ‘golden route’ was a popular investment option for high-net-worth individuals looking to migrate, but we are certain that the UK Government has something better planned along with the Innovator Visa, Global Talent Visa, and Scale-Up Visa schemes for the UK to retain its attractiveness.”
It has to be reformed to protect the economy
Speaking to the newsweekly about the cancellation of the Golden Visa route, Aaditya Rathod, Co-Founder, The Canny Co. Canny (a B2B global payments marketplace that helps any Bank or Fintech, to launch cross border payments in any part of the world and monetise their user base with just a few lines of code) said, “Golden Visa has attracted many investors since the scheme was launched in 2008, and it was very much in favour for start-ups/businesses to attract potential investors. It definitely has to be reformed to protect the economy from fraud and illicit money, but a blanket ban will completely cut off the interest from the true potential investors who can contribute substantially to both the start-up ecosystem and to the economy per se. Instead of a blanket ban, reform is needed with more tightened measures/checks, like imposing conditions with investment strategy and its execution. Also holding firms, taking investment, responsible for doing proper checks on both investors and the source of funds."
Reviving it later may have some benefits
Sid Chakravarthy, Founder & CEO, StaTwig [a blockchain start-up that uses the Internet of Things (IoT) to record the journey of the products across the supply chain from manufacturer to customer to create an extra layer of visibility, transparency and authenticity] supports the ban on the golden route. He told us, "Misuse of Investor Visa or any other immigration policy is a genuine concern and as a member of start-up community I support its current ban. However, reviving it later with more controls in place to prevent any fraud can help more investors to support start-ups and businesses in the future."
