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Exposing foggy Caribbean business of Henley & Partners

Henley & Partners, St. Kitts and Nevis Sugar Industry Diversification Foundation, Belle Mont Farm, SIDF, Kittitian Hill

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Exposing foggy Caribbean business of Henley & Partners

“Citizenship planning” company Henley & Partners helped a bevy of high-risk clients gain citizenship in the Caribbean nation of St. Kitts and Nevis. It routed donations to a public fund that stopped operating after it made bad investments in two ventures linked to Henley’s chairman.

The Belle Mont Farm resort lies nestled in the foothills of a dormant volcano, surrounded by 400 acres of organic farmland and tropical forest in the Caribbean nation of St. Kitts and Nevis. Fruit trees hung with “pick me” signs flank “the world’s most edible golf course” and boutique cottages where guests can enjoy sweeping sea views for prices up to $875 per night.

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The getaway is located on fertile land once covered in sugar cane, so it’s fitting that Belle Monte was one of the first projects to receive funds from the St. Kitts and Nevis Sugar Industry Diversification Foundation, or SIDF, a bank-owned investment body set up in 2006 to move the island economy away from dependence on sugar. It was funded with money paid to St. Kitts by wealthy investors seeking citizenship, since a substantial cash donation to the SIDF qualified them for a passport.

Belle Mont Farm is part of Kittitian Hill, a tourism project that received over $7.9 million from the SIDF from 2010 to mid-2013 through its holding company, Belmont Resorts. The SIDF poured so much money into Belmont that it was its primary shareholder by 2010.

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But the investment was a failure. Although Kittitian Hill was envisioned as an array of hotels, villas, and restaurants due to open in 2013, all of it but Belle Mont Farm remained unfinished in 2020. The holding company fell into debt as the project repeatedly missed construction targets.

St. Kitts and Nevis Prime Minister Timothy Harris criticized the SIDF’s exposure to the failing project in 2016, and said the foundation was “never intended to be in the hotel business.” But it was not the foundation’s only misstep, and — despite some early promise — by 2014 its contributions to the economy were declining. Three years later, the government decided to stop allowing would-be citizens to make payments to SIDF in exchange for a passport.

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Now, an OCCRP investigation, in collaboration with the Daphne Caruana Galizia Foundation, has found company documents, internal emails, and contracts that reveal how two of the SIDF’s highest-profile investment failures both had ties to the chairman of Henley & Partners, the firm that relaunched and ran the country’s passport sales program. Henley was also central to the creation of the SIDF, which was set up along terms laid out in Henley’s contract with the government.

The ultimate losers were the people of St. Kitts and Nevis, who were supposed to benefit from a prosperous SIDF, though it is not clear to what extent Henley or Kälin were responsible for the failure of the fund.

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In a statement, Henley & Partners stressed that the company and Kälin had always “adhered to all laws and regulations applicable in all the jurisdictions they have ever operated in and currently operate.” The company said it had “driven significant financial and societal benefit” in St. Kitts and Nevis and across the Caribbean.

Describing itself as a “citizenship planning” firm, Henley touts itself as the global leader in “citizenship-by-investment” schemes, an industry worth a reported $25 billion each year. The firm has operated passport sale schemes in over 10 countries, including Malta, Montenegro, and several Caribbean nations.

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In St. Kitts and Nevis, selling passports has become an important source of revenue for the government. But the program has also caused headaches as regulators in the U.S. and Canada raised concerns over the sale of passports to potential criminals or sanctioned individuals. OCCRP found clients with such backgrounds among leaked Henley files.

Transparency advocates warn that corruption risks connected to passport sales schemes often outweigh the limited economic benefits.

“Golden visas and golden passports are a major backdoor for dirty money into any country,” said Susan Hawley, Executive Director of the U.K.-based nonprofit Spotlight on Corruption.

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“There is little evidence that they bring real tangible long-term investment into local economies, beyond occasional luxury consumption, and they are open to massive abuse by fraudsters, kleptocrats and organized criminals.”

Citizenship, for a Price

Known as the “Passport King,” Christian Kälin is considered the architect of the citizenship-by-investment programs that have allowed the world’s wealthiest to purchase passports in places like Cyprus and Malta.

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St. Kitts and Nevis launched its citizenship-by-investment program in 1984, but before Henley’s arrival in the country its impact was negligible: In 2005, St. Kitts and Nevis reportedly sold just six passports.

Then, in 2006, Henley signed a five-year contract with the country’s government that would give it a $20,000 fee for every successful applicant. To qualify for a passport, applicants could either donate to the SIDF or invest in real estate on the islands.

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Henley was given exclusive rights to market the SIDF-donation option for citizenship. Henley’s 2006 contract set out the donation requirements: $250,000 for an applicant with up to three dependants, $300,000 for up to five dependants, and $400,000 for six or more dependants, though these rates have varied over time. Internal documents show Henley also charged its clients large fees to handle these applications ranging from $35,000 to $70,000, depending on the size of the donation.

Under the terms of its agreement with the government, Henley didn’t have to pay taxes on these fees.

Former St. Kitts and Nevis Prime Minister Denzil Douglas, who brought Henley to the country, said the fees were partly based on Henley covering the costs of marketing the new program.

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In recent years abuse of these passport sale schemes has attracted media and regulatory attention. In 2020 the European Commission took legal action against Cyprus and Malta, which ran two of the most notorious citizenship programs, for “undermin[ing] the integrity of EU citizenship.” Henley ran the Malta scheme from 2013, but reportedly exited in 2020.

In March, members of the EU parliament called for a ban on the sale of passports by EU countries.

In Cyprus the program was abruptly shut down in 2020 after an undercover investigation by Al Jazeera exposed politicians helping to obtain a passport for a fictitious wealthy client with a criminal record. Last year an investigative committee set up by the Cypriot government found that more than half of the passports issued under the scheme were granted illegally.

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In keeping with this pattern, several Henley clients in the Caribbean — revealed in internal Henley documents obtained by OCCRP — had suspect backgrounds. They included a sanctioned businessman, a disgraced banker and sanctions evader, a figure linked to money laundering, several alleged fraudsters, and powerful political figures.

Maira Martini, an anti-money laundering expert at Transparency International, said criminals and other dubious characters might purchase a second passport “to evade sanctions, to gain access to the financial market, or even to go and hide, as we have seen in many corruption scandals.”

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Martini said the citizenship-by-investment industry is unregulated, so it’s critical for it to have a “serious vetting mechanism” to check applicants’ backgrounds. That responsibility ultimately lies with governments, she said, but firms operating these programs like Henley & Partners should be obliged to follow anti-corruption and anti-money laundering laws.

“They should be required to adhere to the same rules that apply for banks, real estate agents, lawyers and accountants in most countries,” said Martini. “This is not currently the case.”

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Henley said the “full due diligence and governance responsibility” on passport applicants lay with St. Kitts and Nevis, but also that the company “has an incredibly low number of problematic cases compared to the very large number of cases it has processed over the years.” The company said it and Kälin had always abided by all relevant laws and regulations.

“All applications were subject to rigorous due diligence…carried out by reputable international due diligence service providers” said former Prime Minister Denzil Douglas.

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Henley’s contract with the St. Kitts and Nevis government ended in August 2013, but abuse of the scheme it had been running did not go unnoticed. In May 2014, FinCEN in the U.S. alerted financial institutions that illicit actors, in particular Iranian nationals, were using the passport program “in order to mask their identity and geographic background for the purpose of evading U.S. or international sanctions or engaging in other financial crime.”

In November 2014, the Canadian government ended its visa-free agreement with St. Kitts and Nevis over concerns about “the issuance of passports and identity management practices” in the program.

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The FinCEN notice and the Canadian decision prompted a recall of passports, issued between 2010 and 2014, that omitted the place of birth or had not noted if the holder had changed their name.

Former Prime Minister Denzil Douglas said it had been Henley’s idea to remove the place of birth from passports, an allegation that Henley dismissed as “a false claim.”

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“When Henley & Partners advised the government to remove the place of birth from the passport it was given very serious consideration by the cabinet,” Douglas said in an email to OCCRP. “[W]e were assured that it was an important convenience for our citizenship applicants.”

Henley said the opposite was in fact the case: “We have repeatedly advised the government to refrain from this action, an advice that was sadly ignored.”

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Take Off

The 2014 actions by the U.S. and Canada inevitably hit passport sales. But prior to that, Henley had spent nearly a decade successfully promoting St. Kitts and Nevis citizenship around the world. The program got a major boost in 2009 when St. Kitts and Nevis signed a visa-free travel agreement with the European Union According to news reports, St. Kitts and Nevis had issued almost 12,500 citizenship-by-investment passports by December 2015.

Since a successful applicant also wins citizenship for immediate family members, as many as 50,000 new passports may have been issued through the program over the past 15 years, roughly equal to the country’s native population, according to Dwyer Astaphan, a former St. Kitts and Nevis minister.

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Local Assistance

Henley was assisted in St Kitts and Nevis by Wendell Lawrence, a former politician from the islands whose ties to Henley ran back to the very beginnings of the rebooted citizenship-by-investment program.

Lawrence served as the St. Kitts and Nevis finance secretary for 16 years, and has been an ambassador for the country as well as a government financial consultant. Until 2015, he was a member of the board of directors of the Eastern Caribbean Central Bank, the regional monetary authority.

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Henley came to rely heavily upon him. Lawrence worked closely with Kälin to redesign and relaunch the St. Kitts and Nevis citizenship-by-investment program, internal Henley documents show. After the program’s 2006 relaunch, Lawrence was employed as Henley’s local representative, collecting a $5,000 fee for each citizenship application and an extra fee for any client using the fast-track service.

Lawrence registered his own company, Caribbean Governance Consultants, as a financial advisory licensed to operate under the passport sales scheme. Internal documents show that Henley used the company’s bank account to remit the government fees from citizenship applications. In 2012, $1.32 million was remitted to CGC’s account. Lawrence and Henley said this was normal. Lawrence told OCCRP his company “received monies from overseas clients and agents…and paid the prescribed fees to the government on their behalf.”

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Lawrence processed hundreds of successful applications for Henley, most involving payments to the SIDF. His job was well rewarded: Documents show he charged Henley more than $2.5 million for SIDF-linked applications in 2011-12, in addition to over $300,000 he claimed on real estate applications.

Lawrence and Henley said the fees were in line with market rates for such services. They also denied that Lawrence had used his political connections or influence to help Henley.

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“I took great care in ensuring that none of my services provided to any client created a conflict of interest in relation to other clients, including the government,” Lawrence said.

Publicly available data shows the majority of passport applicants up until 2011 paid for their new citizenship by donating to the SIDF, although official figures were never released.

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As passport applications grew, the SIDF quickly became a multi-million-dollar entity. In 2013, its revenues accounted for an estimated 12 percent of the St. Kitts and Nevis GDP. After the government discontinued the sugar industry in 2005, the revenues from the passport program propped up the country’s economy, the IMF said.

There have also been persistent concerns about management of the SIDF. The IMF made several warnings about its opacity, and in a September 2014 report recommended the foundation make “substantial improvement in its reporting to enhance the transparency of its operations.” In 2016 the St. Kitts and Nevis government commissioned a review into the foundation’s management, though the report was never published. A 2017 report by the U.S. State Department highlighted concern among St. Kitts and Nevis citizens over “the lack of financial oversight of both the Sugar Industry Diversification Foundation (SIDF) and the Citizenship by Investment Program (CIP).”

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Martini from Transparency International said the lack of clarity over how the SIDF used its money made it difficult to know if the St. Kitts and Nevis population was really benefiting from the program.

In an address to parliament in December 2016, current St. Kitts and Nevis Prime Minister Timothy Harris said much of the SIDF’s income had not been properly accounted for and had been poorly invested.

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“The very significant amount of funds deposited into the SIDF were being used to further projects, the viability of which had not been demonstrated,” Harris said. “[N]or was the ability of those projects to diversify or grow the national economy clearly ascertainable.”

Former Prime Minister Douglas stressed the independence of the SIDF. “[T]he government did not have the right to issue any instructions to the SIDF in relation to the allocation of its resources or the membership of its board,” Douglas told OCCRP. Henley denied exerting any influence over the SIDF.

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Now, OCCRP’s investigation has revealed two key examples of the kind of mismanagement Harris described: The SIDF’s purchase of the Kittitian Hill project’s holding company, Belmont Resorts; and the foundation’s investment in a luxury travel company owned by a wealthy young Swiss investor introduced by Kälin.

The Kälin Connection

Patrick Liotard-Vogt, an heir to the Nestle fortune and an associate of Kälin’s, applied for a St. Kitts and Nevis passport via Henley in 2012. He needed a letter of recommendation in support of his application and asked Kälin to provide it.

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“I’ve been professionally and personally involved with [Liotard-Vogt] for a considerable time,” Kälin wrote in an April 2013 letter, obtained by OCCRP. “It is beyond any doubt that the source of the considerable wealth of the Liotard-Vogt family and Patrick in particular is clean.”

Liotard-Vogt received his new passport later that year.

Liotard-Vogt told OCCRP he has a friendly relationship with Kälin. “We were introduced by a common friend so I’ve known him for a while. He struck me as someone with a vision and who understands things,” he explained.

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But Kälin and Liotard-Vogt were also in business together from 2012, when Kälin joined the board of Liotard-Vogt’s Swiss company, ASW Capital AG. Kälin was also the vice president of a Zurich-based charitable foundation led by Liotard-Vogt.

Together the pair managed to obtain an investment of close to $1.2 million from the SIDF, which purchased shares in ASW Capital. Kälin was the one to put the wheels in motion on the deal.

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“Kälin formally introduced me to the SIDF in his role as member of the board of ASW Capital AG,” Liotard-Vogt told reporters. ASW company made a pitch to the SIDF, and it chose to invest.

But Martini at Transparency International said Kälin’s roles on the board of ASW and as chairman of Henley, which was working closely with the SIDF to manage the passport sales scheme, “could be a significant conflict of interest” when it came to brokering the SIDF investment in ASW.

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“If you don’t have transparency, you don’t have a proper policy of how the funds will be used and you have people very close to power who can benefit or influence decisions,” Martini added.

Broadening A Small World

Billing itself as the “world’s leading travel and lifestyle community” with a presence in a number of major cities around the world, ASMALLWORLD markets bespoke travel arrangements, luxury travel services and VIP nightlife.

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Liotard-Vogt bought the company in 2009, when he was 25, from since-disgraced Hollywood mogul Harvey Weinstein. In 2010, Liotard-Vogt bragged to HuffPost about walking up to Weinstein at a party in Cannes and telling him he wanted to buy his company.

“[Y]ou need to show up with a lot of money, which I don’t think you have,” Weinstein said, according to Liotard-Vogt.

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“I think I have ten times more than you do,” Liotard-Vogt retorted with a laugh.

When ASMALLWORLD redesigned its site and relaunched in 2013, new members were offered a free, week-long stay for two at Kittitian Hill.

“The goal was to attract affluent travelers and potential real estate buyers to St. Kitts. There was no cost for Kittitian Hill at all,” Liotard-Vogt told OCCRP. “It was an ‘on availability only’ offer.”

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Liotard-Vogt told OCCRP the SIDF’s share purchase was a “financial and strategic investment. The goal was to use ASW to put St. Kitts on the international map through events, online advertising, etc.”

But judging by the SIDF’s financial statements, it was a failure for the foundation. Documents from 2014 show SIDF’s management decided the funds invested in ASW were “not recoverable” and the investment was written off.

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In a 2016 address to parliament, Harris, the current St. Kitts and Nevis prime minister, criticized the SIDF investment in ASW, saying it was “almost as if this sum was just given away and there is no explanation as to why.”

Liotard-Vogt strongly denied Harris’ claim. He said the SIDF had never even claimed the shares it purchased in ASW.

“[It] is quite embarrassing. We have reached out many times,” Liotard-Vogt said. “I don’t understand why they would write off that investment… The shares are held for SIDF and are ready for delivery since their investment.”

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The SIDF did not respond to requests for comment.

Henley said it had no influence over the SIDF’s decision to invest in ASW Capital, and neither did Kälin. It said there were no conflicts of interest from which Henley or Kälin benefited.

“Politicized Project”

The SIDF’s largest private-sector investment was in Kittitian Hill, according to Timothy Harris. By 2011 it owned 90 percent of the resort’s holding company, Belmont Resorts.

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This presented another opportunity for one of the Swiss business partners to make a complicated deal with the SIDF. Having obtained the investment into ASW from the SIDF, Liotard-Vogt moved to take Kittitian Hill off its hands, purchasing the SIDF’s equity investment in and debt from Belmont in the middle of 2013.

Yet within two years Kittitian Hill was back in the hands of the SIDF. The reasons for the reversal of the sale to Liotard-Vogt are unclear. Liotard-Vogt told OCCRP the Kittitian Hill project was “very politicized.”

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Complicating matters further, Henley had almost purchased the project itself years earlier.

Documents indicate that Henley planned to purchase Kittitian Hill in 2009, but the transaction was not completed. Instead, in 2010, the SIDF swooped in to buy a majority share of Belmont Resorts.

“I chose the SIDF instead of [Henley] as they were the better-qualified investor,” said Val Kempadoo, the founder of Belmont.

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But Henley described the SIDF’s investment in Kittitian Hill as “poorly executed and poorly managed.”

Henley’s Loan and Abandoned Purchase

In April 2009, Henley set up a company called E.C.L. Investments Limited in the British Virgin Islands to provide Belmont Resorts, Kittitian Hill’s holding company, with “working capital,” according to internal emails.

The Belmont shareholders wanted to sell in 2008 due to the financial crisis, Val Kempadoo told reporters. “After a significant amount of negotiation, Henley set up ECL as a ‘special purpose company’ with a view of buying the other shareholders’ shares and investing in Kittitian Hill.”

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Documents show ECL agreed to loan $250,000 to Belmont on the condition that it be allowed to purchase a majority stake in the company, according to a copy of the loan agreement obtained by OCCRP.

A separate Belmont shareholder resolution appears to show the four companies that owned Belmont intended to sell to ECL the stakes of three of them, amounting to a 60-percent share, for $5.4 million.

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However, Henley told OCCRP that the agreement was contemplated but never executed.

A Henley takeover could have made sense, since the company had contractual ties to Belmont from 2008. Under the agreement, Henley encouraged clients to buy real estate at Kittitian Hill and Belmont encouraged its clients to apply for citizenship via Henley. Henley got a six-percent commission on each property sold, while Belmont got 20 percent of Henley’s fee for citizenship investors, according to a copy of the contract seen by reporters.

“Henley did not acquire any Belmont Resorts shares as I was able to convince the SIDF to make the investment instead,” said Kempadoo.

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ECL Investment financial statements show that the $250,000 loan to Belmont Resorts remained outstanding until at least 2013 when it was transferred to the parent company, Henley Pearson Richfield Holdings, Inc, then the majority shareholder of Henley & Partners Holdings PLC.

Kempadoo told reporters that in 2017, when he left Belmont, Henley Pearson Richfield Holding still owned the right to the debt. However, Henley said the $250,000 loan was written off, without providing further details.

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According to the SIDF’s 2011 financial statement, the foundation paid almost 14.6 million East Caribbean dollars, worth $5.4 million at the time, for over 60 percent of the shares in Belmont. The SIDF picked up another 29.58 percent of Belmont in July 2011, according to the financial statement, giving it a 90-percent stake in the company.

The foundation didn’t hold onto the project for long.

A SIDF financial statement shows that in July 2013 it signed a “transaction agreement” with REP Caribbean Development Corp, a Panamanian company owned by Liotard-Vogt and registered just a few months earlier, in April 2013. The deal allowed the foundation to sell its 90-percent SIDF share in Belmont for $20 million.

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Liotard-Vogt said that the purchase price did not represent the full benefit for the SIDF. “The transaction was structured so that SIDF would not lose,” Liotard-Vogt said.

However a SIDF financial statement shows that Kittitian Hill reverted to the SIDF in July 2015 after Liotard-Vogt’s company “defaulted on its obligations.”

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Again Liotard-Vogt disagreed with the wording in the SIDF financial statement, saying there had been no default and he and the foundation had struck “a separation agreement.” He claimed there were political forces at work keeping Kittitian Hill from becoming a success.

“[Kittitian Hill was] a punch-ball [sic] between government and opposition,” Liotard-Vogt said. “Kittitian Hill never had the chance of a greenfield approach and certain decision [sic] were taken due to non-commercial factors… The logical consequence was to part ways.”

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The details of the agreement are unknown but Liotard-Vogt is still involved with the project: “I still have a significant financial interest in Kittitian Hill and I hope the project will succeed,” he said.

The current government of St. Kitts & Nevis and Belmont Resorts Ltd did not respond to several requests for comment.

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A Sudden Exit

Henley’s St. Kitts and Nevis contract ended in mid-2013 and the government declined to renew it — a surprise, since Henley had played a key role in St. Kitts and Nevis politics under the Denzil Douglas administration. The firm even allegedly helped finance the prime minister’s 2010 reelection run as part of a broader strategy to bring its preferred candidates to power across the Caribbean.

“In 2013 the government felt it was important to give the program an additional boost and to maintain or improve its growth momentum by bringing fresh ideas to the marketing of the citizen by investment program. It therefore opted to replace Henley & Partners,” Douglas told OCCRP.

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Internal emails show Henley was unhappy with the decision and asked to be paid for all applications submitted before its contract ended in August 2013. A termination agreement signed in December 2014 resulted in the government agreeing to pay Henley $1.5 million for the applications that hadn’t been fully processed yet.

Henley and Douglas defended the payment, saying it reflected fees for applications submitted while Henley was under contract. Henley went further, claiming it “did not get what it was rightfully entitled to.”

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In early 2015, after two decades in power, Douglas finally lost an election. He was replaced by Harris, who had been a minister in his administration until two years earlier. Shortly after, a new board of councilors of the SIDF was appointed and Ernst & Young was hired to look into the SIDF’s operations. The report was not made public, and reporters were unable to obtain a copy.

The SIDF maintains a website, but the foundation is currently “inoperative,” according to a former minister. Its most recent financial statement is from 2016. In 2017, the government decided it would no longer be the organization designated to receive donations from passport applicants; it was replaced by a hurricane relief fund.

In 2017, Val Kempadoo resigned from Belmont, leaving Liotard-Vogt as Kittitian Hill’s only known investor. According to its last available financial statement, dated 2016, the foundation held 90 percent of the shares of Belmont at the time. Around $185 million had been spent on the project up to 2017, Kempadoo said. The SIDF exposure to the project amounted to over $28 million, according to Harris. The SIDF did not respond to questions seeking comment on the current ownership of the project.

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Contents published under this byline are those created by the news team of BLiTZ

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