How rich Chinese migrants to British Columbia get away with destination deception

Applicants state preference for one province, 'change minds' on arrival in another and right to freedom of movement means it's hard to stop them

PUBLISHED : Wednesday, 08 October, 2014, 10:32pm
UPDATED : Thursday, 09 October, 2014, 12:16pm

Immigration experts have described the ease with which thousands of rich arrivals have been deceiving Canadian authorities about the province in which they intend to live, with enforcement of destination pledges being trumped by constitutional rights to freedom of movement.

The scale of deception has been revealed by a South China Morning Post investigation into the troubled Immigrant Investor Programme (IIP), the federal version of which was shut down in June, although Quebec's provincial version continues to operate.

The Post found that 53 per cent of the 29,764 investor immigrants from the mainland, Hong Kong or Taiwan who activated their permanent residency in British Columbia (BC) from 2005 to 2012 did so after telling authorities they would live in a different province. It has cost BC access to more than C$2 billion (HK$14 billion) in no-interest loans, which are made by investor immigrants to Canada and are divided among the provinces according to immigrants' stated destination, not their actual destination.

Vancouver immigration lawyer Peter Larlee said those on all sides of the industry - including government officials - were aware of the deception, although he expressed surprise at the scale.

He said that in addition to missing out on loans from rich immigrants, BC was shouldering costs associated with their settlement without appropriate federal funding. "This second aspect is that the federal government has settlement programmes and those settlement funds for ESL [English as a second language] schooling and grants to aid agencies are based on declared province of destination," he said.

A Canadian immigration expert said investor immigrants were subjected to scrutiny at Vancouver's international immigration checkpoints - particularly if they were granted permanent residency under Quebec's IIP. But this was easy to pass.

"The scrutiny is that you'll be asked, 'Where is your onward ticket to Montreal? We have an obligation to land you and confirm you are a permanent resident in Canada, but you have indicated Quebec as your destination, you are a Quebec investor. So satisfy us that you maintain that intention to reside in Quebec'," the expert said.

"So the guy says, 'Look, here's my onward ticket, here's the name of my realtor in Montreal', but once [admitted to Canada], he can walk outside the airport, sniff the fresh air in Vancouver and go, 'You know what? I changed my mind'."

The expert said that there was a "fairly well-developed process" by which rich Chinese immigrants would apply to live elsewhere in Canada, but end up living in Vancouver. "Although there are bureaucrats who are concerned about this and are encouraging frontline officers to scrutinise these applicants, everyone knows it happens," he said. "In Quebec, the officials know that it is happening. But they are getting the investment money, and they are getting the settlement funding from the federal government. But they are not getting the bodies."

Larlee said that when weighed against constitutionally guaranteed freedom of movement, it was "very difficult to enforce" a rule that immigrants stick to their stated destination. "Not unless the federal government, upon investigation, realises that they have misrepresented themselves from the outset. But if you or I decide to emigrate to Manitoba and then decide that we don't like it - and that could be after a very short interval - well, constitutionally we have mobility rights. We can live wherever we want in Canada once we are here as permanent residents."

For the purposes of the Post's analysis, "Chinese" were defined as those who lodged their Canadian IIP applications in Beijing, Hong Kong or Taiwan. The vast majority were mainland Chinese who applied in Hong Kong.

The 53 per cent rate of deception is a conservative calculation. It does not take into account an unknown number of immigrants who activated permanent residency in other provinces, but later moved to BC. Overall, this practice is so widespread that 90 per cent of Quebec's investor immigrants live elsewhere in Canada after five years, mostly in BC.

While the BC arrival data differentiates between mainland Chinese and Hongkongers, the approval data does not, so it is not possible to calculate the deception rate among Hongkongers. However, Hongkongers make up only a tiny proportion of 2005-2012 arrivals: 383 compared to 24,265 mainland Chinese. Even if it is assumed all applications approved in Hong Kong and Beijing went to mainlanders, this still represents a minimum deception rate of 60 per cent. Among Taiwanese, the deception rate was only 17 per cent.

Not only have rich Chinese dominated the IIP, making up 81 per cent of all arrivals in BC from 2005 to 2012, they have also been far more likely to practise destination deception. In the same period, there were 7,128 non-Chinese arrivals in BC under the IIP and 6,169 approvals, an apparent deception rate of 13 per cent.

The total 36,892 rich IIP migrants known to have arrived in BC from 2005 to 2012 - almost all settling in Vancouver - probably exceeds the number who moved to the United States in the same period under its comparable EB5 wealth migration scheme. There were 9,520 primary EB5 applicants in those eight years, excluding dependents.

The 77,607 IIP applications to move to BC in that period far outstripped applications to wealth migration schemes of the US, Britain and Australia combined.


Canada's Immigrant Investor Programme has a troubled history

Canada's Immigrant Investor Programme (IIP) had been a favourite means of migration for rich Hongkongers and mainlanders for 28 years.

But the scheme had been under close scrutiny for at least four years, before it was shut down four months ago. At the time, there were 65,000 applicants, most of them Chinese. All have been scrapped.

Critics said those admitted under the scheme failed to adequately contribute, specifically by declaring little taxable income once they arrived. This was despite their having a minimum household wealth of C$1.6 million (HK$11.1 million).

Compared with other schemes, the IIP represented a bargain. By lodging C$800,000 as a five-year, interest-free loan, immigrants were entitled to permanent residence for their household, with the later option of seeking citizenship.

In February, the Post revealed that the Hong Kong consulate had been flooded with applications from rich mainlanders, resulting in a queue of more than 53,000 people as of January 2013.

Attempts by Ottawa in 2010 to tighten access to the visas by doubling the wealth criteria increased Chinese domination of the scheme and in 2011, applications sent to the Hong Kong consulate represented 86 per cent of the worldwide total.

A week after the Post report, the government said it would shut down the scheme, and it did so in June. Quebec's still-operational version of the scheme remains popular with Chinese millionaires.