Ongoing events indicate that the once reputed island for its sustained economic success and political stability managed by its multi ethnic population, is churning dangerously into a land where honest investors are fearing to tread.
The country is facing an unprecedented political turmoil, with the departure of a major partner of the ruling alliance, the Social Democratic Party (PMSD) back in December 2016, followed by the refusal of former minister of Financial Services and Good Governance, Roshi Bhadain to participate in the swearing in ceremony of the reshuffled cabinet.
One of the main issues disrupting the political climate is the stepping down of the Prime Minister, Sir Aneerood Jugnauth, whose prime ministership had been the deciding factor in the unexpected landslide victory at legislative elections of December 2014.
Sir Aneerood jugnauth has been recycled into a mentor minister while his son has acceded to the post of Prime Minister. Former minister of Financial Services and Good Governance, Roshi Bhadain has publicly revealed the existence of a mob at the helm of the government, running the affairs of the country. Furthermore, his disclosures on prevalence of nepotism, corruption and political interference in decisions of government institutions have remained unchallenged.
Still suffering from drowsiness caused by the dismantling of the British American Investment (BAI) and amendments made to the taxation treaty with India, the Financial Services sector has been further hampered by a string of controversies involving an array of decision makers, ranging from senior officials of regulatory bodies, advisors of the government, senior ministers, the prime minister and the president of the republic. The case of Angolan born businessman, Alvaro Sobrinho, tops the endless list of controversies unfolding by the day.
More recently, the affinity between Tourism minister Anil Gayan and “close friend” Vijaya Sumputh has been laid bare in the National Assembly. The minister appointed her at the helm of the Tourism Authority when he was Minister of Tourism (a move Opposition leader Xavier Duval decried as illegal) and their trysts abroad were made public even though foreign trips didn’t really form part of the job description. Vijaya Sumputh was also given an allocation of Rs 100,000 recently as director of the Cardiac Centre. This was ratified just days before cabinet was reshuffled and Gayan was made Tourism minister. Vijaya Sumputh was earning Rs 323,000 per month when the average wage of a Mauritian is just Rs 25,000.
Despite featuring on the OECD’s index as largely compliant, Mauritius is often described by analysts as one of the safest tax haven of the planet. With its low-tax jurisdiction offering low taxation platform for international business, Mauritius is an attractive destination for investors of all shades. The financial services sector has known a rapid growth, rising within a short span of time, accounting for 10,5% of the total GDP. Successive governments have been compelled to review the legal and institutional framework with a view to reinforcing financial supervision, enhancing transparency and strengthening the regime to fight financing of terrorism, money laundering, round-tripping, corruption and other financial crimes. However as evidenced in the case of Alvaro Sobrinho, it is hard to improve when the holes in the system are being looped by none other than those sitting high in the hierarchy.
Contrary to what has been repeatedly reported, Alvaro Sobrinho became billionaire only during the time he was calling the shots as CEO of Banco Espírito Santo Angola (BESA). Alvaro Sobrinho is said to have failed incompetently in the governance of BESA, by granting loans of some US$6.5 billion without proper compliance with internal regulations or procedures, without any or any adequate record-keeping, and without adequate collateral, leaving BESA with 90% of its loan portfolio at risk of being irrecoverable and with the obvious risk that funds had been misappropriated, and requiring a sovereign guarantee from the Angolan state. Some the beneficiaries of these non-performing loans are well-known figures in the Angolan government members of the ruling People’s Movement for the Liberation of Angola (MPLA) Politburo and Alvaro Sobrinho himself.
The new billionaire turned investor, has knitted a powerful network of influential people through the Planet Earth Institute. A philanthropic institution whose trustees include Lord Paul Boateng , member of Britain’s House of Lords, Sir Christopher Edwards, chairman of the Chelsea and Westminster Hospital National Health Service Trust and Ameena Ghurib Fakim, President of the Republic of Mauritius.
There has been intense lobbying by Ameena Gurib-Fakim, President of Mauritius, Ivan Collendavelloo, Deputy Prime Minister who presented Alvaro Sobrinho as a great businessman and African philanthropist. Showkutally Soodhun, Vice Prime Minister, is said to have lobbied actively in favour of Alvaro Sobrinho by acting as intermediary with a reputed law firm and facilitating the purchase of multi million worth prime property on the island. Media reports affirm, existing regulations have been amended during last budget exercise, presented by the current prime minister, as to satisfy the demands of Alvaro Sobrinho, who has secured four licenses to operate Global Business firms within the jurisdiction. The issue of these licenses is being challenged on grounds of submission of falsified documents and favouritism, since the licenses were issued prior to the publication of the amended rules.