The financial services sector is fragile and a high-risk high-reward strategy does not work. If confidence and trust are to prevail, risk has to be mitigated. Perception and reality have to be mirror images of each other. In other words, there should be no element of doubt in a sector which thrives on confidence, trust, absolute transparency and accountability.
Following the acquisition of Cim Financial Services Ltd by the European Lead Financial group SGG, the CEO of MCB Capital Markets drew our attention that potential for similar lucrative deals rest on vigilance and nothing should be done to harm the domestic and International reputation of our neat, clean, low tax jurisdiction. Mauritius, unlike US, does not have anonymous shell companies, dubbed the “gateway cars of financial crime”. According to J.C. Shaman, author of Despot's guide to Wealth Management, Britain maintains a network of opaque offshore satellites, including British Virgin Islands. Contrary to the latter, Mauritius is not a tax haven and the Minister of Finance gave firm commitment to EU to comply with scoreboard criteria.
Far from pledges and commitment, the government has to act and strong signals have to be conveyed to the international community. It's not enough to attend anti corruption summit.
Enter Big Spender with toxic assets
The Offshore centers should not allow doubt to linger. Unfortunately Mr Alvaro Sobrinho has spoilt the broth because it appears that he stands doubtful. In 2014 he submitted an application to the BOI for investment in the services sector. His application was set aside and rejected on the basis that he was not fit and proper. The BOM, which has the most sophisticated software to check on the updated profile of any applicant, reached the same conclusion and submitted the latest information on Mr. A. Sobrinho to the State House. It was the outcome of a meeting at State House between the President, the previous Minister of Finance, the Governor of the Bank and the "benefactor" Mr A. Sobrinho. All along it was known that the risk to issue a Banking license was too high and far from being a calculated one. Ever since, the Governor of the Bank had deemed it fit to convey reliable information on the sensitive issue he has become a stumbling block for the regime and his contract is unlikely to be renewed. An alternative route had to be explored since the issuance of a Banking license was not entertained.
To short circuit the system, the specific provision of Banking Act, which regulates Investment Banking, was cut and paste to a new provision of the FSC. It's good to recall that on the 8th February 2012 FSC and BOM signed a protocol to amend the MoU of December 2002 to reinforce the framework for effective exchange of information. Why then was no information exchanged?
After all it's easier to have a hold upon an institution which is within a Minister's arm length. Government is Government and it so decides. Procedures were fast-tracked, due diligence conducted and in ten days global business licenses were allocated accordingly.
Even the concern expressed by the Solicitor General and Deputy Chairman of FSC that wrong information had been furnished to the FSC by Mr. A. Sobrinho with respect to the names of a reputed Senior Counsellor and a former VC of the University of Mauritius being mentioned without their consent for the purpose of application of different licenses was treated lightly. To add insult to injury the Deputy PM arrogated himself unfettered powers to issue a ‘certificate of morality’ to a character whose profile is dubious. He was even invited by the DPM to invest in renewable energy projects. What is the hold that the Angolan multimillionaire has upon the regime?
Money talk for the new carpetbaggers
Unfortunately the new Minister of Financial services and Good Governance has bent backwards to be servile and subservient and will go down in history to have made the biggest U turn to justify the unjustifiable. There is a price to pay for vulnerability.
High Collateral damage
The collateral damage because of greed is far reaching and I would hate to hear our friends from Oxfam, ActionAid tagging Mauritius as a tax haven where dirty money or ill gotten gains are soaked, washed, rinsed and spin dry. We should stand up and fight those who, for personal interest, are hell-bent on turning our neat, clean low tax jurisdiction into a laundromat. I remind our friends that only five of the twenty DTAC Mauritius has signed with African countries have been ratified and as matters stand they would think twice before ratifying. I recall at a meeting in Abuja after the presentation of a report on illicit funds by former President Mbeki of SA, the Finance Minister of Liberia hit at Mauritius for depriving the continent of capital gains, to a large extent he was aided and abetted by Oxfam which was staging a protest against tax havens while the report was being discussed. I intervened vigorously to rebut all their flimsy arguments and Mauritius reaped huge applause from the floor. The support of Mr. Chellapermal from the MOF on the day of reckoning was invaluable.
The regime is putting at stake a sector where there is no rent seeker, and brainpower rules supreme. A sector which is a jewel in the crown of our Republic is under siege because of greed and corruption. We cannot remain insensitive or impervious to the harm being inflicted upon a sector which is the cradle of our democratization process. People with a culture of impunity are obscene and should neither be seen nor heard.