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AfricaMoney | September 22, 2017

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Mauritius’ future as global financial centre under threat as huge Ponzi scheme erupts

Mauritius’ future as global financial centre under threat as huge Ponzi scheme erupts

Friday, 03 April 2015, can be compared to a Black Friday for Mauritius with the huge financial scandal that first saw the revocation of the banking licence for BBCL and next witnessed leading insurance provider BAI with a market share of over 45% in Mauritius and counting over 45 years’ existence, being declared a Ponzi scheme of over Rs 25 billion. (Image: ION News)

Mauritius’ future as on offshore financial centre is under threat after the island economy’s Prime Minister Anerood Jugnauth announced that the central bank has uncovered evidence of a Ponzi scheme of unprecedented proportions, with financial implications of over Rs 25 billion.

The central bank has revoked the licence of listed local banking major the Bramer Banking Corporation Ltd (BBCL) and the closure of the bank follows last week’s suspension of a third Mauritius-based entity of alleged Ponzi scheme operator Belvedere, which is controlled by South African Cobus Kellermann and his Irish national partner David Cosgrove.

Trading in shares of BBCL was suspended by the Stock Exchange of Mauritius immediately following the central bank communique revoking Bramer Bank’s licence and, till date, no information has been provided to the investors of the bank while for employees, policyholders and bank customers, the situation is under control.

Friday, 03 April 2015, can be compared to a Black Friday for Mauritius with the huge financial scandal that first saw the revocation of the banking licence for BBCL and next witnessed leading insurance provider BAI with a market share of over 45% in Mauritius and counting over 45 years’ existence, being declared a Ponzi scheme of over Rs 25 billion.

Mauritians were in the grip of wide-spread chaos and panic upon the closure of BBCL, with bank customers’ expressing frustration and anxiety regarding the status of their money at the bank, which counts around 56,000 customers.

On Friday, 03 April 2015, the Minister of Finance highlighted in a press conference that the situation was under control, giving BBCL customers the guarantee that their money is safe.

Together with the board of the directors of the State Bank of Mauritius (SBM) and regulatory authorities, the decision was taken that SBM will take control of BBCL.

Accordingly, as from Saturday 04 April 2015, BBCL customers were able to access to their money via ATM retrieve and from Tuesday 07 April 2015 onwards it will be normal banking operations at BBCL with previous employees at their post while executives have already been shown the door.

A 24 hour period has been provided to SBM to ensure banking as usual at BBCL and on Tuesday 07 April 2015, the bank shall be fully operational with customers being able to access the counters of the bank to perform regular banking transactions.

Given the more complex issue of BAI Insurance, it was only on Saturday that finance minister Vishnu Lutchmeenaraidoo came up with the solution that a new entity will be set up to take over BAI Insurance operations so as to safeguard policy holders interest.

There are 156,000 policies out under BAI, of which only 137,000 have the guarantee of the State while those under the super cash back policy that offered super normal returns will not be covered, announced the two receivers, namely André Bonieux and Mushtaq Oosman from PwC.

The two receivers also announced the liquidation of BAI, while noting that foreign investors are showing interest to invest billions of rupees in the coming three weeks in the BAI.

Several parties are interested in injecting funds in BAI or acquiring certain companies of the group.

According to a person in charge of KPMG INDIA, a private investment fund would be inclined to lend Rs 3.7 billion to assist with resolving the current problem, until normality returns. This operation can be performed within one or two weeks, if the government gives its consent.

In conclusion, while this situation has been treated with urgency by the regulatory bodies in Mauritius, the news has already reached the global financial world, adversely affecting Mauritius’ image as an international financial centre with a sound financial framework.

- By Wazna Gunga

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