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AfricaMoney | August 20, 2017

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SBM not to go ahead with Bramer purchase but restricted banking resumes

SBM not to go ahead with Bramer purchase but restricted banking resumes

The bank governor also rued that regulatory authorities are being placed under the scanner regarding the issue, and questioned the fact that no fingers are being pointed at the external auditors of the bank who certify the bank’s balance sheet, and should have rung alarm bells to begin with. (Image: Ecohousescam)

The latest developments in the Ponzi scheme involving financial service majors Bramer Bank and implicating parent company BAI are that the State Bank of Mauritius (SBM) will not go ahead with purchasing the entity, while Bramer Bank has been given a licence to continue banking services under receivership status.

Accordingly, this deep-rooted financial fraud in Mauritius is still a live issue for the island economy though business, albeit restricted, has resumed with the reopening of BBCL bank including all its 20 branches around the island.

A communiqué from the Bank of Mauritius (BoM) indicates BBCL in receivership has been granted a banking licence under section 7 of the Banking Act 2004.

“Bramer Banking Corporation Ltd (In Receivership) has taken over the assets and liabilities of the defunct Bramer Banking Corporation Ltd. Bramer Banking Corporation Ltd (In Receivership) will start operations as from 7 April 2015,” reads the communiqué.

This will enable PwC’s Andre Bonieux and Mushtaq Oosman, receivers of BBCL, to provide restricted banking services at all the places of business as follows: cash withdrawal from savings and/or current accounts in amounts not exceeding Rs 50,000 per account per day, encashment of cheques over the counter in amounts not exceeding Rs 50,000 per account per day and cash deposits.

However, it is to be noted that SBM will not go ahead with the purchase of BBCL, according to a cautionary announcement released today stating that “it has now decided not to go ahead with the conditional offer to purchase certain assets and liabilities of Bramer Banking Corporation Ltd (in receivership). Therefore, the offer stands cancelled whereby there are continued discussions for the provision of limited assistance by SBM Bank (Mauritius) Ltd to the new bank, owned by the Government of Mauritius, which is not yet concluded.”

Yesterday marked a first for the BoM as it provided its reaction to the press regarding the financial fraud and central bank governor Ramesh Basant Roi explained the critical situation of BBCL’s liquidity problems that forced the BoM to intervene just before the collapse of the bank.

The BBCL approached the BOM for a loan of Rs 1 billion as collateral against its building for which the BOM did not give its approval, while the liquidity problem rose mainly due to depositors withdrawing funds held with the bank.

The bank governor also rued that regulatory authorities are being placed under the scanner regarding the issue, and questioned the fact that no fingers are being pointed at the external auditors of the bank who certify the bank’s balance sheet, and should have rung alarm bells to begin with.

Regulators visit banks once in two years and verify the operations on a sample basis, while on the other hand, external auditors do a more in-depth analysis and take into account the entire scope of operations, placing them in a far better position to be aware of such liquidity issues arising at the bank level, he noted.

Finally, there is a concern over the potential damage to Mauritius’ reputation as an international financial centre whereby Ramesh Basant Roi said it was quite clear that a negative perception of a country would arise if it does not report wrong doings, and Mauritius is on the right track by duly reporting such issues and keeping its image untarnished.

Moving to main developments concerning the executives of the BBCL and BAI, it may be noted that Dawood Rawat, the chairman of GlobalCapital Plc, has resigned after BAI — which holds 48.45% of the ordinary shares of the latter — had to go under the stewardship of conservator PricewaterhouseCoopers as ordered by the Financial Services Commission (FSC).

“The business and operations of the GlobalCapital Group are totally separate and distinct from those of any of its shareholders, including BAI, and that the appointment of conservators of BAI does not relate to the business, operations or assets of the GlobalCapital Group,” GlobalCapital said in a statement.

Further regarding Dawood Rawat, the BoM issued a communiqué which refers to a press article which appeared in a daily newspaper on 04 April 2015, wherein it was stated that Mr Dawood Rawat had allegedly taken steps to transfer about Rs 1.4 billion from Kenya to Bramer Banking Corporation Ltd (‘BBCL’) and clarification was provided that the revocation of the license was due to the deficiencies noted at the bank level, mainly pertaining to the depletion of its liquidity.

BBCL (and parent BAI by extension) is considered a huge financial scam as the number of people that were trapped under the Ponzi scheme is significant. It is to be noted that in March 2015 the FSC suspended the license of RDL management, a fund managed by Belvedere fund management group, as it was alleged to be a Ponzi scheme and appointed PwC as administrator.

The USD 130 million Kijani Commodities Fund and the Capital World Markets (CWM) Brighton funds have been reported to be linked to Mauritius-based Belvedere Management Group. Last month, City of London police raided the offices of brokerage CWM and arrested 13 people “on suspicion of fraud by false representation, conspiracy to defraud and money laundering”.

This crackdown on potential fraudsters under even the merest shadow of a threat shows that Mauritius regulatory authorities are indeed exercising due vigilance and reporting wrongdoings, boding well for the sound future of the island economy as an international financial centre of repute.

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