The array of scams and scandals uncovered over the past months brings to light the systemic flaws inherent to a system plagued by incompetent political appointees subservient to systematic and wanton political interference. Such a system is intrinsically toxic.
It also shows what can happen as a result of lax governance and rampant violations of the public interest
In the space of about a month, huge financial holes amounting to billions of Rupees in each case have been exposed in four major financial institutions by audit exercises carried out on their finances by appointed administrators. Such an appalling situation is a scathing indictment of the regulatory system, the lack of rigour of internal and external auditing and the role and responsibilities of the top Executives running these institutions who were entrusted with billions of Rupees invested by their unsuspecting clients. These investments include the lump sum of pensioners, beneficiaries of VRS compensations, pension funds and savings set aside by people from all walks of Mauritian life.
The financial verification exercises of the administrators have revealed that Bramer Bank, British American Investment and now with the domino effect the Bramer Asset Management have all huge unaccounted for deficits in investors’ Funds cumulatively amounting to tens of billions of Rupees. Similarly, it is now revealed that the Mauritius Post & Cooperative Bank has granted billions of Rupees of toxic loans without adequate collateral guarantees. It will be recalled that the previous Mauritius Cooperative Central Bank had faced a similar toxic situation in the past leaving the members of cooperative societies to bear the loss. Have the authorities and the regulatory institutions not leant from past blunders?
The scale of these financial scams and the inordinately long period that these went undetected obviously show that regulators and internal and external auditors have been caught napping on their watch. It also highlights that checks and balances, both in-house and within the regulatory system, were either not triggered or are not robust enough to stem and nip in the bud such a large scale and systematic haemorrhage of investors’ funds. The inability and lack of rigour of the regulatory system to protect investors, insurers or depositors’ funds it is meant to safeguard is disconcerting and a crying wake up call.
The regulatory institutions were meant to diligently monitor all these financial institutions authorized to operate in Mauritius to ensure that they adhered to the highest code of prudent financial practice and safeguarded investors’ or depositors’ funds at all times. They were also meant to scrupulously check and vet all investment products offered to the public by these institutions before they are marketed. The colossal deficits in investors’ funds in all these financial institutions are evident proof that this has clearly not been done.
To crown it all, the recent information leaked about the heavy losses registered by Air Mauritius has added to the appalling legacy of financial disarray bequeathed by the previous government. We have been able to maintain our national airline through thick and thin when more wealthy countries have had to close theirs. It is therefore imperative that the management acumen of the Executive cadres be constantly upgraded through appropriate training and that a proper succession planning is put in place. Similarly the Board must be beefed up to mainly include top professionals of the commercial aviation business to help further improve their decision making process. Everything must be done to assure its long-term sustainability bearing in mind the difficult context faced by airline companies generally
Against such a backdrop, it was therefore unacceptable that the savers and investors who placed their funds with authorized financial institutions in capital protected products, deemed to have been checked and vetted by the regulatory authorities, should in any way be made to incur any losses on their hard earned savings invested in good faith. Government therefore rightly stepped in to safeguard the interests of savers and investors and allay their anguish in the wake of the discovery of the scams.
A similar protection must now be extended to those who invested their savings with Bramer Asset Management (BAM) as it is clear that their plight is the result of the unchecked internecine financial links with the Bramer/BAI set up. According to the report of the Administrators, about Rs 3.3 billion out of a total of some Rs 4.2 billion invested by about 15,000 direct and indirect investors in BAM have been found to be missing right under the nose of the regulators and auditors.
We must remember that the financial sector is very sensitive to market sentiment. It is therefore vital that the current turmoil afflicting the sector is judiciously managed to minimize any negative impact bearing in mind the extensive reporting by the media. Cleaning the Augean stables left behind by the excesses of the past is a must. However, what is more important is to re-establish the repute of the financial sector by aligning it onto the highest standards of practice and rigour. This cannot be done by half measures or in a piecemeal way or in a fire fighting mode but in a holistic manner which not only recast the regulatory framework to the best international benchmarks but also ensures that it and the sector are manned by world class professionals which would also kick start a process of significantly moving it up the value chain.
The array of scams and scandals uncovered over the past months brings to light the systemic flaws inherent to a system plagued by incompetent political appointees subservient to systematic and wanton political interference. Such a system is intrinsically toxic. It also shows what can happen as a result of lax governance and rampant violations of the public interest.
New mantra and rules
It is therefore high time for a paradigm shift in approach aimed at harnessing, selecting and putting the best and the most able Mauritians imbued with a common national ethos of altruistic service to the nation to man all key posts and institutions of the country.
This can be achieved by two simple rules:
The recruitment of the best people for all the key posts of the country and the review and constant upgrading of the system of good governance, checks and balances and the regulatory framework. This means ensuring through a merit based and transparent selection process that the most competent people with a track record of achievements in their respective fields of professional activity are appointed to man the key institutions and the sectors of the economy, bearing in mind that a bank and an insurance company have now been added to the portfolio of state assets.
Similarly, a new generation of suitably qualified politicians imbued with a selfless sense of service to the nation should urgently assure a changing of the guards of the political class.
It must be remembered that the generation of politicians who spearheaded the freedom movement as from the mid-30s and who won the 1948 elections thus paving the way towards independence were among the best elements of Mauritius in terms of leadership, qualifications and intellect within our plural society at the time. These high benchmarks have been whittled down over time.
It is therefore opportune, as is the case in say France, India, the UK or Singapore where the key politicians have been educated in the best universities of the world, that the political class is systematically upgraded through the induction of the most talented Mauritians willing to serve the country. It is time that civil society demands such a sea change in the choice of the political class.
If we are to realize our loftiest ambitions as a nation, we can only do so by harnessing the synergies of the ablest Mauritians whether as politicians or top executives in both the public and private sectors for this common purpose. Makeshift solutions of Ministers cutting their teeth on the job or the unabated appointments of the party faithful or sycophants to high positions of responsibility at the head of key institutions undermines our national ambition and is, as evidenced by recent events, fraught with risks.
The last polls have unequivocally demonstrated that the people can and will sanction all those who breach their trust, including those who considered themselves too strong to be defeated. This cardinal lesson is valid for all the political class including the current government with whom the people have knitted a contract of trust. Their decisions and actions are under the constant scrutiny of the people. These have to be judiciously taken in keeping with the national and public interest. Therefore, the government should through its actions and high standard of good governance continuously earn the support and approval of the people.
We can only hope of putting an end to scams and scandals if good governance, robust checks and balances manned by men and women driven by the highest code of probity hold unequivocal sway. It is imperative that this is urgently so.
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Après Moi, Moi
The political landscape continues to be afflicted by a burlesque parody when it comes to a true democratisation of political parties. The latest clip of this endless vaudeville which unfolded this week is the sudden return of the caliph from his retreat to unceremoniously claim with the help of subservient foot soldiers his seat as caliph. Surely not of the true Labour of old we collectively value. Seriously, is that a credible option for the future or the fight for the municipal elections in the current context of the people’s ire at the multiplicity of scams uncovered? These shameless shenanigans are light years distanced from the lofty ideals, values and ethos of the Labour Party which inspired and mobilized the downtrodden masses to win Independence.
The disavowed and discredited leaders of the Labour Party and the MMM surrounded by their faithful apparatchiks persist in desperately clinging to a shrinking power base when they should have had the grace to step down, as was the case for the leaders of Labour or the Liberal Democrats in the wake of their defeat at the general elections in the UK last week. How can such delusions of power still be harboured in the teeth of such an emphatic disavowal of their disputed choices and decisions at the last polls?
Such an ingrained mindset of ‘Après Moi, Moi’ is unbecoming in our democracy when since the early 1990s a breeze of democracy swept across Africa and led to 34 of the continent’s 55 countries put a cap of a maximum of two terms of office on their Heads of State or Government. The stance of stubbornly not stepping aside puts them in the bad company of the likes of Mugabe or Burkina Faso’s Blaise Compaoré who was forced to an ignominious exile last year in the wake of mass protests and the Burundi President who is currently facing violent protests and has been condemned by the African Union and the UN following his convoluted ploys to bend this sacrosanct rule of political and democratic good governance. Such a dogged mindset also boxes them and their parties in a political limbo. Isn’t high time for civil society to add their voice to the growing clamour that their time is up?
The resulting political vacuum creates the conditions and opportunity for a launching pad for a new national party led by a new generation of young and talented leaders capable of inspiring the people around an ethos of altruistic service to the nation, shared values of inclusiveness, equality, fair sharing of the rewards of prosperity and an innovative projet de société for the benefit of all.
* Published in print edition on 15 May 2015