Poor Governance On Trial

By Mrinal Roy

The Supreme Court ruling in the Betamax case has triggered a holier-than-thou political blame game among the main political parties when they are all (Labour, PMSD and MSM as well as the MMM), to varying degrees, guilty of not steadfastly safeguarding the public interest

The Supreme Court judgement quashing the Rs 4.5 billion award in the long drawn Betamax affair yet again brings to light the appalling state of governance in the country under successive governments. Just as in the case of the Medpoint affair, the lucrative 15 year Betamax contract involved the commitment of substantial amounts of public funds in decried deals with close relations of those in power in the teeth of public interest. Both the Betamax and the MedPoint cases as well as other contentious lawsuits have drawn government into lengthy and costly litigations not only in local courts but also in courts overseas at the cost of the Public Exchequer.  The Betamax case is not only being presently examined by the Delhi High Court but is also expected to be brought by the respondent to the UK Privy Council for their learned legal guidance.

The Supreme Court ruling has triggered a holier-than-thou political blame game among the main political parties when they are all, to varying degrees, guilty of not unswervingly and steadfastly safeguarding the public interest.   In fact, although the Betamax deal was contracted in 2009 by the Labour-PMXD and others in the Alliance Sociale government, it was not only maintained and defended by the MSM as a partner of the Labour-PMSD-MSM alliance government from 2010 to August 2011 but it was also basically swept under the carpet for reasons of political expediency by the MMM when it contracted the ill-fated power sharing alliance with the Labour Party to contest the 2014 general elections. It is only in February 2015 that the leonine Betamax contract was rescinded by the L’Alliance Lepep government. 

The office of the Director of Public Prosecutions (DPP) has in the wake of the Supreme Court judgement advised that the Commissioner of Police may carry out further investigation to determine whether offences may have been committed under the Public Procurement Act (PPA) in the case of the freighting contract awarded to Betamax.

Patently disadvantageous deal

The Betamax case basically exposes so many things which are fundamentally amiss and wrong in the country. A government is expected to judiciously manage and be a rigorous custodian of public funds as well as be a robust bulwark of public interest. Its mandate is to safeguard the interests of the country in all circumstances. Governments that obviously do not fathom commercial technicalities and those without seasoned commercial credentials cannot be allowed to negotiate on behalf of Mauritius.  

Instead of robustly protecting the interests of the country, the patently disadvantageous terms of the Betamax deal negotiated by those responsible do the exact opposite. The commercial terms negotiated basically provide a risk-free guaranteed payment spanning 15 years to Betamax with predetermined annual increases of the freight rate over the period and the irrevocable and unconditional guarantee of the State of Mauritius to ‘promptly pay any sum of money which State Trading Corporation (STC) has failed to pay to Betamax’ in accordance with the terms of the contract. In what way do such questionable terms safeguard the interests of the country?

These disputed terms skewed in favour of Betamax reminds the country of similar leonine terms in the Independent Power Producers (IPP) contracts which indexed the electricity price on fuel oil and coal costs as well as currency and economic indices. Mauritius must ensure that public interest is no longer shortchanged and public funds so abjectly despoiled, bearing in mind that climate change imperatives require an end to the use of coal to produce electricity.

In its judgment, the Supreme Court thus concludes that ‘the enforcement of an illegal contract of such magnitude, in flagrant and concrete breach of public procurement legislation enacted to secure the protection of good governance of public funds, would violate the fundamental legal order of Mauritius.’  The State Trading Corporation was bound as a public body to act in conformity with the Public Procurement Act (PPA). How could a lucrative contract of such magnitude and committing such colossal amounts of public funds have been concluded without adhering strictly with the provisions of the PPA and the process of a transparent tender procedure?

The Supreme Court therefore ruled that it has ‘no difficulty in holding that the public policy of Mauritius prohibits the recognition or enforcement of an award giving effect to such an illegal contract which shakes the very foundations of the public financial structure and administration of Mauritius in a manner which unquestionably violates the fundamental legal order of Mauritius.’

Scathing indictment

The Betamax case is therefore a scathing indictment of governance in the country. Governments and those in power must unconditionally abide by legislations that have been enacted to ensure good governance and absolute transparency in the utilization of public funds.  The damning annual audit report issued by the National Audit Office each year exposes and criticizes the many unchecked shortcomings in the utilization and management of public funds in the country. 

For too long, successive governments have through political interference, the appointment of cohorts of political appointees and nepotism undermined the management acumen and efficiency of the government Establishment and public institutions or companies where government is a major shareholder such as Air Mauritius or the State Commercial Bank, etc. Such an appalling system of governance has spawned systemic blunders like hedging and operational losses or risky exposure on loans requiring considerable impairment provisions or substantial cost overruns on infrastructural projects such as the Midlands dam or the Cote d’Or multisport complex. The contested and costly Safe City project valued at some Rs 16 billion is being implemented in patent opacity with Huawei technology which is banned in the United States, without public oversight.

A more rigorous oversight

This deplorable state of governance in the country cannot go on. It also raises fundamental questions of accountability of all those involved in cases where public funds are wantonly squandered. However, what is of vital importance is to urgently restore the competence of the government Establishment, public institutions and companies by merit based appointments. It is equally important to urgently put in place a robust system of checks and balances which rigorously assure in-house verification and validation of all decisions by government and all government bodies. The government Establishment must once again become a hub of competence, independence and sound counsel to government to promote and arbitrate public interest and act as a solid bulwark against the decried excesses of poor governance.

No democratic country can tom-tom about good and exemplary governance if existing legislations and rules are repeatedly circumvented through political high-handedness or where opacity of governments decisions holds sway. Similarly, the standard of political ethics must adhere to and uncompromisingly uphold absolute principles of propriety and probity instead of perpetually cutting corners and pandering to decried considerations of political expediency.  

This is therefore not the time for a futile political blame game but for the people and the country at large to draw lessons from the costly Betamax, Medpoint, IPPs and other contentious affairs and demand that the government and the political class urgently take the remedial steps necessary and build in the required checks and balances to ensure absolute transparency and accountability of the government decision making process at all levels and the rigorous management of public funds so as to shepherd and rigorously assure good governance in the country at all times.

* Published in print edition on 7 June 2019

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