The Ghost of BAI

Editorial

The BAI affair has been back in the news, this week, during the debates on the Supplementary Appropriation (2020-2021) Bill. In reply to the Opposition, the Minister of Financial Services informed the House that Rs 17.9 billion have been injected by the government into the National Property Fund for the repayment of its debts and for the reimbursement of the BAI’s policyholders and investors. Those billions of taxpayers’ money go up to more that Rs 20 billion if we add up the Rs 3.5 billion advanced by the Bank of Mauritius and Rs 5.2 billion invested into the Maubank, which took over the assets of the former BAI’s Bramer Bank. That’s a far cry from the earlier guarantee of the Anerood Jugnauth-led government at the time the BAI Group was being dismantled – that not a single rupee belonging to the taxpayer would go towards reimbursing policy-holders and investors in the company’s business.

 At its 2019 Labour Day meeting, the Labour Party announced its intention to set up a commission of inquiry with a view to establishing the responsibility of all those who took the decision of or participated in the dismantling of the BAI Group. That is not likely to happen any time soon, judging from the pitiable position the opposition parties find themselves in currently, unable to form and sustain a common front to counter the ruling alliance. More revelations and disturbing facts might have come out other than what is to be found in the nTan Report, commissioned by the Bank of Mauritius to look into the factors that led to the BAI’s failure. A number of allegations were levelled soon after the BAI was dismantled to the effect that the insurance company would have been involved in a Ponzi scheme: the company would have used funds collected from premiums received from the issuing of new policies to redeem sums due to holders of policies which had reached maturity. It was also alleged that significant amounts of funds belonging to the financial institutions of the group would have been siphoned off outside the country.

The government which dismantled the BAI is still in power, and the truth will remain unknown as to how and why one of the biggest conglomerates in Mauritius was dismantled within a few days and whether the proper legal procedures were followed. What is known is that there was an already bad situation within the BAI. This was pointed out by the IMF which had, a few years before its dismantling, drawn the attention of the authorities to the precarious financial situation of the BAI. It was aggravated by rash political decisions to precipitate its downfall. The result of this inept, bull-in-a-China shop approach is that several billions worth of taxpayers’ money have been spent by the government to compensate BAI’s policy holders and investors. It has been a big price to pay for the country, adding to an already mounting public debt burden.

The people’s feelings about the local financial market have since many years been seriously ruffled by the uncovering of scandals, with several irregularities unearthed in this sector. With the resurfacing of the BAI affair this week, allegations of corruption have again made the headlines as political adversaries fought against each other about contributions received from the BAI.

Politicians have preferred to fight among themselves than to own up about the donations that have been mentioned. However, since they have not denied either, the public will surely draw their own conclusion from that silence. The public is no fool, and has always held the view that support of political parties across the board by financial and non-financial institutions of the country, has existed since long, maybe even before the Air Mauritius list of donations was revealed by the discovery of the ‘caisse noire’. It may have taken new forms now, and despite the announcement at the approach of every election of an in-depth review of political financing, nothing has materialised to date. Leaving one to wonder whether this will ever happen. One can only conclude to a persisting lack of political will on this issue, which therefore leaves us at status quo.

* Published in print edition on 7 May 2021