VL may come out of the cave much earlier

Political Caricatures

By L.E. Pep

Following the resignation of his Minister of Foreign Affairs the Prime Minister stated in his press conference that “Vishnu Lutchmeenaraidoo (VL) told me that it was time for him to go back to his cave. So I said good luck in your cave.” And the MBC, under the direction of Anooj Ramsurrun, the one who we presume decides what is of news value, decided that “the resignation of a minister is a fait divers.”

Treated with such disdain in and outside Government, VL may decide to come out of his cave earlier than expected. We have decided to set camp around his cave as he may come out anytime now. Irked by Sir Anerood’s remarks that Lutchmeenaraidoo himself should be ashamed for what he did, the latter has promised to speak out in due course.

We cannot afford to miss out on his first statements when he comes out of his self-exclusion. But we hope that this time there will be much more than the terse enigmatic “Enough is Enough!”, which some observers had humourously interpreted as “Not enough!”. Who knows, now that he no longer has any reason to have “honte”, he can spill the beans. We are sure these are likely to be toxic stuff, like the missing gaps and first-hand information on the Sobrinho affair, the dismantling of the BAI, the Heritage City, the fishing port project, the revision of the Indo-Mauritius DTAA and many others which we may not be even aware of.

* * *

Unsound directives from the Central Bank?

The Central Bank has two main objectives in its accommodating monetary policy stance: preventing the nominal exchange rate from appreciating and maintaining the Key Repo Rate (KRR) at its present level. Our central bankers are succeeding in stabilising the volatility of the exchange rate by excessively building up the stock of foreign reserves. Thus, they will not have to put that amount of Treasury bills and securities on the market. And by sterilising only part of the large excess liquidity in the system, they have ensured that there is not undue upward pressure on the KRR. Closing the spread between the interbank interest rates and the KRR would have implied a tightening of the monetary policy and an upward adjustment to the interest rates. This would have meant increasing cost of sterilisation for the Central bank which it wants to avoid at all costs; it would also have hiked up the cost of servicing of debt for Government.

Caught up recently with a surge of foreign exchange inflows, it has come up with another very unsound trick of hobbling the market that is reminiscent of the yesteryears of exchange control in violation of the rules for the market determination of the exchange rate. It is dictating the rate at which banks should be selling their foreign exchange. It is trying to guide the movement of exchange rate. This policy of the Central Bank – also known as “leaning against the wind” – in the face of currency appreciation pressures goes against sound banking practices and affects the credibility of the Bank.

 * * *

Audit Report : More damning than before

The National Audit Office’s Report shows again and again that wastage and unnecessary expenditures have continued unabated. It is unacceptable that at a time when everyone is bearing the brunt of an economy that is showing serious signs of running out of steam, our Ministries and Departments and State-owned enterprises were profligate with taxpayers’ money. We do finally come face to face with the stark fact that not much has changed; it is the same old way of doing business. Every year the list of revelations of wastage, costly delays and other financial malfeasance gets longer and longer.

During 207-18, we had to pay Rs 4.2 million as commitment fees on undrawn balances because of delays in implementation of projects. Our investments to the tune of Rs 11.2 billion and representing some 48% of total investments did not yield any return at all since they have been acquired. A clear case of wastage and absence of proper planning was the Compost Scheme of the Ministry of Environment – 11,000 compost bins and 11,000 accompanying mixing tools purchased by the Ministry in 2017-18 for some Rs 9.5 million had remained unsold. As of 30 June 2018, there were 12,371 compost bins and 14,334 mixing tools, purchased for some Rs 10.91 million still in stock. At the Ministry of Social security, overpayments of pensions continued to increase over the years.

Though there is so much of talk about the tackling of drug trafficking and the control of goods entering the country, our patrol boats acquired at the cost of Rs 25 million were not effectively utilized. Similarly for the scanner at the Customs Department that has a capacity of scanning a large volume of parcels/packets per day and the drones that they had purchased with our money at the cost of Rs 1 million.

And one of the most shocking improprieties relates to the Ministry of Technology, Communication and Innovation. First there was the ICT Academy which turned out to be a white elephant costing us some Rs 10.9 million. Then we had the School Net II Project for secondary schools where the Ministry, at the request of the company, reviewed its contract with the supplier, DCL, and paid the company Rs 45.4 million which was “contrary to financial procedures”. The total payments to DCL amounted to Rs 81.7 million. The company officially went into receivership in October 2018 and there is very little chance of recovering anything of the Ministry’s gift of our money to DCL.

Nearly all ministries have their own lot of wastage, poor governance and accountability issues. The most glaring cases, among others, were the recruitment process under delegated powers at the Ministry of Health, the NEF completing only 23 of the planned 116 houses, the case of over Rs 9 million spent on a defective CCTV system at Melrose prison. The degree of incompetency and laissez-aller in some SOEs has reached new heights. At the MRA, for e.g., the Statement of Arrears show that out of the outstanding debts of Rs 7.4 billion, only some Rs 872 million had been collected during 2017-18, a mere 11.8% of the outstanding debts.

All this wastage and inefficiencies at such scale is no more shocking. Indeed, it comes as no surprise given the nepotism, favouritism and cronyism that have become widespread under this regime with connections outmanoeuvring competence and displacing merit. The Public Accounts Committee should be empowered to summon public officials to explain their decisions; this could indeed provide a better oversight and accountability of public decision making.

* * *

Palmar Ltd ex-employees demand «full compensation»

The former employees of the textile company Palmar Ltd held another sit-in in front of Government House on Saturday last. The symbolic demonstration then ended in front of the premises of the Mauritius Commercial Bank (MCB). The protesters are demanding the full payment of their compensation.

These employees, dismissed in February, have signed a letter demanding the full payment of their compensation. The signatories of the document, about 300 of them, are requesting their former boss, Thierry Lagesse, the government and the MCB to respond favourably to their compensation claims. They are asking the government to respond by April 18. “If not, we will not hesitate to go on a hunger strike,” warns Satyam, a former factory employee with 27 years of service.

Trade unionist Faizal Ally Beegun, who is the spokesman for the employees, has urged government, Thierry Lagesse and the MCB to “consider” the compensation of the former employees of Palmar Ltd. He has also requested the Ministry of Labour to regularize the situation of the workers operating in the EPZ, so that the workers of factories will not have to resort to street demonstrations to claim their payment for their time of service. “The government must come forward with a law that protects textile workers in Mauritius. This situation faced by the former workers of Palmar Ltd must never happen again,” said Faizal Ally Beegun.

The former Finance minister has gone back to his cave; the minister responsible for the textile sector seems to have gone into hibernation…

* * *

Betamax: The two Ministers negotiating for a deal

The lawsuit brought by the Betamax against Ministers Etienne Sinatambou and Ashit Gungah was called on March 28, 2019, in front of Senior Puisne judge Asraf Caunhye in the Supreme Court. The two ministers were present in court. Surprisingly, Mr Luchmyparsad Aujayeb, Assistant Solicitor General, who represents the two ministers, requested a referral of the case. He claims to be “still in discussions” with Me Rishi Pursem, Senior Counsel, and the attorney for Betamax, in order to find a way to resolve the dispute amicably. Otherwise, he will request that the trial be continued. The case will now be called on May 14, 2019 before the Master and Registrar of the Supreme Court. We’ll know by then whether the negotiations have been successful.

Betamax is suing Ministers Sinatambou and Gungah after the remarks they made during a press briefing on December 2, 2017. Minister Sinatambou had alleged that the contract that this firm had signed with the Mauritian government for the transport of petroleum products was concocted by “mercenaries”. Minister Gungah had in his press conference branded Betamax as unpatriotic for having launched an action in Indian justice to block the cargo of 40,000 tons of petroleum products destined for Mauritius.

The Prime Minister was also among those who had blamed Betamax for its “criminal act” and for trying to asphyxiate the country’s economy. The PM also denounced the opposition « kipé aplodi Betamax. Sa apel sa patriot? » (He was intervening on the occasion of the inauguration of a leisure center at l’Agrément in Dec 2017.)

Readers will recall that this case originated in the termination of the contract between Betamax and the State Trading Corporation on February 4, 2015 – a contract for the transportation of petroleum products from Mangalore to Mauritius for the sum of Rs 10 billion. The contract was signed in 2009.

It is becoming difficult for us to make out why government is trying to strike a deal with such “unpatriotic” people who it says is holding the Government and the nation to ransom. In this very column, one of our former correspondents had noted that “those who blame Mr Veekram Bhunjun, CEO of the Betamax Group, for being “anti-patriotic” because he has taken all legally available means to secure the interests of his company are way off the mark in their reasoning be it on moral or legal grounds.”

* * *

Hunger strike for Justice and Truth

Clency Harmon, Philippe Marion et Jean-Pierre Maurice of the Association des Victimes de Dépossession, are carrying out a hunger strike to put pressure on Government to honour its promise to set up a Land Court that will hear and decide on the claims of the citizens who consider that they have been dispossessed of the lands of their ancestors either by treachery or by the fraudulent acts of organized land grabbers.

Clency Harmon had in the past submitted to the Justice and Truth Commission the necessary documents attesting to his right over the lands of his ancestors. In 2009, before that same Commission, Clency Harmon, heir to Frederic Bonnefin, had alleged that Medine Sugar Estate would have taken possession of 277 arpents of his family’s land at Camp-Caval, Curepipe. The lands were “incorrectly acquired”.

Other activists from Resistans ek Alternativ are joining in the battle. Stephan Gua gives the reasons for his support: “After the release of the Justice and Truth Commission’s report, they should have implemented the recommendations of the report. The previous government and the present one have done nothing,” he laments.

“This is a fight that dates back more than twenty years,” vindicates Clency Harmon indignantly. They call themselves “victims of exploitation” and are « saturés » with broken promises. They demand that the government come forward with the Land Court to restore the lands they have been dispossessed of. « Nos terres ont été volés par certaines personnes pour des projets IRS et nous nous mourrons dans la misère ».

« Nous nous sentons bafoués par la façon de faire du gouvernement. Dans son manifeste électoral, il nous avait promis un Land Court. Anerood Jugnauth nous l’avait promis. C’est du baratin », he said to the press.

Activist Jack Bizlall is also bringing in his support. For Bizlall, a Land Court will help to unlock several cases linked to land issues. “This tribunal will take care of everything related to the transactions like the sales, the purchases but also the lease of lands… We hope that things will move quickly in the right direction.” He is categorical: “This battle, we will win.” His wish is that those who have been robbed of their lands in the past should get them back as soon as possible. Otherwise, the State will have to compensate the descendants of the victims.

* * *

EU ‘Grey List’: Why didn’t we make it to the ‘white list’?

In the document, recently declassified, on the EU list of non-cooperative jurisdictions for tax purposes – a progress report of Mauritius – we get a more damning picture of the assessment by the Economic and Financial Affairs Council of the European Union (ECOFIN) than what the authorities had divulged to us. The concluding para says it all:

“The assessment of the new partial Exemption regime as harmful should be agreed. In this case, Mauritius should remain listed in Annex II and a committed request should be sent to Mauritius asking for a commitment to amend or abolish by 31 December 2019. The commitment letter should reach the Chair of the Code of Conduct Group before (date to be decided by ECOFIN). If no commitment letter is received within the given deadline, Mauritius should be listed in Annex I by ECOFIN.”

Readers will recall that in March 2019, the European Union announced a black list of 15 non-cooperative jurisdictions (Annex I) and a grey list of some of 34 countries (Annex II). Mauritius was stuck in the “watch list, or “grey list, whereas 25 countries graduated out of the grey list, including Jersey, Guernsey, the Isle of Man, Hong Kong, Fiji, Jamaica, and Malaysia to join the ranks of the white-listed jurisdictions like Singapore.

For not fully enacting all of the measures to which we had committed, we were confined to the grey list to be closely monitored by the Code of Conduct Group while some of the previously blacklisted countries like Tunisia, Grenada and Panama were upgraded to the white list because they have enacted the required reforms in 2018 .

The report notes that Mauritius did not agree to introduce CFC rules or a switchover clause. As a result of the absence of appropriate anti-abuse rules and the deficiencies in substance requirements, we were assessed as harmful. Even more damaging is this comment of the report:“Many of the entities that benefited from the GBL 1 and GBL 2 may in the future benefit from the partial exemption regime. The result would therefore be similar to the status quo”… that is maintaining the harmful tax measures contrary to the principles of fair taxation.

Is this our new-found way of propelling the financial services sector to new heights? Mauritius was on the brink of being casted among the EU list of non-cooperative tax havens! Who is responsible for such blunders? Heads will have to roll; we cannot continue to depend on such a bunch of amateurs! It is the future of our financial services sector which is at stake!

---

* Published in print edition on 5 April 2019

Tags:Ashit Gungah, Association des Victimes de Dépossession, Betamax, Economic and Financial Affairs Council - European Union, Etienne Sinatambou, Jack Bizlall, Justice and Truth Commission, L.E. Pep, Land Court, Monetary policy, National Audit Office's Report, Non-Cooperative Jurisdictions, Palmar Ltd, Political Caricatures, Resistans ek Alternativ, Tax Havens, Thierry Lagesse, Vishnu Lutchmeenaraidoo