This week the Mauritian offshore sector has been named in two prominent investigations - the Sentry, an US investigative anti-corruption NGO, released a report on the Zimbabwean business magnate, Kudakwashe Tagwirei’s business activities and the the French website Mediapart ‘s report on the Rafale deal, an alleged corruption and favouritism in the 7.8 billion euro sale to India of 36 fighter aircrafts.
The Sentry’s investigation shows how Tagwirei used complex corporate structures to build and hide his wealth, potentially benefiting from preferential government treatment along the way. Tagwirei has invested in gold, nickel, platinum, and chrome mines by hiding behind South African businesspeople and offshore structures in Mauritius and the Cayman Islands and by using lawyers and financiers who are seemingly happy to turn a blind eye to accusations of cronyism and corruption.
Tagwirei, according to the documents, directed Sotic International, a Mauritius-based commodity trader partly owned by Pfimbi, another Mauritian company.
In an FT article titled “The offshore hive of Zimbabwe’s ‘Queen Bee” , mention is made of the Mauritius connection, also involving Capital Horizons, the Mauritian company agent for Pfimbi, which was till recently providing its services to Sotic International.
Capital Horizons is known to be very close to LaKwizinn.
In a three-part investigative series, Mediapart revealed how the influential defence businessman Sushen Gupta, who acted as an agent for Dassault Aviation, obtained crucial documents on the Indian negotiating team involved in the Rafale deal and supplied them to Dassault Aviation. It also said that Dassault paid €1 million to Defsys Solutions, one of the Gupta family’s Indian companies, for the production of 50 replica models of the Rafale jet but French authorities were not shown any proof that they were actually made.
In addition, the reports also stated that Dassault and its French industrial partner Thales paid Mr. Gupta several million euros in secret commissions to offshore accounts and shell companies, using inflated invoices for software consulting. Dassault was instructed to pay commissions into a fronting company registered in Mauritius called Interstellar.
You recall that FATF had recommended continued and further actions to address, among others, these two specific strategic deficiencies:
On the first Strategic Deficiency- the lack of effective risk-based supervision- FATF considers the supervision of DNFBPs should improve, and Mauritius should demonstrate progress across DNFBPs supervisory authorities to conduct risk-based on-site inspections, along with staff training, and provide indicators that demonstrate that supervision and actions against non-compliance are being implemented effectively. Suspicious Transaction Reporting (STR), especially among higher risk sectors and DNFBPs, should be increased, and indicators for a sustained increase in the diversity of STR should be provided.
On the second Strategic deficiency-the lack of improvement in access to beneficial ownership information- FATF expects Mauritius to demonstrate that the relevant beneficial ownership information is accurate and up to date, through on-site visits and verification by the Registrar of Companies, and by reviews of deficiencies identified at monitoring. FATF also expects Mauritius to reinforce the application of proportionate and dissuasive sanctions, including by the FIU, which regulates most NFBPs.
These latest developments are not good for the sector which may put at risk the delisting of Mauritius from the grey list.
With all these cronies involved to some extent in these cited companies, many operators are concerned whether there is any real political will to fight money laundering.
We have put in place the legislations but we seem to be failing to make it really bite in terms of enforcement and immediate and effective responses to addressing financial crime.
