I came across the statement of one of our lady economists , very popular
with our journalus, claiming that « Le secteur privรฉ est disciplinรฉ en
matiรจre de gouvernance »
Whether it was about the “caisse noire” at Air Mts or the MCB-NPF” scandal,
private sector companies were involved . The MCB-NPF scandal highlighted
issues with ๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐ ๐๐๐
๐๐๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐๐
๐๐๐๐๐๐๐ ๐๐๐
๐๐๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐, which prompted public and
regulatory attention. Advance corporate governance reforms were carried out
in both the public and private sectors by creating a corporate governance
framework of principles for business leaders to apply.
In 2016, the Financial Services Commission opened an investigation into the
different steps followed on the trading floor of the Stock Exchange in relation
to the transfer of 45.5 million shares of New Mauritius Hotels Ltd (NMH). The
regulator had retained the services of an investigator to look into these transactions
of New Mauritius Hotels. The investigator had compiled a list of offences that
would have been committed at the time of the transaction, including “market rigging”
. ๐ฌ๐ต๐ณ, ๐บ๐๐๐ ๐๐๐
๐น๐๐๐๐๐ ๐๐๐๐ ๐๐ ๐๐ ๐๐๐๐๐๐๐๐๐ ๐๐๐๐ ๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐๐
๐๐๐
๐๐๐ ๐๐๐๐๐ ๐๐๐๐๐๐ ๐๐๐ ๐๐๐ ๐๐๐๐๐๐๐๐๐
.
Is that good governance ?
Why is it that despite the whole armada of reinforcing legislations , we never
had any case of insider dealing, would you believe that ?
For the first time that they were investigating one , it turned out to be a sour joke ,
joining the spate of continuous investigations on such dealings which rarely come
to fruition.
Back in 2010, a Report on the Observance Standards and Codes (ROSC) had
then remarked that “๐๐ต๐ฒ ๐ฐ๐ผ๐ป๐ฐ๐ฒ๐ป๐๐ฟ๐ฎ๐๐ฒ๐ฑ ๐ผ๐๐ป๐ฒ๐ฟ๐๐ต๐ถ๐ฝ (๐ฎ๐ป๐ฑ ๐บ๐ฒ๐บ๐ฏ๐ฒ๐ฟ๐๐ต๐ถ๐ฝ ๐ถ๐ป
๐ด๐ฟ๐ผ๐๐ฝ ๐๐๐ฟ๐๐ฐ๐๐๐ฟ๐ฒ๐) ๐ผ๐ป ๐ผ๐๐ฟ ๐ฆ๐๐ ๐ถ๐ป๐ฐ๐ฟ๐ฒ๐ฎ๐๐ฒ๐ ๐๐ต๐ฒ ๐ฟ๐ถ๐๐ธ ๐ณ๐ผ๐ฟ ๐บ๐ถ๐ป๐ผ๐ฟ๐ถ๐๐ ๐๐ต๐ฎ๐ฟ๐ฒ๐ต๐ผ๐น๐ฑ๐ฒ๐ฟ๐
๐ณ๐ฟ๐ผ๐บ ๐ฎ๐ฏ๐๐๐ถ๐๐ฒ ๐ฎ๐ฐ๐๐ถ๐ผ๐ป๐ ๐ฏ๐ ๐ฐ๐ผ๐ป๐๐ฟ๐ผ๐น๐น๐ถ๐ป๐ด ๐ผ๐๐ป๐ฒ๐ฟ๐ ๐ฎ๐ป๐ฑ ๐บ๐ผ๐ฟ๐ฒ ๐ด๐ฒ๐ป๐ฒ๐ฟ๐ฎ๐น๐น๐ ๐๐ต๐ฎ๐ฟ๐ฒ๐ต๐ผ๐น๐ฑ๐ฒ๐ฟ๐
๐ณ๐ฟ๐ผ๐บ ๐ฝ๐ฎ๐ฟ๐๐ถ๐ฐ๐ถ๐ฝ๐ฎ๐๐ถ๐ป๐ด ๐ถ๐ป ๐๐ต๐ฒ ๐ด๐ผ๐๐ฒ๐ฟ๐ป๐ฎ๐ป๐ฐ๐ฒ ๐ฝ๐ฟ๐ผ๐ฐ๐ฒ๐ The same owner may control listed
and private firms and the relationship between the different firms is not transparent
to outsiders. It is not always easy for minority shareholders to identify “related parties”
or to assess the fairness of a transaction. This can provide controlling shareholders
with multiple and often perfectly legal opportunities to engage in activities
that advance their own interests at the expense of minority shareholders.”
Is that Good Corporate Governance ? How far have we progressed over
the years. ? How fair are the transactions on our Stock Exchange of Mauritius(SEM) ?
They have recently updated the Code of Corporate Governance and launched
a ‘scorecard’ system for public and private organisations to self-evaluate a
nd assess their peers on the best corporate governance practices.
We believe that it is just a smokescreen to con us in believing that this
‘scorecard’ will help companies better “operationalize” (sic) the ‘code’
and that it is part of an evolving process aimed at improving corporate
governance practices . While the reality is that after so many years of
application of the Code , ๐๐ ๐๐๐ ๐๐๐๐๐ ๐๐ ๐ ๐๐๐๐๐๐๐๐๐, ๐๐๐๐-๐๐๐๐๐๐๐๐๐๐
๐๐๐๐๐, ๐๐๐๐๐ ๐๐๐๐๐ ๐๐๐๐ ๐๐๐ "๐๐๐๐๐-๐๐๐
-๐๐๐๐๐๐๐" ๐๐๐๐๐๐
๐๐๐๐๐.
Over the years , our companies have picked and chosen the elements
of the code that were easily implementable for them and what were perceived
to be more beneficial, or simply implementing the ones that made them look
good. They have totally ignored the more demanding ones, the more effective
ones - the ones that require strong boards composed of qualified , competent
and independent members exercising objective and independent judgement
to guide strategy development and monitor management- not forgetting, the
question of the operating processes and accountability of boards of directors,
better representation of stakeholder interests and that of minority shareholders
and improvements in reporting, transparency and disclosure of financial and
operational performance data.
What about our local markets ?
“A relatively ๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐๐๐ are active across sectors in the Mauritian
economy and are also vertically integrated across value chains. While this
level of integration can provide benefits, such as reductions in transaction costs,
security of supply and quality assurance, it can also have negative consequences.
๐ฏ๐๐๐ ๐๐๐๐๐๐ ๐๐ ๐๐๐๐๐-๐
๐๐๐๐๐๐๐๐๐๐๐๐ ๐๐๐
๐๐๐๐๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐
๐๐๐๐๐๐๐๐๐ ๐๐๐
๐๐๐๐๐๐ ๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐. Furthermore, the purchasing of
products and services within groups reduces the extent to which independent
competitors in the economy are able to compete as they may not be able to enter
value chains or reach a minimum efficient scale based on the remainder of the
non-integrated market. SMEs also struggle to access markets due to complex trading
arrangements that may stem from buyer power, including lengthy payment terms
(for example, hotels often take 60-90 days to pay suppliers), fees (supermarkets
charge fees of up to one third of the selling price of a product) and limited or
expensive access to finance and factoring from commercial banks.”
“Beyond its current focus on consumer protection, the competition authorities
should examine sectors and markets most relevant for investment, including critical
upstream industries. Industries that merit special review are Information
and Communications Technology, Energy, Financial Services, Transport.
Consideration should also be given to the ๐ซ๐๐ง๐ฉ๐๐๐๐ก ๐ง๐๐ก๐๐ฉ๐๐ค๐ฃ๐จ๐๐๐ฅ๐จ ๐๐๐ก๐ ๐๐ฎ
๐๐ค๐ฃ๐๐ก๐ค๐ข๐๐ง๐๐ฉ๐๐จ and state-owned entities, including screening the potential
for ๐ฉ๐๐๐จ๐ ๐ง๐๐ก๐๐ฉ๐๐ค๐ฃ๐จ๐๐๐ฅ๐จ ๐ฉ๐ค ๐๐ง๐๐๐ฉ๐ ๐ ๐จ๐ค๐๐ฉ๐๐ฃ๐๐ ๐๐ช๐จ๐๐ฃ๐๐จ๐จ ๐๐ฃ๐ซ๐๐ง๐ค๐ฃ๐ข๐๐ฃ๐ฉ ๐ฉ๐๐๐ฉ ๐๐จ
๐๐ค๐ฃ๐๐ช๐๐๐ซ๐ ๐ฉ๐ค ๐ฉ๐๐๐๐ฉ ๐๐ค๐ก๐ก๐ช๐จ๐๐ค๐ฃ. This should include careful consideration of
the extent to which ๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐
๐๐๐๐ ๐๐๐
๐๐๐๐๐-๐
๐๐๐๐๐๐๐๐๐๐๐๐
๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐ ๐๐๐๐ ๐ ๐๐๐๐๐๐๐๐๐๐๐ ๐๐๐๐๐๐๐๐๐๐๐.
This can be considered in merger assessments as well as investigations
(including cartel screening) and provide perspective on interventions
that can be made to promote firm entry.”
On the local innovation environment:
"The dominant position of conglomerates creates a conundrum for innovative
independent firms. An analysis of World Bank Enterprise Survey data
reveals that, other firm characteristics being equal, ๐ฐ๐ผ๐บ๐ฝ๐ฎ๐ป๐ถ๐ฒ๐ ๐ฎ๐ณ๐ณ๐ถ๐น๐ถ๐ฎ๐๐ฒ๐ฑ
๐๐ถ๐๐ต ๐ผ๐ป๐ฒ ๐ผ๐ณ ๐๐ต๐ฒ ๐น๐ฎ๐ฟ๐ด๐ฒ ๐ฐ๐ผ๐ป๐ด๐น๐ผ๐บ๐ฒ๐ฟ๐ฎ๐๐ฒ๐ ๐ต๐ฎ๐๐ฒ ๐ฒ๐ฎ๐๐ถ๐ฒ๐ฟ ๐ฎ๐ฐ๐ฐ๐ฒ๐๐ ๐๐ผ ๐ณ๐ถ๐ป๐ฎ๐ป๐ฐ๐ฒ, ๐ฎ๐ฟ๐ฒ
๐บ๐ผ๐ฟ๐ฒ ๐น๐ถ๐ธ๐ฒ๐น๐ ๐๐ผ ๐ฏ๐ฒ ๐ฎ๐ฏ๐น๐ฒ ๐๐ผ ๐ฒ๐
๐ฝ๐ผ๐ฟ๐, ๐ฎ๐ป๐ฑ ๐ฎ๐ฟ๐ฒ ๐บ๐ผ๐ฟ๐ฒ ๐ถ๐ป๐๐ฒ๐ด๐ฟ๐ฎ๐๐ฒ๐ฑ ๐๐ถ๐๐ต ๐ฑ๐ผ๐บ๐ฒ๐๐๐ถ๐ฐ
๐๐ฎ๐น๐๐ฒ ๐ฐ๐ต๐ฎ๐ถ๐ป๐. Borrowing a term from a Mauritian micro-entrepreneur, this
leaves smaller firms with the conundrum to either ‘ride the dragon’ by
collaborating with one of the big players or face the resulting disadvantages
in access to finance and key markets. To the extent that collaboration with
a conglomerate limits the ability to appropriate profits, this could result
in diminished returns to innovation for SMEs while at the same
time reducing the incentive for conglomerates to risk their own resources f
or innovative expansion.”
These are extracts from the WB CEM report published in 2021-
“Mauritius: Through the eye of the perfect storm.”
Quite a challenging work awaiting our "Competition Commission,"
which our conglomerates ensured that it was properly eunuchised to limit its
work to review regulations and policies that restrict entry, facilitate collusion,
and/or create undue advantages for certain players in selected markets.
That’s just an aperรงu of the type of business practices of our private sector…
I think there is still more to say en “matiรจre de gouvernance” of our private
sector especially in the context of our crony capitalism that has enriched
cronies and some specific conglomerates through allocations of licenses,
land, contracts and special deals. Every other day, our local press is fraught
with “allegations” of the nexus between politicians, business groups and cronies.
The MIC scandal and the cast-iron IPP contracts continue to remind us
that lately a new breed of “rodeur boutes” businesses and rent-seekers
oligarchs have emerged in an environment characterized by governance and
ethical deficits.
Our lady economist from Harvard could do us a lot of favour if she could spare
us such inane comments which are quite frequent these days.
Pritbeeraj Bheem Singh
I appreciate your analysis... One area the lady can verify on good governance.... Why the same people are awarded contracts in some conglomerate for years
- Reply
Paul Lismore
I described these so called "economists" who are regular fixtures in our worst newspapers accurately, but those with too tight underwear thought I was being crude....
I am astonished that more people don't ask a simple question: Why do these so called newspapers keep asking the same mercenaries for their "opinions"? The answer is quite simple: to brainwash people into thinking that these are geniuses and therefore their arse licking of the private sector and of the super rich must be a wonderful thing....
- Reply
Raj Ramlugun
Paul Lismore Many are more good opportunists and narcissists than anything else. Check their real track records and consistency. Consensus manufacturers that suit their agendas and self interests! Very impressive behind the mic and with bling bling qualifications, but when it comes to real experience on issues or fields they preach or debate about so expertly, whether on Good Governance, Basic Management or Ethics .... I leave you to fact check them !
- Reply
Mishra Vidyadhar
An excellent article. I am sharing with my friends
- Reply
Raj Ramlugun
Excellent contribution to enlighten us on that wider and deeper picture of our corporate world and its governance culture..beyond being mere followers of stereotypes or superficial narratives peddled via public opinion sphere & so called media gurus. Take the concrete example of the Delisting of MK from the SEM in March 2022 through the Take Over initiated by AHL & the oppressive strategy of Compulsory Acquisition of the shares of Minority Shareholders. I've spent more than Rs 300,000 of my personal money, not to mention my energy & time, to fight this oppressive , even illegal Take-Over. But our Etat de Droit gave its verdict as per its own logic and interpretation. No one in public opinion.. including those shallow experts who come to pontificate via media, will ever raise such issues. The Gouvernman Sanzman should have set up an enquiry on the Take Over of MK by AHL to establish whether things were done in all legality and no oppression of minority Shareholders' right or more as a manoeuvre for state capture via AHL cronies. That would have been a real test case concerning Minority Shareholders' Rights and the loopholes or lack of proper protection in the Take Over Rules or in our laws to safeguard minority Shareholders' Rights & Voices against the diktats of the controlling shareholder/s.
