The government is still dealing with the aftermath of the
collapse of one of the island's biggest conglomerates after a
The dismemberment of the British American Investment (BAI)
Company, one of the largest conglomerates in Mauritius, is in its
final phase. The government took over the company in April 2015
after discovering that it ran a Ponzi scheme that paid investors
from the money of other investors rather than from its profits.
BAI had its origins in the insurance business before
diversifying over the years into a broad range of businesses
including banking, financial services, healthcare, transportation,
retail and the media in various parts of the world. But the
government found fault with two of its products. BAI-owned BA
Insurance offered the Super Cash Back Gold policy and Bramer Bank
issued Bramer Property Fund Preference Shares, promising high
returns to lure investors.
After discovering the fraud, the Bank of Mauritius revoked
Bramer Bank's licence. BAI owned 74% of the financial
institution, and Bramer Bank's closure had a rapid domino
effect on other BAI entities. The holding was placed under
administration then in liquidation in order to reimburse the Ponzi
Prior to BAI's collapse, the conglomerate had been showing
signs of extreme financial difficulties. Between1 January 2010 and
31 December 2013, BAI lost some Rs14.7bn ($410.3m). "Even the
best capitalised corporate groups in Mauritius would stagger under
such losses, and the BAI Group was not one of the best capitalised
corporate groups in Mauritius," wrote nTan Corporate Advisory
in a report published last year. The Bank of Mauritius chose the
Singaporean firm to investigate BAI's operational systems. As
of 31 December 2010,BAI Group's liabilities exceeded its assets
by some Rs1.2bn. Three years later, this shortfall
balloonedtosomeRs12bn, says the report.
The majority of the 126 minority entities and investments held
by the BAI in Mauritius and abroad have been put up for sale by the
authorities. The government appointed a special administrator to
manage recovery and transfer procedures. After the revocation of
the first administrator, Mushtaq Osman of the firm PwC, Yacoob
Ramtoola of the firm BDO took the position. "My role is to
transfer the group's assets to the National Insurance Company
(NIC) and to the National Property Fund Ltd. (NPFL)," Yacoob
Ramtoola tells The Africa Report.
NO SMOOTH RIDE
The asset sales have not all gone smoothly. BAI's stake in
Britam in Kenya was finally transferred to existing shareholders
for Rs2.9bn, netting the government less than expected in June
2016. A first offer of 4.3bn from MMI of South Africa had
originally been accepted. MMI went ahead with their lawyers to
conclude the deal with the existing shareholders of Britam in
Kenya, but the shareholders decided not to give their consent.
"An agreement was even signed between the potential purchaser
and the NPFL. As the deal is quite large, the South African firm
had to do due diligence in Kenya. But the entity in Kenya did not
want to have a South African partner. They wanted to have people
from Kenya," says Ramtoola. Finally, the shareholders went to
Mauritius and made an offer that the government accepted.
Bramer Bank – after being suspended From the Stock
Exchange of Mauritius in 2015 and wiping out more than Rs4bn in
market capitalisation – was nationalised before being merged
with state-owned bank Mauritius Post Cooperative Bank (MPCB) to
form the Maubank. Before the merger, Bramer and MPCB held toxic
assets of Rs5bn and Rs1.7bn, respectively. The government
injectedRs3bnto get the new bank going. It now has deposits of
Rs25bn and total assets of Rs32bn,andthe government is
contemplating a possible Maubank sale. However, the collapse of BAI
is still the subject of legal proceedings as BAI owner Dawood Rawat
is seeking damages, arguing that the government's activities
have been illegal, which could complicate things further.
Originally published in the africa report n° 87,
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Confidentiality of corporate documents and information is one of
the key attractions of incorporating a company in the BVI. A
company search of the BVI Registrar of Corporate Affairs will only
disclose certain information and documents.
A trust is a legal relationship created when a person (the settlor) places assets under the control of another person (the trustee) for the benefit of specified persons (the beneficiaries) or for specified purposes.
The European Market Abuse Regulation ("MAR"), which replaced and extended the existing market abuse regime, prohibits insider dealing, market manipulation and unlawful disclosure of inside information...
The British Virgin Islands ("BVI") is a long-standing jurisdiction of choice for incorporating joint venture and private equity vehicles. In more recent years it has also become an established option...
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).