The exsanguination of Bramer Bank

On the night of 2nd April 2015,  Bank Of Mauritius (BOM) invoked liquidity issues to justify its decision to pull the plug,  thereby  sentencing  Bramer Banking Corporation ( BBC)  to a definite death. The official version presented to the public by the BOM and hammered by the Jugnauth led Government for the last 4 years, referred solely to the BBC’s  inability to raise the required capital amounting to MUR 350 million. On the other end defending parties emphasized on the massive withdrawals by Government Institutions spinning a run on the bank. Today, Capital brings to you the other narrative which has been kept away from the public.

A narrative hard to believe, given the general perception that  age old businesses run by the oligarchs are white and stainless.  A careful study of documents in our possession leads us to believe and demonstrate the exsanguination of Bramer Banking Corporation.

On 27th March 2015, in a correspondence addressed to the Board of Directors of the BOM, bearing subject “ Update on Liquidity Situation at BBC”, Ashraf Esmael, then Chief Executive Officer of Bramer Banking Corporation, provides a detailed health check report  of the Bank. Here are the first set of observations on how the BOM kept breathing down the neck of the BBC after it had been gagged by massive withdrawals and swayed the bank towards helplessness:

BBC has been having recourse to the BOM borrowing quota of M U R. I 47m on each day since 06 March 20 I 5. However, for 25 & 26 March 20 I 5, BOM reduced the amount of the borrowing quota to MU R. 107m .

BOM took the decision to reduce the borrowing quota on the basis that the collatera l in the form of government securities for value MUR. 380m securing the foreign currency line of credit of USD I O.Om with themselves were now considered inadequate in view of the appreciation of the USD. Thus, on 25th March 2015, they called on the bank to provide additional securities for the value of MUR. 62m. The bank has the next day itself repaid an amount of USD 2.0m so that the remaining loan balance of MUR 8.0m remains adequately secured against the existing securities.

BBC submitted the liquidity management and contingency plan to Bank of Mauritius on Thursday on 5th March 20I5. The Bank of Mauritius has not reverted  on the  plan . Furthermore,  our  latest two letters to BOM dated 24th & 25th March 20 IS requesting liquidity assistance from BOM has been turned down.

The inability of Bramer Banking Corporation was due not only to external pressure, but also from the loss of gravity within. The Board of Directors of BOM were made aware in the very same document of  a bizarre pattern of difficulties encountered in recovering significant amounts which could have bailed out the bank from calamity. The Sugar Investment Trust was unwilling to provide a repayment plan for the MUR 90 million it owed to the Bank.  Similarly, Omnicane, a diversified group boasting billions in turnover and hundreds of millions in profits was reluctant to repay the MUR 80 million due to the BBC.

These figures are mere starters in comparison to the amount owed by the leading hotel group – Beachcomber.  According to the document drafted by Ashraf Esmael, Chief Executive Officer of Bramer Banking Corporation, “Repayment of the facilities of USD 10 m was expected from Beachcomber Group by 16 March 2015. This would have allowed BBC to free up MUR 300m liquidity through  repaying the line of credit of USD 1Om to Bank of Mauritius . However, this repayment is encountering delays.. “ .

Had the total amount of MUR 470 million been repaid by the above named companies back in March 2015, the Bramer Bank  would have been saved.  Omnicane has benefited from  staggering support from the Jugnauth led  government by means of investments in infrastructure worth billions leading to  significant   value drawn by its real estate projects.  New Mauritius Hotels , owner of the Beachcomber Brand has miraculously escaped form what is tagged by independent analyst as the most scandalous ‘Stock-jacking “ .

The Financial Services Commission ( FSC) which has been adamant on  hunting BAI on its  related party transactions since 2004, made an astonishing decision in November 2017, not to pursue its investigation into the takeover of 45,5 million shares held by  PAD/Taylor Smith and  Kingston Asset Management. The take over was being challenged over breach of Securities Act ( 2005)  and  les Securities Takeover Rules ( 2010). Though it is a fact Rogers, ENL and SWAN are organically related companies and the take-over pertained to 40,22% of the share holding , thereby violating the ceiling of 30% stipulated in the Take over  rules, the Financial Services Commission ruled otherwise.

A dreadful scenario packed with double standards which provides solidity to rumours of a nexus between government and powerful rulers of the economy. A story, which would have inspired English novelist George Orwell in his fight against totalitarianism, undoubtedly depicting again  through his candid pen,  how we are all equal, but some are more equal than others.

Rajen Valayden

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