Over the years, the International Monetary Fund ( IMF) has repeatedly drawn attention to the urgency of improving governance within the Bank of Mauritius ( BOM). Limitation of moral hazard by ensuring the BOM does not depart from its mission has featured high on recommendations. BOM’s dogged submission to government instructions, throws wide open a boulevard of questions and rings the bells of disaster.
MIC – Vehicle with a one way ticket
“The State Investment Corporation Limited is a major group in the business of investment. It was founded in 1984 with the main objective of providing funds for the realisation of high-growth entrepreneurial ventures and assisting businesses to industry leadership position. For more than 35 years of its existence, the Group has developed into a solid conglomerate with a strong and well-diversified portfolio which has witnessed a phenomenal growth. The Group has an asset worth of around RS 7.5bn.
In addition, the SIC is supported by a network of top entrepreneurs, investors, technical minds and industry experts. This architecture, fundamental to the SIC, is a central factor in its ability to develop and manage multiple projects simultaneously, while consistently achieving success and delivering strong results compared to industry level. To ensure the efficient use of resources, the SIC has developed and implemented a Good Corporate Governance Model and has also been successful in promoting Best Management Practices throughout the Group. Today, the Group is generally considered as a transformational institution that is success-oriented.”
The above is a public statement by the State Investment Corporation (SIC) on its website http://www.stateinvestment.com/about-sic . The SIC has a number of subsidiaries namely : SIC Management Services Ltd, SIC Corporate Services Ltd , State Investment Finance Corporation Ltd, SIC Capital Support Ltd and SIC Development Co Ltd. Companies which according to official records undertake : investment, holding, management activities. Assuming the Government’s initiative to get the Bank of Mauritius (BOM) to indulge in economic activities by creating a Special Purpose Vehicle, to be sane, prompts a pertinent question – Why the Mauritius Investment Corporation Ltd (MIC) and not the SIC?
The Covid 19 tempest has blown off the lid, exposing the can of worms for us all to see. The communique from BOM dated 22nd of may 2020 is a clear admission of an ongoing banking crisis. The early warnings from IMF and financial reports of Banks prior to outbreak of Covid 19 are blatant evidences of failure by the BOM & government to handle the gangrenous situation.
While the central bank states, MIC would help save jobs, over 70 applications have been filed at the Redundancy Board, ultimately resulting in loss of thousands of jobs. How can governor of the bank expect to be taken seriously when talking about “Operating independently” & “strict governance structure” when his very nomination & conduct is rightly so, subject to controversy? The communique underlining the role of MIC in providing support through a range of equity/quasi-equity instruments, does revive the dark memories of the stimulus packages gifted to cronies in a very recent past. The MIC which poses as “ an innovative people-centric initiative” appears more of an eccentric way to loot and spread despair.
With a government, reigning in constant denial, moving the boundaries of absurdity and darkening our democracy, the most important factor required to muster countrymen as to re-engineer our economy will never occur – TRUST.