While Mauritius fails to shrug off its tag as a safe haven for shady money launderers and shell companies, the Stanford story will definitely add a thick layer of gloss to its current image. Even worse, it might throw wide open a Pandora’s box with disastrous repercussions on our ailing economy.
The penal notice served by attorney Firoz Hajee Abdoola at the request of Standford Asset Holding ltd and Greenway PCC on 14th August 2023 prompts a particular attention. Summoning of a 3 year old child and a barrister who claims the sum received represents duly paid fees for legal services offered, form an unprecedented conundrum for the judiciary. But far from the crispy headlines which the mainstream media fancies so much, there lies a string of concerns which have been deliberately swept beneath a silky Syrian carpet.
On its own the Stanford Story would suffice to justify the extent of ridicule embodied by the FSC. In march 2022, enforcement agencies raided the premises of Fiduciam Corporate Ltd the Management Company of Stanford. A reliable source affirms that some of the files seized do contain incriminating evidence of serious offences by none other than Stanford itself and its ultimate beneficial owner. Yet the FSC opted to move away from the leads.
The Stanford Group is composed of : (i) The Stanford Fund Manager Limited a private company incorporated in Mauritius, holder of Global Business Licence a CIS Manager Licence (ii) The Greenway PCC a public company limited by shares, constituted as a Protected Cell Company and incorporated in Mauritius (iii) Two cell companies, namely Prism Evergreen Fund and Global Growth Fund I and (iv) Stanford Asset Holding Ltd, a special purpose vehicle incorporated in Seychelles as an International Business Company.
The ultimate beneficial owner of the Stanford Group is Syrian born Dr Mohamed Ali Zarzour, holder of Dominican passport and resident of Dubai and United Kingdom. Besides the entities within Stanford Group, documents reveal that he has set up 3 special purpose vehicles in the British Virgin Isles namely : Evergreen Investment Holding I, Evergreen Investment Holding II and Evergreen Investment Hospitality Ltd set up to hold investment and accommodate for the loan schemes within Stanford Group.
Interestingly Dr Mohamed Ali Zarzour runs a Dubai incorporated company, Plato Capital Investment Holding Limited, an SPV meant to inject funds into Stanford Group and Seychelles domiciled Oxford Business Group, an International Business Company specialised in providing consultancy services.
Documents seized at the premises of Fiduciam Corporate ltd reveal serious breaches of legal prescriptions, licensing conditions and requisites of good governance. The omnipresent role of the ultimate beneficial owner who was at all times taking decisions without any trace of accountability coupled with irregularities ranging from absence of : Audit & Risk Committee, Investment Advisors, Compliance Officer, Money Laundering Officer do offer sufficient evidence to warrant a full fledge investigation by FSC.
A diligent inquiry would have shed light on the funds flowing from First Abu Dhabi Bank through the Stanford entities and return back to UAE. Not only this is a potential case of round tripping there has also been concerns officially raised by one of the directors regarding the opacity surrounding the source of funds. In an attempt to curb the pressure and pacify regulators, Fiduciam Corporate called upon a CompFidus Ltd, a Regulatory Compliance Consultant to list out short comings. In its report submitted in March 2022, CompFidus lists out a damning concerns hindering the practice of good governance and prevalence of law.
Here is an extract from the report indicating the relevant concerns which need to be addressed.
Pg 8 – There were numerous Agreements in place and some of the debatable ones are mentioned below by way of example.
(i) There is a Service Agreement between Fiduciam Corporate and Oxford Business Group to act as Administrative Agent of the latter. It was not clear why Fiduciam Corporate should act as an Administrative Agent for Oxford Business Group when it is incorporated in Seychelles and has already its Registered Agent appointed over there. There may be a rationale but not fully clarified.
(ii) A Consultancy Agreement dated 26/01/2021 has been executed between Oxford Business Group and the ultimate beneficial owner, according to which the latter provides Consultancy Services to the introducer against fees. No consulting advice/work/document was sighted in this respect.
(iii) An Introducer Agreement has also been signed between Oxford Business Group and Skybound Capital Limited (‘Skybound’), a company incorporated in Mauritius. There was barely any information on same on file, except that its RO address is at LC Abelheim, to demonstrate its competencies and networking as an introducer.
(iv) Skybound has additionally established a Broking Agreement with Oxford Business Group to obtain Investment Instructions from Oxford Business Group. Skybound pays Oxford Business Group such commissions and compensation as determined by the formulas below: ▪ Trail fees – a monthly fee of 50% of the investment management fee charged by Skybound. ▪ Performance fees shared between Skybound and the introducer on a 50/50% basis, paid as and when the fees are charged to the respective assets under management.
(v) Prism Income Fund is a cell of Skybound Capital Partners PCC, duly licensed by the FSC with an authorization to operate as a Collective Investment Scheme and an Expert Fund. Prism Evergreen is an investor in the Fund.
(vi) Further, a Placement Fee Agreement dated 05/02/2021 has been set up between Oxford Business Group and Skybound relating to The Prism Income Fund invested in Skybound Capital Partners PCC.
(vii) An Agreement in respect of a Structuring Fee dated 02/02/2021, was sighted relating to a Loan Agreement – Interest-Bearing Mezzanine Bonds Facility Agreement dated 13/01/2021 entered between GMG Real Estate (Luxembourg) S.A. & STANFORD Asset Management Ltd in order to refinance and develop the Properties.
The establishment and use of all of the above Agreements closely look like colourable devices to pull out funds from the CIS through the related PCCs and transfer same to / in the interest of the ultimate beneficial owner via the SPVs incorporated in low tax jurisdictions (Seychelles, Dubai, BVI).
While tax planning is legal, the fact that these Agreements are not disclosed fully to the investors pose issues of various nature whether commercial, compliance, proper governance and/or ethics.
Another concern raised by the consultants from CompFidus pertain to loans dished out to SPVs and ultimately benefitting the ultimate beneficial owner – There were loans raised and incurred amongst the SPVs through “Profit Participating Loan Agreements” for which there seemed to be little economic reasons, except for their commercial character whereby they are being used to levy costs/charges which weigh on the return of the investments. The charges/costs levied from the structure are paid out to the ultimate beneficial owner in various forms through the Agreements set in place. These loans are not disclosed to the investors although the promised return as set out in the “side letter” is paid out to them. This scheme constitutes a lack of transparency within the Group structure – which adversely affects good governance principles as those loans and the related interest paid out constitute charges for the investors without upfront disclosure.
CompFidus further concludes “While it is recognised that capital market activity inherently involves risk taking, the CIS structure must assure that a solid framework exists in which risk is voluntarily assumed by investors under fair and transparent conditions. The goal is not to prevent investors from incurring losses that occur due to developments in financial markets, but to protect them against deceptive techniques or self-interested investment selection or management designed to erode the genuine return to which they are entitled.”
According to a seasoned professional from the Financial Services Sector, the placement fees, introduction fees, upfront fees, commissions received by Oxford Business Group which solely belongs to Dr Mohamed Ali Zarzour is in itself a heist. The silence of the Financial Services Commission on documentary evidence of instructions from Dr Mohamed Ali Zarzour for dividends to be paid out from The Stanford Fund Manager Ltd ( USD7m) and from Oxford Business Group ( USD4m) to his personal bank account held with AfrAsia Bank Ltd, is beyond understanding. Another leery instruction from the supremo of Stanford relates to payment of agency fees of USD 4m from to Victoria Hart a totally unknown entity created in the wake of acquisition of Sky View hotel from Emaar Properties for USD 204 m by Evergreen Hospitality.
The Stanford story prods numerous questions. Namely the involvement of middlemen in securing of licenses and shielding the happy few from scrutiny. In the course of our investigation, we have come across whistleblowers who claim having given up on providing leads to enforcement agencies, which they are convinced are more loyal to fraudsters rather than the state. They stand convinced, the F.S.C would be better defined as Farce, Sham, Charade abetting crime rather than a decent Financial Services Commission efficiently regulating the financial services sector. Some of the leads provided earlier to FSC pertain to the USD 400 m managed by Skybound Capital Ltd which they are adamant, is an absolute lure. Again the FSC crawls back into its carapace acting like the three wise monkeys, can’t see, can’t hear, can’t speak.
Which brings us to another interesting character who will be soon hitting the headlines – the founder of Fiduciam Corporate ltd , Tayseer Abdel Muammar Goolbar , named after the leader of Jamahiriya, Muammar Gaddafi by his father Hamza Aneel Goolbar director of Al Hisra International Trade Ltd and coordinator of “Amicale Maurice – Libye”. Since the raid by the Special Striking Team at his residence in Mauritius, Tayseer Goolbar has been swinging between Istanbul and Dubai. He will be the key to unlock the pandora’s box revealing much more than only the dealings of Zarzour’s merry-go-round but also the “gaddars” (traitors) who betrayed the trust of Gadaffi. As the Libyan government increases its efforts to recoup USD 64 billion invested across the world with 45.5% being in cash, representatives of Libya Investment Authority have been querying all those having dealt with the funds domiciled within our jurisdiction. Despite so much happening, our Financial Services Commission is lost in a profound comatic sleep. Is it out of lethargy ? Or is there the blessing of some mysterious “Sattar” ( Almighty) flocking alongside the Zarzour (startling birds) ?