Mauritius Prime Minister Demands Publication Of MCB Report

by Lorys Charalambous, Tax-News.com, Cyprus

21 March 2005

Mauritius Prime Minister, Mr. Paul Bérenger, has asked the Central Bank to publish a controversial report into a 2003 fraud at the Mauritius Commercial Bank.

In view of the allegations that have been made in relation to the so-called nTan report, the Prime Minister said that he had requested the Governor of the Bank of Mauritius to bring the issue before the Board of Directors of the Bank of Mauritius and to find ways and means within the law of making the nTan report public.

In a statement made last week in Parliament, the Leader of the House recalled that the MCB issued a communiqué on the 14th of February 2003 to inform the public of the loss of hundreds of millions of rupees with regard to one of its important customers, the National Pension Fund, arising out of irregularities at the Bank. The Bank of Mauritius was informed of this matter on the same day.

On Monday 17 February 2003, the Bank of Mauritius carried out an inspection of the MCB. On 10 March 2003, the BOM enlisted the services of nTan Corporate Advisory Pte Ltd of Singapore to carry out an independent investigation mainly into the various factors that led to the irregularities and to make recommendations. A team of Bank examiners supported the nTan team of investigators.Ratings agency, Moody's earlier this month confirmed its D financial strength rating of the Mauritius Commercial Bank.

Following detection of the MUR881.6 million fraud, Moody's downgraded the bank's financial strength rating from D+ to D. However, according to Moody's, the MCB then made considerable progress in improving its risk management system, having both engaged an international risk consultancy firm to identify weaknesses, and restructured its risk management framework. In April, 2004, Moody's confirmed the bank's D financial strength.

Additionally, the ratings agency revealed that the MCB had improved its corporate governance by reinforcing various committees at the board level, with especial emphasis on its audit committee.

In February 2004, nTan submitted a report to the BOM on the investigations carried out at the MCB. On 26 March, after the Board of the BOM had taken cognizance of and discussed the nTan report, the Governor and the Managing Director of the BOM met the Board of Directors of the MCB to discuss the findings and recommendations of the nTan report. The MCB was advised on the necessary measures it should take to redress the situation at the Bank. On the same day, the BOM issued a communiqué on the findings of the investigation into the irregularities at the MCB.

Once again, the Prime Minister affirmed not to have seen the nTan report, having been advised by the BOM that the report was protected by confidentiality provisions of the banking legislation and that it could not be made public. However, he declared to have been briefed in March 2004 ‘dans les grandes lignes’ by the Governor of the Bank on the main findings and recommendations it contains.

In the second case, in its Comanche of 26 March 2004, the BOM pointed out that the nTan report “dwells comprehensively on certain practices that date as far back as in the early 1990s when the Mauritius Commercial Bank Finance Corporation was still in operation. The anatomy of the irregularities reveals techniques that have been employed for tampering with fixed deposit accounts and executing transfers of funds”.

In another Comanche dated 3 March 2005, the BOM stated that it had not come across any post nTan case of tampering with fixed deposit accounts and unauthorised transfers of funds concerning customers’ accounts at the MCB.

“I am further informed that no one has lost money placed on deposit with the MCB as a result of the irregular tampering with fixed deposit accounts and unauthorized transfer of funds uncovered by nTan”, he added. It is for this reason that Mr. Bérenger claimed to have stated at the last sitting of the National Assembly that apart from the MCB/NPF fraud, no other fraudulent or other irregular transactions has been reported to the Police. In the same line, he mentioned that the Leader of the Opposition was wrong in saying that money worth over Rs 1.5 billion had been stolen.

As regards reference made to various sums of money, in particular the sum of Rs 1,516,480,810 and Rs 3.3 billion in ‘Le Mauricien’ of 10 March 2005, the Prime Minister explained that the total amount of fixed deposit accounts transfers effected over the years since the early 1990s and uncovered by nTan adds up to Rs 3.3 billion, including the sum of Rs 1,516,480,810.

Concerning the allegation that at one point in time nTan was ordered to stop his enquiry on instructions “venant de haut lieu”, Mr. Bérenger said that he has been informed by the BOM that at one point in time the issue whether it was worthwhile to investigate certain transfers that had been made to banks in other countries such as Switzerland and the UK was raised. The BOM considered that for confidentiality reasons the concerned banks in those countries would not be prepared to give information sought by nTan. Accordingly, the BOM concluded that the cost to be incurred in pursuing this matter further was not justified and the matter was allowed to rest where it was.

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