Following the dismantling of the BAI Group, its Super Cash Back Gold policy was discontinued some two years ago. Former clients have started a hunger strike since last week. The new Minister of Financial Services, Good Governance and Institutional Reforms, Mr Sudhir Sesungkur paid a visit to the strikers. The Prime Minister, Mr Pravind Jugnauth, for his part, received the strikers at his office on Monday 15 May. Both reassured the victims that government is studying the case and a solution may be announced by next week. News on Sunday met Minister Sesungkur to get an insight into the matter.
Why have some policyholders been left behind during the reimbursements of SCBG investors?
It is important to look back in order to get a proper understanding of the BAI scam. A few years ago, many questions were being asked about the viability of the BAI group. As far back as in 2009, an audit report by KPMG concluded that the Group was practically bankrupt. In 2013, the then leader of the opposition in 2013, through a Private Notice Question, drew government and public attention to a massive Ponzi scheme in operation. Instead of the PTr/PMSD government taking bold actions, they condoned this practice and even gave a banking license to Bramer Bank. People should understand that BAI was a scandal of grand scale. The IMF rang the alarm bell and cautioned about the risk it posed to the country’s financial stability. Finally, the NTan report confirmed that BAI was operating a “Ponzi-like” scheme. It was therefore predictable that people were going to lose their money. Any responsible government could not have stood idle. Without any action, our whole economy would have been swallowed in little time by the massive hole which SCBG and Bramer Asset Management Limited schemes had become.
What was the purpose of your visit to the hunger strikers?
We do not play cheap politics on the sufferings and ill fate of others. There was nothing political in my action. I made it a point to visit the strikers as I know they are fighting for their rights. I said from the very outset that the BAI collapse was a tragedy. We are talking about honest people who have been lured. Stemming from a poor family, I understand the plight of these people. Had I not been an experienced accountant, I might have been one of them. The act of solidarity also testifies the PM’s and government’s concern to find a sustainable solution to their problem. Unfortunately, my predecessor [Mr Roshi Bhadain, who left the government earlier this year and now heads the Reform Party] has failed to work out an acceptable plan for all these clients. He gave false hopes that there is enough money to repay them. Now we know it was just hot air. He knew those promises could not be fulfilled. He has deliberately misled both the clients and the authorities that sums will be generated from the sale of assets, which will then be used to repay them back. Assets such as Britam, Courts, Iframac, vintage cars, etc. have been disposed at lower than expected amounts. At the level of my Ministry, we are looking at the whole aspect and severe actions will be taken against any wrongdoing.
What is the sum that remains to be paid to date and how much has been paid out?
As at date, more than 15,000 clients of SCBG and BAML have fully been paid out of a total of 20,000 clients. The total amount paid to date exceed Rs 10.6 billion and this includes Rs 3.5 billion which government has loaned to the National Property Fund Ltd. Slightly more than 5,000 clients are to be refunded a total amount of around Rs 9 billion. I must also add that payment has not been made in certain cases as they are subject to clearance/s by relevant institutions. My predecessor had also excluded certain institutions from repayment (cooperative societies or NGOs – namely Vidur Co-op, Arya Maha Sabha, Hindi Pracharini Sabha, etc). So, if we were to refund these institutions, the amount will go up. My office has taken a series of actions to recover as much money as possible to be able to repay the clients. NPFL has secured the services of Kroll for tracing assets of the ex-BAI Group which may be held abroad. Other actions are being taken locally to seize assets and recover money. A Commission of Inquiry has been set up on the sale of shares of Britam (Kenya) which has caused a net loss of approximately Rs 2 billion. This sum would have been of great help to alleviate the miseries of those clients.
Is there a solution to the problem?
The Prime Minister has met with the representatives of the SCBG and BAML, including Mr Salim Muthy to engage into a dialogue. He has exposed the situation and that unfortunately, there are not enough funds available to repay them. He nevertheless made a request to the members present not to engage in extreme measures as a Ministerial Committee has been set up to look into the matter. The Prime Minister is a man of action and will never make a promise upon which he cannot deliver. We are attentive to the demands of the clients and are working relentlessly towards a solution. This being said, we need to act as a responsible government, we cannot use public funds to repay private investors. Any inconsiderate action could have grave impacts on our capital budget and affect our debt level. The government is aware that BAI has been an unprecedented crisis in the country’s economic history, which my predecessor has further compounded. He has made judgemental errors at the initial stage which has led to the current situation.
Do you think government will take a decision on the matter and how long will it take?
There is a solution to every problem. However, what matters is whether the solution will satisfy everybody including the public. We should not forget that different categories of the population have different takes on the situation. There is no one size fits all. Let’s wait for the PM to make the announcement because we are serious and we are dealing with this matter seriously without making a lot of noise which would affect the morale of the people. The government is having meetings on a daily basis with all its technicians be it weekdays or weekends. Public service officers are working till late night along with members of the government. We should trust all those involved, especially these unsung heroes who always advise with wisdom and find solutions in difficult situations.
What’s next after the visit?
The Prime Minister has been very clear that a country cannot be governed through hunger strikes. We are working on a sustainable solution. Progress can only be achieved through dialogue and understanding. May I remind you that the mission of my Ministry is to fight against fraud, corruption, malpractices, and irregularities and above all to ensure a policy of good governance and best practices? We will see to it
that similar scams do not happen in future and that people’s investments are safe. So it is a long journey in order to make Mauritius a respected and reputed International Financial Centre where investors feel protected.