Mauritian Minister Mahen Kumar Seeruttun rejected allegations made by short seller Hindenburg Research
New Delhi:
Mauritian Financial Services Minister Mahen Kumar Seeruttun has rejected allegations made by US short seller Hindenburg Research on the Adani Group using the Indian Ocean archipelago as a safe house to create shell companies.
Hindenburg on January 24 alleged that industrialist Gautam Adani used shell companies in Mauritius to manipulate stock prices of Adani Group firms.
Mr Seeruttun has told the island nation’s parliament that there is no shell company in Mauritius, and so the Hindenburg allegations are “false and baseless”.
A shell company is an inactive firm used as a vehicle for financial transactions.
The Financial Services Commission, the Mauritian equivalent of the capital markets regulator Securities and Exchange Board of India (Sebi), has said it has not found any breach of law by the 38 companies and 11 funds linked to the Adani Group.
“We have set up a very robust framework for global business activities in Mauritius. Our global business sector is well regulated today. The Financial Services Commission, before giving a business licence, ensures conditions set in our laws are met,” Mr Seeruttun said in an interview with NDTV.
He said every business that wants to set up base in Mauritius has ensure several conditions required by the country’s laws should be met, should prove their core income-generating activity, and among other conditions, should have at least two local directors.
The Adani Group has called the allegations made by Hindenburg a “calculated attack” on India, its institutions and growth story
“They should have bank accounts, keep records, and audit accounts and file them in Mauritius. Many conditions need to be met before they can get a licence… So when the (Hindenburg) report mentioned about shell companies operating in Mauritius, I had to say it’s not true at all. It’s baseless,” Mr Seeruttun said.
He pointed at how a few years ago the Financial Action Task Force (FATF) evaluated the systems in Mauritius and the island nation complied with all the conditions.
The FATF is a global organisation that works to stop money laundering, terror financing and other threats to the international financial system.
“This shows the robustness of our systems… But in the media they show us as a tax haven country and cast suspicions. The focus is totally incorrect,” Mr Seeruttun said, adding the conditions for getting a business licence is so strict in the island nation that he had no problem in telling the parliament the Hindenburg allegations are baseless and stems from not understanding how the Mauritian system works.
On whether the Mauritian authorities have shared information with Sebi on the Hindenburg-Adani row, Mr Seeruttun said information-sharing happens all the time. “I don’t see any reason not to have shared any information if it has been requested by Sebi in this particular matter,” Mr Seeruttun said.
He cited how Mauritius made major reforms on global tax matters in 2018. Experts from the Organisation for Economic Co-operation and Development (OECD) had reviewed the island nation’s tax laws.
“Based on that, today I can tell you that Mauritius does not have any harmful tax practices. About being a tax haven country, we are whitelisted (by the OECD). So it is unfair to be treated with suspicion when we have complied with all the requirements sent by the OECD,” Mr Seeruttun said.
He did not rule out taking legal action against Hindenburg Research, but the priority right now is to reassure the business and investor community. “Businesses that know the truth will not base their decisions on such reports (Hindenburg),” the Mauritian Minister told NDTV.
Dhanesswurnath Vikash Thakoor, the chief executive of Mauritius’ Financial Services Commission, has also said an initial assessment of all entities linked to the Adani Group in the island nation were found to be compliant with local laws and rules.
The Adani Group has called the allegations made by Hindenburg a “calculated attack” on India, its institutions and growth story, saying the allegations are “nothing but a lie”. It said the report was driven by “an ulterior motive” to “create a false market” to allow the US firm to make financial gains.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
