Monday, October 18, 2010

On Mauritius - and Zimbabwe

We are getting really tired of hearing of corporate malfeasance via Mauritius. It is a favourite location for "round tripping" - whereby a local wealthy official in a country: India, say, or Kenya - goes off to Mauritius, dresses up in offshore secrecy, then returns back home, disguised as a foreign investor, in order illegally to reap all the exemptions and tax breaks that foreign investors get - or to pursue any number of other nefarious schemes, safe from the rule of law.

In this story Khadija Sharife is once again on form, this time looking at the Mauritius link to the crooked leadership of Zimbabwe, as reported in the Harvard International Review. Among other things, it notes:
One company in particular, New Reclamation, has engaged with the Zimbabwean government through a joint venture called Mbada. The company's operating arm, Grandwell Holdings Ltd, has been created a Global Business Category II (GBCII) entity, essentially a paper company, using Mauritius as the 'tax haven' of choice. As the Zimbabwe Mining and Development Corporation (ZMDC) admitted, due diligence into internal financing mechanisms, beneficiaries and other critical details, could not be conducted as it was 'a paper company registered in Mauritius.'

Such shell corporations act as passthrough conduits allowing for economic activities, including profits and transactions, to be disguised and transferred through to 'ultimate beneficiaries'. GBCII companies are tax free enabling entities allegedly accruing tax to escape taxation, while facilitating the flow of profits to ultimate beneficiaries.
It is time for right-thinking governments to start cracking down hard - very hard - on this fast-growing, almost impenetrable facilitator of corruption in the Indian Ocean.


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