Mauritius Minister clears the air on Hindenburg's charges, says 'no shell companies' in country

Hindenburg Research's allegations of the presence of 'shell' companies in Mauritius are "false and baseless", said its minister while addressing the nation’s parliament.

Mauritius was in compliance with OECD-mandated tax rules, said Mauritian Financial Services Minister, Mahen Kumar Seeruttum.

"At the outset, I wish to inform the House that the allegations of the presence of shell companies in Mauritius are false and baseless," he said. "According to the law, shell companies are not allowed in Mauritius."

All global business companies licensed by the Financial Services Commission have to meet substance requirements on an ongoing basis and are being strictly monitored by the Commission, he said.

"So far, there has been no breach that has been found," he said.

He said the Financial Services Commission has taken note of the Hindenburg report against Adani Group but the regulator is bound by the confidentiality clause of the law and cannot disclose details.

"The Financial Services Commission can neither deny nor confirm whether an investigation has been and/or is being conducted. As such, disclosure of information on global business companies would be in breach of section 83 of the Financial Services Act and may have an adverse impact on the repute of our jurisdiction," he said.

US short seller Hindenburg on January 24 alleged that billionaire Gautam Adani-led Adani Group used shell companies based in Mauritius to manipulate stock prices of his India-listed companies.

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"With respect to the allegation of Mauritius being a tax haven, I wish to inform the House that Mauritius strictly complies with the international best practices and has been rated as compliant with the Organisation for Economic Cooperation and Development OECD standards," the Mauritian minister told the Parliament.

While listing out the requirements for the companies to register in Mauritius, the minister said that they first have to carry out their core income-generating activities in or from the country. They must be managed and controlled from Mauritius, have at least two directors resident in Mauritius, maintain at all times their principal bank account in the country, keep and maintain at all times their accounting records at their registered office in Mauritius and prepare their statutory financial statements and cause those financial statements to be audited in Mauritius.

The statement by the Minister of the Mauritius came just before the Supreme Court hearing in India on the Adani-Hindenburg issue. The apex court, which had appointed an expert committee to look into the regulatory issues, had scheduled the hearing on May 12. 

He said the Financial Services Commission monitored the Adani issue closely. "The commission is pursuing its actions within the ambit of the relevant legislations and in line with its current supervisory process. It has been carrying out reviews of all the companies cited in the Hindenburg report."

"And as part of the Supervisory Review, the Financial Services Commission has requested and received compliance reports pertaining to all the relevant companies, which show compliance with the prevailing legislations in Mauritius. Given the multilayering of those companies cited in the report, the Financial Services Commission continues to monitor the matter diligently," he said.

When the MP asked how he arrived at the conclusion that allegations made in the report are 'false and baseless', the minister said he was referring to the statement made the report with regard to shell companies being registered in Mauritius.

"And this is, like I said in my reply, to be able to be licensed in Mauritius, there are conditions and requirements that need to be satisfied. And those conditions, I have spelled out all those conditions, and based on the fact that these companies adhere to those conditions, then it is unfounded to say that those companies are shell companies" he said.

With inputs from PTI

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