Mauritian financial scandal shakes Bramer Life
Brian Benza | Thursday April 9, 2015 18:00
The Authority’s decision came after it emerged that the Mauritian parent company, BAI Co was being liquidated after a P6.7 billion financial scandal was unearthed at its sister company.
BAI Co, which owns 80 percent of Bramer Life, was last week placed under conservatorship in Mauritius with the banking licence of its sister company, Bramer Banking Corp limited (BBCL) revoked. NBFIRA communications manager, Tapologo Kwapa confirmed that Bramer Life has been placed under curatorship with Nigel Dixon-Warren of KPMG appointed statutory manager.
“ Yes its correct. But, this does do mean Bramer life has been shut down. It is a temporary measure to determine to extent of the systematic risk posed by the closure of its parent company.
“Policyholders and members of the public are informed that Bramer Life licence remains valid to transact insurance business, however under statutory management until further notice,” said Kwapa. The central bank of Mauritius last week revoked BBCL’s licence and appointed liquidators after a ‘Ponzi’ investment scheme involving $693 million (P6.7 billion) was unearthed at the bank.
This led the Financial Services Commission of Mauritius to immediately act on BBCL’s sister company, BAI Co limited by placing it on conservatorship and appointing PricewaterhouseCoppers (PWC) as conservators.
A Ponzi scheme involves returns being paid out to investors from incoming money rather than from genuine returns on investments.
“The FSC Mauritius has been closely monitoring the exposure of BAI Co. (Mtius) Ltd in the BAI Group and in light of the systemic risk posed by the revocation of licence of BBCL, notice is hereby given that the Financial Services Commission has appointed PricewaterhouseCoopers as conservators of BAI Co (Mtius) Ltd in order to safeguard the interest of policyholders.
“The Conservator shall take charge of the business of BAI Co (Mtius) Ltd and all of its property, books, records, and effects and shall exercise all powers necessary to preserve, protect and recover any of the assets of the insurer, collect all monies and debts due to it, assert causes of action belonging to the insurer and file, sue and defend suits on its behalf and shall have such powers and duties as provided under the Insurance Act 2005” a statement of the Mauritian FSC website read.
Mauritius Finance Minister, Vishnu Lutchmeenaraidoo was quoted as saying that government is looking for an insurance company to take over BAI’s 156,000 policies.
By the time of going to press yesterday, Mmegi Business could not ascertain how main policy holders had Bramer Life managed to amass in its nine months of operation in Botswana.
According to reports from the Indian Ocean island, BBCL had been experiencing large withdrawals, placing it in a precarious liquidity situation. The regulator said BBCL had relied heavily and continuously since March 6 on overnight facilities from the central bank.
Bramer Life is BAI Co third subsidiary outside of Mauritius after opening similar offices in Kenya and Malta. Bramer Life was launched in Botswana last year amid optimism that CEO Reginah Sikalesele-Vaka, an old hand in the insurance business, would utilise her experience to up competition in the market dominated by a few firms. BAI Co invested P40 million into Bramer Life as initial capital investment.
Contacted for comment Sikalesele-Vaka, who is believed to own the majority of the remaining 20 percent in Bramer Life, said that all efforts were been put in place to ring fence the Botswana business from the scandal at the parent company.
“In terms of operations we expect very little impact on Bramer Life as it is an autonomous entity. However Bramer Life would have to find new shareholders as the Mauritian entity have been found by the authorities in that country to be not ‘fit and proper’ because of the financial scandal. The Botswana authorities will most likely find BAI Co to be unfit shareholders in Bramer Life as well,” she said.
Three of the five directors of Bramer Life are from BAI group, a development that would have added weight to NBFIRA’s decision to appoint an independent company to temporarily manage the company.