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Mauritius Hits Back Over Mass Account "Leak"

Tom Burroughes, Group Editor, 29 July 2019

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The Indian ocean jurisdiction has angrily reacted to news of the "leak" by the group of journalists.

The government of Mauritius and other parties have hit back at the latest set of "leaks" to hit offshore centres, involving the Washington DC-based International Consortium of Investigative Journalists. The group said it has obtained a cache of 200,000 accounts from the Mauritius office of Conyers Dill & Pearman.

Mauritius joins jurisdictions such as the Bahamas, Panama and the British Virgin Islands that have seen account data fall into the ICIJ's hands. The group points out that the existence of such accounts does not necessarily suggest illegal activity. It does not say how it acquired the information.

The government of the Indian Ocean International Financial Centre (IFC) stated that the material was "illegally obtained and tampered with, and of the allegations which are of a serious and malicious nature, and factually incorrect. It is noteworthy that criminal investigation is currently being conducted after the police has received complaints that the systems of a corporate service provider has been illegally intruded and breached.”

"It would seem that the ICIJ itself is confused as to the purpose and objective of its articles. And it appears, therefore, that its agenda is to use its unsubstantiated ‘findings' and incorrect arguments just to harm the repute of Mauritius. In this light, the Government of Mauritius firmly rejects the statement that Mauritius is ‘a small island off Africa’s east coast [that] helped companies leach tax revenue from poor African, Arab and Asian nations,’ as stated in one of the articles by ICIJ’s Will Fitzgibbon," the government continued.

Axis Fiduciary Ltd, in a commentary on the matter, said: "This self-proclaimed ‘investigation’ was apparently based on a USB key which ICIJ received anonymously, and it is therefore reasonable to assume that the data contained therein may have been illegally obtained. Whilst the ICIJ has admitted that the information did not reveal any illegal activities, the report uses sensational headlines, derogatory statements, half-truths, false and out-of-context information to put Mauritius in a bad light."

The harsh language suggests that IFCs such as Mauritius are becoming less reluctant to hit back at what they say are unacceptable breaches of client confidentiality. Already, academics and other commentators – including those worried about money laundering and tax evasion – fear that legitimate financial privacy is threatened by such leaks. (See an editorial commentary here.)

One of the ICIJ's leading articles on the “Mauritius leaks” (the name it gives to its investigation) looks at the ways in which a private equity firm belonging to Sir Bob Geldof, the poverty campaigner/musician, had been based in Mauritius (it stated that Sir Bob had declined to comment).

However, a spokesman for Geldof’s firm, 8 Miles LLP, told the ICIJ that its investors included international development finance institutions that “request that we consolidate their funds in a safe African financial jurisdiction for onward investment into the various target African countries. Because of its reputation, Mauritius is used by many private equity investors for this purpose.”

According to the ICIJ, its "investigation reveals how a sophisticated financial system based on the island is designed to divert tax revenue from poor nations back to the coffers of Western corporations and African oligarchs, with Mauritius getting a share. The files date from the early 1990s to 2017".

Conyers
Conyers ceased operations in Mauritius at the start of April last year and former Mauritius colleagues now operate as Venture Law Limited. Venture Law has employed a third-party data security company and launched an investigation to determine the scope of the issue. This matter has been reported to the relevant authorities in Mauritius, according to a statement on its website.

“Our clients are our top priority and we are sorry that their confidential business information has been stolen and made public in this way. We are investigating the sources and extent of the data theft as a matter of urgency,” said Christian Luthi, the chairman of the firm. “Our investigations to date show that only a limited number of files from our former Mauritius office were taken. Conyers is contacting clients that we know to have been affected.”

“Conyers strictly adheres to the laws of all the jurisdictions in which we operate and upon which we are asked to advise. The firm does not and will not comment on confidential matters relating to our clients," Luthi added.

Policy changes
Since the arrival of international tax-information sharing agreements (drawn together under the Organisation for Economic Co-operation and Development’s Common Reporting Standard), IFCs, both onshore and offshore, say that they have been at pains to stamp out illicit money.

The disclosure of the beneficial ownership of companies and trusts has been a difficult issue. Advocates of public registers say that they will deter people from trying to hide money from legitimate authorities, while their opponents say that this increases the danger that the owners of legitimate wealth will be kidnapped and attacked. Some critics worry that governments will, in accordance with the Common Reporting Standard, transfer information to other regimes with poor or non-existent methods of protecting privacy.

(The CRS has been dubbed an "accident waiting to happen" by a senior lawyer in a paper for Mishcon de Reya.)

The Mauritian government said that the ICIJ was "apprised, at the very outset, of the recent legislative and policy changes brought to our system, but nevertheless focused on obsolete information". The government claimed that the ICIJ equates the signing of Double Taxation Avoidance Agreements with tax-related malpractices, saying: "This is incorrect. Sovereign nations freely sign DTAAs after arms-length negotiations in order to mutually improve their investment climate with a view to attracting foreign direct investment, and to prevent burdensome double taxation of the same income during cross-border investments and transactions."

The jurisdiction’s government said that more than 70 nations had signed 3,000 tax treaties. It also said that it based its treaties on a combination of the United Nations’ and OECD’s model tax treaties. It added that in July 2017 Mauritius had signed the Multilateral Convention to Implement Tax-Treaty-Related Measures, commonly known as “Multilateral Instruments” (MLI), as part of the OECD’s BEPS [base erosion and profit shifting] actions.

See articles about the Panama Papers, Paradise Papers and BVI sagas.

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