The Financial Services Commission, Mauritius (FSC) issued a statement in connection with the allegations leveled by Hindenburg Research regarding the use of Mauritian shell companies and the country being labeled as a ‘tax haven’. FSC said that offshore funds mentioned in the latest Hindenburg report against the SEBI Chairperson Madhabi Buch, are not domiciled in the Island nation, while adding that the legislative framework in Mauritius does not permit creation of shell companies.
“Mauritius has a robust framework for global business companies. All global business companies licensed by the FSC have to meet substance requirements on an ongoing basis as per section 71 of the Financial Services Act which is strictly monitored by the FSC,” it said in a statement issued on August 13. The regulator highlighted that Mauritius strictly complies with international best practices and has been rated as compliant with the standards of the Organisation for Economic Co-operation and Development (OECD).
“As per the peer review conducted by the OECD Forum on Harmful Tax Practices, the OECD is satisfied that Mauritius does not have any harmful features in its tax regimes, thus recognizing Mauritius as a well-regulated, transparent and compliant jurisdiction. Therefore, Mauritius cannot be termed as a tax haven,” FSC said.
The Mauritian regulator also clarified that the funds mentioned in the report released by Hindenburg Research – ‘IPE Plus Fund’ and ‘IPE Plus Fund 1’ – are not licensees of the FSC and not domiciled in Mauritius. ‘IPE Plus Fund’ is a small offshore Mauritius Fund and ‘IPE Plus Fund 1’ is a fund registered in Mauritius, it informed.
On August 10, the US-based short seller had alleged that SEBI’s Madhabi Buch, and her husband opened an account in 2015 with a wealth management firm in Singapore to invest an undisclosed sum of money in a Mauritius-registered offshoot of a Bermuda-based fund. The Mauritian fund, it had stated, was run by an Adani Group director, and its ultimate parent was the vehicle used by two Adani associates to round-trip funds and inflate the company’s stock prices.
Soon after the release of the report, Madhabi Buch and her husband Dhaval Buch had issued a joint statement denying the allegations made by Hindenburg Research. The Buchs categorically denied these claims, calling them “baseless” and “devoid of any truth”. They emphasized that their finances are transparent and have been fully disclosed to SEBI over the years. The couple expressed their willingness to share all financial documents, even those predating Madhabi Buch’s tenure as SEBI Chairperson, with any relevant authorities.
“It is unfortunate that Hindenburg Research against whom SEBI has taken an Enforcement action and issued a show cause notice has chosen to attempt character assassination in response to the same,” the statement read.