Me Penny Hack, Business Lawyer, on the Nicolás Maduro Case: "People within Our Institutions Have Neglected Their Work"

Penny Hack, a business lawyer, analyzes the Nicolás Maduro case, stating that warning signs were present between 2016 and 2020, yet our institutions failed to address them with the necessary rigor. He points out that the real issue lies in the lack of ethics and political biases that undermine our institutions from within.

Following the Mamy Ravatomanga case, another international matter strikes the Mauritian financial sector with an investigation into 3.5 million euros seized related to an alleged Venezuelan bribe. How does this type of case affect the competitiveness and attractiveness of our financial center?

Firstly, it's important to remember that our financial sector includes hundreds of management companies and hundreds of thousands of clients. A case like Mamy Ravatomanga or Nicolás Maduro cannot solely represent the entire Mauritian jurisdiction. In a globalized financial system, it is unfortunately common for criminals to attempt to exploit financial hubs. However, this does not mean that there is a lack of vigilance or that management is systematically deficient.

That being said, the real issue in Mauritius is that for the past decade, our institutions have been infected with a significant amount of corruption, with individuals neglecting their duties while protecting the former regime.

Regarding the Maduro case, he was indicted well before 2020, with a reward of $25 million, later increased to $50 million, on his head. What I find strange is that neither the Independent Commission Against Corruption (Icac) at the time nor the Financial Intelligence Unit (FIU) acted on this information. It is only now that the truth is coming out. There has been a failure at this level, and the Financial Services Commission only reacted starting in 2021.

However, it would be simplistic and unfair to judge the entire Mauritian financial sector solely based on these isolated cases. Moreover, in terms of global financial flows, Mauritius, as a jurisdiction, represents only a tiny fraction.

Initial investigations indicate that funds from a corruption network estimated at $1.2 billion may have passed through a local bank via a company based in Mauritius. For some observers, this episode seems to highlight potential weaknesses in the anti-money laundering system. Your comments?

A bank has hundreds of thousands of clients, so it is inevitable that one or two problematic cases might escape vigilance. That can happen. The real issue here is that warning signs have existed since 2016-2020. Financial institutions should have paid more attention to these signals. Yet, there was a formal indictment of Nicolás Maduro in a New York court. Clearly, there were failures at this level.

It also seems that a certain global bias against Trump may have led some to not give enough importance to this case. It should have been taken seriously from the start.

In practice, management companies, wealth management firms, and financial institutions are supposed to implement strict due diligence procedures. Do you believe these obligations have been neglected or circumvented?

There was a certain bias surrounding this case. Banks and companies generally act properly and follow procedures. But in this particular case, I believe that the American political context influenced the perception and handling of the issue. I hope things will evolve now, with more objectivity.

Companies, whether banks or management companies, are required to submit a Suspicious Transaction Report (STR) to the Financial Services Commission as soon as a suspicious fund movement is detected.

How do you explain that none of these reports seem to have been filed, either in the Ravatomanga case or in the one related to former Venezuelan President Nicolás Maduro, despite the significant amounts involved?

We cannot say with certainty that this was not done. But if no report was submitted, actions must be taken against the companies involved. Likewise, if reporting was done but authorities did not act, sanctions must also be taken at that level.

As Mauritius prepares for the next evaluation by the Financial Action Task Force (FATF), could these two high-profile cases potentially harm our assessment?

I don’t think these cases, taken in isolation, are enough to weigh significantly in the balance. The FATF will not base its evaluation solely on one or two incidents but will assess the entire system and the developments since its last assessment. It will examine whether the situation has improved, stagnated, or worsened.

The real problem is not so much the absence of laws; our legal framework is already quite robust, some might even say overly strict. The fundamental issue lies within our institutions and the people within them, with their mindset, sense of ethics, and political biases, to name a few.

In your opinion, what measures should be taken to prevent a structure registered in Mauritius from being used to conceal illicit flows?

Personally, I believe it’s time to revalue our private institutions: companies, banks, law firms, and accounting firms. We need to trust them and hold them accountable, rather than imposing increasingly draconian laws or turning them into internal police departments. It is essential to encourage them to adopt a more ethical, professional, and honest behavior. Over-regulation could discourage investors, as the framework would become too complex. In the same vein, it would hinder operators, who would no longer be able to act freely and independently to develop their activities. Thus, I am in favor of reducing the current level of regulation.