Economic Governance and Management Chapter 4 Chapter 4 for corruption. In addition to the Customs Department, the police and the National Transport Authority, corruption is said to be widespread in awarding contracts under the capital budget and that there is collusion between officials, contractors and suppliers. 567. The CRM is convinced that the perception is prevalent among major stake-holders and the public that corruption is a serious problem in Mauritius, even if it is only relative and far less than in almost any other African country. The government should therefore take this problem seriously and endeavour to inform and sensitise the public on the level and trends in corruption and at the same time strengthen its efforts to fight corruption. ICAC may want to consider undertaking its survey on corruption every two or three years compared with every six years, as happens at present. In addition, the government must do everything possible to show that the ‘big fish’ and well-connected individuals are not immune to prosecution. 568. Money laundering seems to be less of a problem than corruption. Mauritius has adopted a number of laws and subscribed to a number of regional and international conventions on corruption and money laundering. Stakeholders in Mauritius generally believe that the current legal framework can deal with these problems. 569. The sources of money laundering are drug money, money from gambling and tax evasion. There seems to be little money laundering by individuals based in Mauritius. The laundering of drug money rarely came up during the CRM’s visit. The CRM did not find any credible evidence that the laundering of drug money was significant or a major problem in the country. 570. Allegations of money laundering, especially from India and South Africa, seem to be far more serious. Investors from India and South Africa engage in what is called ‘round tripping’. They establish investment companies in the financial centres in Mauritius and use these companies to invest in India and South Africa. There are several advantages for the companies involved. Among them are the fact that it is easy to start businesses in Mauritius and that taxes in Mauritius are much lower than in India and South Africa. These companies therefore avoid paying taxes in Mauritius, on the one hand, and also in India and South Africa on the other. 571. 216 Officials in Mauritius insist that the current rules and regulations comply fully with international norms and standards for money laundering. They also point to the bilateral and regional agreements Economic Governance and Management that provide for cooperation against money laundering between Mauritius and its neighbours in Africa and in Asia. The Mauritian authorities minimise or dismiss the allegations that Mauritius is a platform for tax evasion and money laundering. The authorities regard the activities of these investors as ‘fishing expeditions’ to get financial information. They also feel that the investors resent Mauritius’s policy and progress in developing a tax-free economy and are jealous of it. According to officials in Mauritius, they cooperate fully with neighbouring countries and give all the information requested when a credible case is made that Mauritius is being used to evade taxes and launder money from neighbouring countries. In addition, the Mauritian authorities point to the work of the FIU, which is described below, the cooperation between the FIU and similar institutions in African and other countries, and the efforts of the FIU to help establish and/or strengthen similar institutions that fight money laundering and tax evasion in neighbouring African countries. 572. The CRM believes that the authorities in Mauritius must take these allegations of tax evasion and money laundering more seriously, be more sensitive to the problems facing their neighbours, and make greater efforts to address the concerns of its neighbours that Mauritius is being used by people in neighbouring countries who are trying to evade taxes and launder money. However, this will not be easy given the goal of Mauritius to become a tax-free haven and the inevitable disparity in the level of taxes between it and its neighbours. However, it is an issue that officials could address within, for example, the framework provided by the SADC MoU on Macroeconomic Convergence (2002) and the SADC Finance and Investment Protocol (September 2007) that provides for, among other things, cooperation in investments and common provisions for taxation. Failing this, Mauritius may well encounter barriers to investment in neighbouring countries. 573. However, laws dealing with corruption in the private sector suffer from the requirement that a person may only be prosecuted with the cooperation and support of the principal or owner. Nonetheless, the CRM believes that the problems with the fight against corruption and money laundering lie more with implementing existing laws and regulations than with the laws themselves. 574. The most important agency in the fight against corruption is ICAC. ICAC was created as an autonomous institution answerable to no one. The prime minister appoints its director after consulting with the 217