Port Louis - A Ponzi investment scheme has been found at Mauritian lender Bramer Banking (BBCL), the Indian Ocean's premier said on Friday, after the country's central bank revoked its banking license and appointed liquidators.
The central bank said an onsite examination conducted at BBCL from January 22 to February 20 revealed a number of significant deficiencies, which had been conveyed to the bank.
“The Bank of Mauritius has appointed PricewaterhouseCoopers (PwC) as receivers for BBCL," Prime Minister Anerood Jugnauth told reporters on Friday. "We had to act rapidly because we are in [the] presence of a Ponzi scheme of about 25 billion rupees (R8.16bn).”
He gave no further details and did not say how many depositors would be affected or the likely scale of any losses.
Mauritius has been in the headlines already this month over another alleged Ponzi scheme. Cobus Kellermann, who runs Cape-based money manager Clarus Capital, was recently accused of being the mastermind behind a massive global Ponzi scheme run out of Mauritius.
READ: Capetonian Kellermann accused as kingpin of R200bn Belvedere Ponzi
Calls to the bank went unanswered and its website could not be viewed.
A Ponzi scheme involves returns being paid out to investors from incoming money rather than from genuine returns on investments.
The Bank of Mauritius said BBCL had been experiencing large withdrawals, placing it in a precarious liquidity situation. The situation was worsened by difficulties faced by the bank in raising funds on the interbank market.
The regulator said BBCL had relied heavily and continuously since March 6 on overnight facilities from the central bank.
Jugnauth said the Financial Services Commission also appointed PwC as conservator for insurer BAI, to safeguard the interest of policy holders, in the light of the systemic risk posed by the revocation of licence of BBCL.
BBCL, which is listed on the Stock Exchange of Mauritius, was issued with a banking licence on August 27, 2008.
Shares in BBCL, which had closed unchanged at 4.30 rupees on Thursday, have been suspended.
UPDATE:
Since publication of the article above, several regulatory authorities have conducted investigations into the allegations of fraud and of a possible Ponzi scheme and have found as follows:
The Guernsey Financial Services Commission having reviewed their Enforcement Division’s report and accompanying evidence concluded that no further action will be taken and that their proceedings are at an end.
The US based Chartered Financial Analyst Institute stated, after reviewing the information available to them, that their Professional Conduct program decided to close its investigation and to take no disciplinary action, reserving the right to reopen the matter if new information comes to hand.
The Financial Sector Conduct Authority found no evidence of any breaches of the relevant South African financial sector laws.