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Three months after its incorporation, the Mauritius Deposit Insurance Corporation still has no staff. Three of its seven directors worked at the Bank of Mauritius.

The Mauritius Deposit Insurance Corporation (MDIC) was established to manage the deposit insurance scheme. The Mauritius Deposit Insurance Scheme Act was passed in 2019 and promulgated in June. The objective of the MDIC is to protect depositors, by providing insurance for their bank deposits. This is a guarantee that in the event of the failure of a member bank, the deposit is guaranteed up to a certain amount. According to a document from the Registrar of Companies, the MDIC has seven directors, including the Governor of the Bank of Mauritius and its two Deputy Governors. The members of the board are, subject to subsection (2) of the Act, appointed in accordance with the statutes of the MDIC. The first board is composed of members appointed by the Bank of Mauritius with the approval of the supervising Minister. The MDIC must also have a CEO who is appointed by the board under such conditions as it determines. According to our information, this appointment will not be long in coming. The Banking Committee chaired by Harvesh Seegolam has already discussed the issue of the Mauritius Deposit Insurance Corporation during one of its meetings with the CEOs of the country's banks. However, for now, the MDIC does not have any staff.

Board

Harvesh Seegolam, Mardayah Kona Yerukunondu and Sadhna Sewraj-Gopal, who sit on the board of the Bank of Mauritius, are among the directors of the Mauritius Deposit Insurance Corporation. Is there a conflict of interest? Economist Sameer Sharma says no. He points out that the central bank’s primary mandate goes beyond inflation to protect financial stability. “The country’s central bank is the bank of last resort. It is in a way the bank of commercial banks. It makes perfect sense for the central bank to manage the system by exercising effective control over it. In a small country like Mauritius, it does not make sense to create more and more overlapping bodies,” he argues.

It turns out that a new responsibility – and not an insignificant one – has been given to Harvesh Seegolam. He was appointed Chairman of the Financial Services Commission (FSC) on 3 July 2024. Queries sent by Le Défi Quotidien to the Bank of Mauritius regarding a possible conflict of interest have remained unanswered. However, Sameer Sharma believes that all Mauritians today understand that there is a very small clique of people who have shown loyalty to the government and who are still rewarded with multiple positions. However, it is not unusual, he points out, for the Governor of the Bank of Mauritius or the First Deputy Governor to chair the Board of the Financial Services Commission (FSC). The First Deputy Governor has already assumed this responsibility. The current problem, the economist argues, is that Mauritius is facing a foreign currency liquidity problem. The fiscal policy of the government and the central bank has caused this problem. β€œIt is clear that the central bank's priority should be to fix monetary policy on its messy balance sheet. The more responsibility you give to the same person, the less likely he will be able to handle his big problems,” concedes Sameer Sharma.

For his part, Hafeez Toofail, a financial sector professional, is of the opinion that the appointment of the governor as the chairman of the FSC is quite normal. This is because, he says, Harvesh Seegolam knows this body very well. “Also, it is important to maintain good synergies between the BOM and the FSC. These two institutions have similar roles and functions, although they supervise different sectors. With his appointment, everything will happen as usual. The BOM and the FSC collaborate on a number of fronts. Prudential supervision, anti-money laundering are some of them. And it is important that the two bodies align and look in the same direction,” he says.

Effectiveness of institutions

The independence and effectiveness of the agencies are closely monitored internationally. The International Monetary Fund’s Article IV has already raised the issue. However, Sameer Sharma deplores the fact that appointments to the heads of important institutions for the country, such as the BoM, are only made on the basis of who is loyal to the Prime Minister or the government and who is linked to them. They are put in these positions, he points out, because it is known that they will follow orders. On the other hand, Hafeez Toofail argues that the method of appointment in these agencies is defined in the Bank of Mauritius Act and the Financial Services Act. It is up to the legislators, he continues, to see and assess whether they need to be changed. “Let us not forget that these methods of appointment have been in place for a number of years and have proven to be very effective. It is not the institution that makes the man, it is the man who makes the institution,” he concludes.

Survey on the composition of boards in Mauritius

carolineThe results of the “2024 Survey on Directors’ Fees and Board Composition in Mauritius” were unveiled on July 3, during an event held by the Mauritius Institute of Directors, in collaboration with Korn Ferry. According to Caroline Piat, Associated Consultant of Korn Ferry, this third study shows that Mauritian companies have taken significant steps towards improving the competitiveness of directors’ remuneration. And there is an alignment of compensation practices across different sectors.

“We have also seen clear improvements in terms of diversity and independence in board composition. Two important trends that further align Mauritian practices with international standards. These changes strengthen trust among stakeholders and support sound decision-making. This improves corporate governance standards with regard to director remuneration and board composition,” she explains.

What does the 2024 Survey involve?

  • 56% of companies listed on the stock exchange
  • 44% of unlisted companies
  • Strong representation in sectors such as banking and diversified groups (20% each), as well as services (17%).

In numbers :

MDIC

20,000 ordinary shares
Declared capital: Rs 200,000

Shareholder

Bank of Mauritius:
20,000 ordinary shares

Directors of the Mauritius Deposit Insurance Corporation to be appointed on 26 March 2024

  • Chedumbarum Pillay Neil Radhakrishna
  • Cooblall Vinay
  • Kona Yerukunondu Mardayah
  • Paturau Marie Francoise Sarah
  • Ramkhalawon Vasish
  • Seegoolam Harvesh Kumar
  • Sewraj-Gopal Hemlata Sadhna.

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