Africa-Press – Mauritius. When the Independent Commission Against Corruption (ICAC) released the declaration of assets for a list of former and new MPs and ministers, the public was pleasantly surprised by this apparent gesture of transparency.
Frankly, he did not expect the commission to reveal what our elected officials in the 2014 and 2019 polls say they have. But when he saw the details of the individual statements they filed with the ICAC, he couldn’t believe his eyes.
Surprise has given way to general questioning, skepticism in some, and outrage in others. Before getting to the heart of the matter, let’s set the context to better understand the law and its shortcomings.
The Declaration of Assets Act 2018 was passed by the National Assembly on December 12, 2018 to introduce a new legal framework governing the declaration of assets in the public sector.
This law was amended on July 5, 2019 [The Declaration of Assets (Amendment) Act 2019] before coming into force on August 22, 2019. Important provisions of the law
Article 2 of the law defines eight categories of assets which are mainly movable and immovable property (see Table 1). Article 3 of the law lists the persons who are required to make a declaration of assets and liabilities, in particular:
members of the National Assembly, including the Speaker, members of the Rodrigues Regional Assembly, and members of municipal and district councils;
Senior officials of the public sector (except judicial officers such as magistrates and judges), executive heads of municipal and district councils, presidents and executive heads of statutory bodies and enterprises under state control, and State officers and advisers employed under contract with a salary equivalent to that of a Deputy Permanent Secretary.
Section 4 of the law requires anyone covered by section 3 to file a declaration of their assets and liabilities with the ICAC, including those of their spouse and minor children, according to statutory deadlines.
It is also required to declare any property sold, transferred or given to adult children and grandchildren, including any income or profit from an account, partnership or trust. Role of the ICAC The law gives the ICAC the mandate to: (a) be the custodian of asset declarations (under article 4 of the law),
(b) monitor the assets and liabilities of reporters with a view to detecting, and investigating, corruption, money laundering and illicit enrichment offenses (under article 9 of the law), and
(c) disclose to the public the declarations of assets prescribed in Article 7 of the Law. Limitations of the law
Section 7 (1) of the law requires the ICAC to disclose statements filed by members of the National Assembly, including the Speaker, members of the Rodrigues Regional Assembly, and members of municipal councils and district councils.
However, there is a limitation to this requirement. Indeed, paragraph 7 (2) of the law does not authorize the ICAC to disclose any information provided by persons referred to in paragraph 7 (1) concerning:
money deposited in accounts, in any currency, in local or foreign banks or in non-banking institutions;
any item of jewelry, any precious object or watch whose value exceeds Rs 500,000;
cash in hand not exceeding Rs 1 million in any currency.
Section 7 (3) of the Act does not allow disclosure of statements other than those covered by paragraph 7 (1). This means that statements by unelected individuals such as senior officials in the public and parapublic sectors will remain confidential in the records of the ICAC and may not be released to the public.
Section 5 (2) of the law states that no declarant is required to: (a) specify the value of any asset included in the statement of assets, unless the asset is in money,
(b) specify the nature of its interests in the assets, including those jointly owned, and
(c) the nature of its liabilities (debts) in relation to assets. Intention of the legislator
In light of the aforementioned restrictive provisions of the law, the questions would be:
What was the intention of the legislator when he introduced the law on the declaration of assets?
Was there an ethical intention to allow for a measure of transparency that could ensure the full confidence of the public in the integrity of its elected representatives and senior public sector officials?
Or was the intention to allow for a minimalist statement that gives a semblance of transparency without exposing elected officials to the test of critical examination of their degree of wealth or opulence?
In theory, the intention of the legislator, which is always open to interpretation, is based on law.
In practice, the intention of the legislator will be judged against a framework of ethical or moral references. Gaps in the law It is from this point of view that the whole question of the declaration of assets should be analyzed.
The obligation imposed on certain individuals to declare their assets and the disclosure of these declarations by the ICAC come up against significant gaps and limitations in the law which do not do justice to two imperatives of good governance: (a) transparency affairs and transactions; and (b) the duty to be accountable for its decisions and actions in the exercise of power.
First, under paragraph 7 (2) of the law, the ICAC is not allowed to disclose the bank accounts of elected officials (deputies, ministers and city and district councilors), less their money in hand. of Rs 1 million and their valuables over Rs 500,000.
The disclosure of the assets of elected representatives is therefore reduced to the heritage of movable property (vehicles, boats, company shares, bonds and other financial instruments) and property real estate (land holdings).
Information provided to the ICAC on bank accounts will be kept confidential. We will not know with what money they acquired their property. Second, section 7 (3) of the law does not authorize the disclosure of statements of assets by senior officials in the public and parapublic sectors.
It is an aberration because these officials, like the presidents and chief executives of parastatal entities (CEB, CWA, STC, etc. ) and companies under the control of the State (Air Mauritius, Mauritius Telecom, SICOM, etc.
), negotiate government contracts (supply contracts) worth billions of rupees. They should be above suspicion.
Third, the declaration of assets is based on a quantitative approach insofar as the declarant only has to declare the assets that he has acquired. Under paragraph 5 (2), he is not required to provide a monetary valuation of the acquired property.
If we know how much movable property (company shares or vehicles) or real estate (houses, land) a person has bought, we will never know the value of those assets. Monetary valuation
If the degree of relative wealth can be judged by the number of assets acquired, it is more by the monetary valuation of assets that one determines whether someone is a millionaire or a billionaire.
In accounting, monetary valuation normally takes place according to one of two criteria: (a) the historical cost of the asset, i. e. its acquisition value at the time of purchase or transfer, and (b) the current fair market value.
When the disclosed asset statements do not mention any value, it gives free rein to the imagination of the curious. From the historical cost to the fair market value of any asset, there is always an upward appreciation over time, except for movable assets (e.
g. vehicles) which lose value as a result of the usage and depreciation. For example, a land property (house or land) that costs Rs 1 million to buy can be worth Rs 5 million after a few years with inflation and rising market prices.
At the time of the resale of this property, the seller realizes capital gains of Rs 4 million. If one were to apply fair market value to all real estate reported at this time, most of its owners would be found to be potential or existing multimillionaires.
Sources of income It is not enough to speak of monetary valuation of acquired property to determine whether the individuals concerned are wealthy people.
It is still necessary to know what are the sources of income that financed the purchase of the goods. For the purposes of taxation for individuals, there are five sources of income:
(a) employment income from a salaried or managerial position,
(b) business income from self-employment or from a profession,
(c) property income (dividends on stocks, interest on bank accounts or bonds, rental income),
(d) investment income (return on investment in financial instruments), and
(e) income from capital gains (capital gains) realized on the sale of movable property (e. g. corporate shares) and real estate When we buy movable property (vehicles, boats, company shares, etc.
) and real estate (houses, land, commercial buildings), we do so from certain sources of income or from repayable loans. Without wanting to call into question the integrity of those principally concerned, questions arise:
Have these loans or income been declared to the tax authorities?
Since some of the acquired real estate properties are in Europe or in Persian Gulf countries, how much foreign currency has been transferred for this purpose?
Was the transferred money subject to income tax beforehand?
These are all questions that the Mauritius Revenue Authority (MRA) should probably be interested in.
The MRA, it should be remembered, has already indicated that Mauritian individuals have Rs 104 billion in various investments abroad. Under section 4 (4) of the law, she can ask a chamber judge to authorize the disclosure of any statement of assets for investigative purposes.
High Net Worth Individuals When examining the disclosed asset declarations, there are four categories of declarants: (a) those who say they have no assets, either furniture or real estate,
(b) those with modest assets (a house and one or two cars),
(c) those who have significant assets in number and variety (land, company shares, various investments) and are relatively wealthy, and
(d) those who have a great deal of wealth in number and variety, including overseas properties, and are very wealthy. These are considered High Net Worth Individuals whose assets greatly exceed liabilities (loans and mortgages).
Another question that arises: are the statements disclosed by the ICAC only the tip of the iceberg given the loopholes and limitations of the law? There are arguably many wealthier people in Mauritius whose annual income and assets are not known to everyone due to the confidentiality of banking affairs and the security of property rights in the market economy.
Mauritian law does not prohibit anyone from becoming rich by acquiring property and appreciating personal wealth as long as all income received is declared to the tax authorities. Only illicit enrichment is punishable, and the MRA has every means to detect it if it takes an interest in it without fear or favor.
What the history of the statements disclosed in Mauritius and elsewhere teaches us is that these countries are coping very well with heritage capitalism of which some within the political class are the beneficiaries.
It is the system based on the accumulation of capital by the haves who sometimes use political and economic power to their advantage. To do this, they adopt measures that promote the growth of wealth inequalities in society such as income tax proportional to a fixed rate (15%), tax exemption on dividends and the absence of income tax. capital gains (capital gains tax).
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