Mauritius, the new destination for dirty money

High interest rates, minimal documentation and an unresponsive government are enough incentives for terror financiers and politicians to stash away their ill-gotten wealth in Mauritius. But does the world, especially India, realise the inherent dangers, asks Vicky Nanjappa

Very recently, a politician who was about to lose face parked a large amount of money in a bank in Mauritius, the islands off south-east Africa. A confidential document shows that post WikiLeaks and the Swiss bank controversy, many money transactions have shifted to banks in Mauritius.

An International Monetary Fund report states that the risk of money-laundering has increased in Mauritius. The bigger worry is that wherever there is black money, terror follows suit.

What started as a fund-parking zone for terror groups in benami names has now attracted money-launderers as well.

Indian Intelligence Bureau officials told rediff.com that a lot of investments are being made in Mauritius and that it has become very difficult to track the original source of the money.

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People have been found to be investing money in the names of their brothers or distant relatives and hence the trail becomes extremely difficult unless and until there is proper assistance from the officials of that country.

Even terrorist organisations, who are supported by the well-established Dawood network, have been investing in a great deal of property in Mauritius. Trails of these investments can also be found in countries like Malaysia and Singapore, say sources.

Besides, investigators also say that there is a lot of mixed funding that could be found in these countries.

Not ruling out a nexus between some terror groups and politicians who have used these countries as a safe parking ground for their funds, investigators believe there is a need to thoroughly investigate these cases and also bifurcate the two forms of money being parked over here.

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The IB says there is a need to scrutinise the banks or financial institutions in particular, as they have become extremely liberal in nature and have been offering sops to attract money-launderers.

Interest rates of over 20 per cent, very little questioning and documentation have made parking of illegal money very easy. Moreover, they favour investments from non-residents.

For the IB, the bigger headache has, however, been the parking of terror funds in Mauritius. And it is going unnoticed by the country's government.

The international community is yet to wake up from slumber on the issue (as they did in the case of the Swiss bank accounts) and until there is a proper awareness the issue is likely to remain unresolved for many years.

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While India claims that it needs the support of the international community in resolving this menace, the rest of the world feels that a lot of money that is being pumped into the country is done through the underworld and the drug cartel operating out of India.

The international community states that the money that is being raised through these operations is used directly to fund terror. The hawala remittances from India have been emerging from Kerala. However, there are trails to show that such money is also being pumped into Mauritius.

Various reports show that in the past three years hawala transactions pumped into these countries by the underworld/drug cartel and kin of politicians amount to nearly Rs 2000 crore. All this money, according to the report, was initially shown as an investment from India, but mysteriously vanished once it reached these tax havens.

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The IB says there is a clear bifurcation in the manner in which these terror groups have been working. While using these tax havens to park their funds, they have also ensured that none of their modules have been operating from these places, in a deliberate ploy to avoid facing too much heat in one particular country.

A group like the Lashkar-e-Tayiba has very safely installed its modules in countries such as Nepal and Maldives and they use the funds from the tax havens to take their activity forward. In fact, in a country like Maldives they have managed to spread over the 300-odd isolated islands and set up bases rapidly.

Today, according to intel inputs, they have over 1000 operatives at their disposal.

India, thus, has its task cut out. But making things worse for it is the fact some politicians too have been using these tax havens. This gives terror financiers automatic protection, since the resolve to track the money is weakened thanks to the involvement of high-profile personalities.

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