Adani Group Scandal is a BIG RISK for the Mauritius Tax Haven

The Mauritius tax haven is found on a secluded tropical island located in the Southern Indian Ocean. A seemingly peaceful country located 2000 kilometers East of Madagascar. For me, it was always a tantalizing stop over after my many visits to Sub-Saharan Africa. But what is the real hidden secret of Mauritius?

Mauritius is controversial, at least in my opinion. From the thuggish local surfer community, to its completely dilapidated coral reefs, to being the last known location of the infamous (and now extinct) dodo bird, there is much hidden beneath the surface on Mauritius.

However, the focus of this post will not be about its flora and fauna. Instead, we will shed light on the financial controversy surrounding Mauritius which the latest scandals have once again brought to the surface.

Is the Mauritius Tax Haven Indian or African?

Although Africa has been a close neighbor for time immemorial, the connections to Africa are hard to find there. In fact, if you go to Mauritius, it is easily perceived that the local population is obviously not of African decent.

Indeed, the close geographical proximity of Mauritius to Africa, belies its close political, cultural and economic ties with India.

The ties with India are a bit too close actually. This is clearly evident in the most recent scandal to strike the island. Once again, the mutually beneficial relationship between the Indian government, Indian Business and the Mauritius tax haven has gone too far.

Brief History of the “Desai Papers” Scandal

As mentioned, this is certainly not the first time the Mauritius tax haven has come under scrutiny. Indeed, Mauritius has survived many scandals in the past. Before the most recent Adani Group revelations came the Desai Papers scandal.

The Desai Papers scandal was strikingly similar to the “Panama Papers” debacle in the way it played out. But ironically, you probably never heard of it in contrast with the Panama Papers which was broadcast worldwide. 

The source of the two scandals was the same. That being a well known tax haven was exposed because files were leaked by an trusted insider who betrayed their clients (Tax Advisory Law Firm). However, there is one main difference between the “Desai Papers” and the “Panama Papers”. The difference is that this time the exposed clients were all from India.

Specifically, the Desai papers publicly exposed 33 files revealing controversial tax planning strategies espoused by the largest companies in India in addition to several high net worth individuals. The data leak revealed their secret ties to the notorious tax haven countries such as Mauritius, British Virgin Islands, Cayman Islands and also Guernsey Island. (None of which are citizenship by investment countries which we cover.)

Unfortunately, the leak itself was of dubious origin as it involved a law firm employee who revealed confidential information. Apparently, for a greater good but an illegal and questionable source nonetheless.

Ironically, the Desai Papers received very little, if any, international attention. Indeed, the press coverage of the Desai papers paled in comparison to the Panama Papers and especially compared to what Hindenburg Research recently uncovered about the Adani Group of companies.

No Surprises in the Hindenburg Research Report

Apparently, the Hindenburg research was conducted over a period of 2 years. But in contrast with the Desai Papers, most of the evidence unleashed by Hindenburg was already publicly available.

Nonetheless, the stock market reaction was brutal. However, the contents of the report should have come as little surprise. Indeed, the data was already well known to the Indian government and everyone in India for that matter. In fact, government investigations into the same alleged indiscretions revealed by Hindenburg have been pending for years.

Apparently, the economic benefits of allowing big business in India to use the Mauritius tax haven outweighs the risks. This long standing quid pro quo brings in a flood of investment dollars to India, while creating jobs for average Indians and getting the local politicians reelected.

Furthermore, allegations abound in the report which seem to implicate government officials were taking bribes all along. Plus, both Gautam Adani the founder of Adani Group and Narendra Modi, the extremely popular prime minister of India are from the same home state of Gujarat. Which in India, apparently means a lot. At least according to Hindenburg Research.

So just the same, there was nothing the Hindenburg report revealed that everyone concerned did not already know about. However, this time there is reason the Mauritius tax haven should be worried. The new scandal may have a secret but very powerful perpetrator.

This risk is especially salient for non Indian investors who have registered offshore companies and bank accounts in Mauritius. 

What is Really Behind the Latest Threat to the Mauritius Tax Haven?

A tiny island country like Mauritius could never impose its will on a global power such as India. It is the other way around. Clearly, the truth is that the Indian government does not care about tax dodging Indian companies. If they did, they would have done something about Mauritius a long time ago.

The secret is revealed by the uncanny timing of the Hindenburg Research report. Hindenburg is indeed a US company, who ostensibly has a short position against the Adani Group.

Nonetheless, the effect of the Hindenburg report brought disrepute to the Indian government at a time when the US government was seeking to do exactly that. This effect seems to be too well timed to be a mere coincidence. Just follow the money trail, US dollars to be exact.

The Real Target of Hindenburg was India, Not Mauritius

To be clear, besides Indian companies using the Mauritius tax haven to avoid tax, there is a much larger international issue in play. The issue is that the Indian government has continued to support Russia with largest purchases of Russian oil. This is despite the fact that the US government has persistently warned them to cease from doing so.

What is even more alarming for the US government is that the Indian government is now paying for Russian oil using Emirati Dirhams which is the national currency of the United Arab Emirates (UAE).

In addition, despite US demands to denounce the war in Ukraine, both the UAE and India have refused to denounce or disassociate themselves from the Russian government. The result has been contrary to the expectations of the US government.

Indeed, not only the UAE and India but also China, Brazil, Indonesia and practically the entire Global South have not distanced themselves from Russia at all. In fact, they have strengthened their ties.

This brings us to the real reason for the conspicuous timing of the Hindenburg report. The US government is desperate to prevent the failure of the US dollar as the global reserve currency. Ultimately, they will fail, but in the interim a small tax haven country like Mauritius has become collateral damage.

Mauritius Tax Haven is no Longer Politically Neutral

Essentially, the Mauritius tax haven has been weaponized in the war of the “Western Democracies” against Russia. Small players could easily get trampled on which is why second citizenship a critical addition to your offshore plan.

There are several options to acquire a second passport, although European countries are not going to solve your problem. Indeed, Western Europe is anything but politically neutral against resurgent global powers such as Russia and China.

Therefore, a wise expatriate will think twice before pursuing European citizenship by ancestry, marriage or long term residency. By doing so you are gambling your future.

The war could easily spill across the Ukraine border into Eastern Europe, or vise versa. Russia sees the war as existential, for Europe it is the same. So anything can happen in these crazy times. You must have a politically neutral citizenship.

Contact me to protect your family and your wealth against potential disaster. Rest assured that I have walked in your shoes on the path to global access and economic freedom. The time is now to protect yourself against an uncertain future.

Tax Haven Agent
Edwin Morgan Managing Director Go Global Corporation PTE LTD