Harvesh Seegolam Faces Accountability for Alleged Public Funds Misappropriation

The new year has not begun on a strong note for the banking sector in Mauritius. The reputation of both the sector and the jurisdiction has been tarnished following the arrest of former Governor of the Bank of Mauritius, Harvesh Seegolam.

Key Dates in Seegolam’s Tenure:

• February 20, 2020: Seegolam is appointed as the Governor of the Bank of Mauritius (BoM).
• November 21, 2024: He resigns from his position as Governor of the central bank.
• January 3, 2025: Seegolam is detained at Plaisance Airport for questioning “Under Caution” by the Anti-Money Laundering Unit of the Central Criminal Investigation Department.

The scandal is revolving around a questionable disbursement of Rs 45 million made by the Mauritius Investment Corporation (MIC) on October 28, 2023, to a high-risk company categorized as a “Category 5” entity.

Seegolam is responding to accusations regarding this transaction, which reportedly occurred during an election campaign, as highlighted by Dr. Rama Sithanen, the new governor of the BoM.

According to Sithanen, this incident constitutes a case of misappropriation of public funds.

The approval process for the Rs 45 million disbursement raises eyebrows.

Dr. Sithanen noted that the initial request was rejected by the MIC’s board but was later resubmitted and approved, despite the company failing to meet 11 out of 25 conditions stipulated in the “term sheet.”

Within the Bank of Mauritius, the sentiment following Seegolam’s arrest is mixed.

Some employees, hired during his tenure, empathized with his situation, while others were critical of his leadership.

Fear has reportedly settled among certain staff members.

An insider remarked, “Some employees who worked on controversial cases, including those related to Silver Bank, were merely following orders.

Nevertheless, they are anxious about potential repercussions and fear they will bear the consequences.”

This scandal casted doubt on the functioning of the MIC under the previous administration.

One banker emphasized the urgent need for reform, stating that good governance must take precedence in the banking sector.

He insisted that all accomplices, whether directly or indirectly involved, must face justice to uphold good governance.

The impact of this case could harm Mauritius’s reputation and potentially affect its Moody’s credit rating.

“This is extremely serious and a significant setback for the jurisdiction,” the banker added, recalling that Seegolam had received the title of Central Bank Governor of the Year at the 7th African Banker Awards in 2023.

Kamal Hawabhay, Managing Director of GWMS Ltd, stressed that such issues are unwelcome, especially involving the position of a central bank governor.

“The former governor is accused of actions detrimental to both the sector and the country.

Meanwhile, sanctions and actions are already underway, sending a strong message that misconduct will not go unpunished,” he argued.

What can be inferred from the early stages of this case? According to the banker, this is serving as a warning for upcoming regulatory appointments.

He added that the profile of future regulatory leaders must be impeccable, as they are expected to set an example.

“They cannot regulate the sector and commercial banks if they themselves have significant shortcomings in their practices,” he concluded.

Source: Defi Media