Rose-Belle Sugar Estate’s Rs3 Billion Assets Overshadowed by Rs1.2 Billion Debt

Several tenants of the Rose-Belle Sugar Estate’s commercial centre have failed to pay their rent for an extended period, raising significant concerns within the Ministry of Agro-Industry. The Ministry of Agro-Industry and Food Security is spearheading a thorough investigation into the estate’s management. A formal statement from Minister Arvin Boolell is expected in Parliament on Tuesday 6th May, as the government vows to clarify the facts.

Founded in 1855 by G. Rochery, the Rose-Belle Sugar Estate was a cornerstone of the local economy.

Acquired by the state in 1973 for Rs 18 million to avert collapse, it once spanned some 6,600 acres across Grand-Port and Savanne, and was managed by the Rose Belle Sugar Estate Board established through parliamentary legislation.

Shrinking Estate, Questionable Land Sales, Leases & Dubious Partnership

The estate’s once vast acreage has shrunk dramatically to less than 1,000 acres. Investigations suggest a series of land sales at below-market prices have eroded its physical and economic footprint.

Defi Media reported that commercial leases have been granted at preferential rates, with ongoing rent defaults by certain tenants, particularly at the Rose-Belle shopping centre.

Further, some joint ventures have been labelled as “highly questionable,” compounding suspicions of mismanagement.

Audits have uncovered a glaring absence of regular financial checks over the years, mounting debts, arbitrary hiring, and inexplicable salary hikes.

Ministry insiders lament the evident disregard for international accounting standards.

In the midst of these alarming revelations, Minister Arvin Boolell is poised to address Parliament on Tuesday 6th May, as calls for accountability and justice for the Rose-Belle Sugar Estate’s legacy intensify.

Rose-Belle Sugar Estate Board

According to Defi Media, the government is contemplating the reinstatement of an operational board within the Rose Belle Sugar Estate Board (RBSEB).

However, before taking this step, it seeks to “clarify responsibilities” and delve into the underlying causes of the estate’s decline.

“We must identify accountability, establish shortcomings, and implement a recovery policy,” stated a government source.

The troubling state of the estate is not a recent development; rather, it appears to have reached a critical juncture in recent years, exacerbated by inconsistent decision-making and deficient governance.

The Financial Crimes Commission may also be called upon to conduct further investigations into the matter.

While private sugar companies have managed to restructure and diversify their operations over the past few decades, Rose-Belle remained a glaring exception.

For the time being, the ministry continues its audit, and parliamentary’s statement could pave the way for significant structural reforms, or even legal action, should the evidence warrant it.

Serious Shortcomings Unveiled

In August 2023, the Office of Public Sector Governance (OPSG) submitted a comprehensive report to the Ministry of Agro-Industry, highlighting severe deficiencies in the management of the RBSEB.

Despite its 144 pages of findings, criticisms, and urgent recommendations, this report was largely ignored, allowing the RBSEB to continue its financial and managerial decline.

The organisation holds a portfolio of assets valued at over Rs 3 billion, yet suffering from poor governance, a glaring lack of professional expertise, and administrative mismanagement.

The OPSG pointed out that only three qualified executives are in place to oversee an entity of this magnitude.

The report revealed losses of Rs 21 million in 2017 and Rs 89 million in 2018.

Although a seemingly positive financial turnaround occurred in 2019 and 2020, with profits of Rs 117 million and Rs 142 million, this improvement was primarily due to asset sales rather than genuine operational performance.

According to the OPSG report, the RBSEB is also grappling with a critical cash flow situation.

The liquidity ratio was unfavourable between 2016 and 2018, with current liabilities exceeding available assets.

By the end of 2022, the bank overdraft had soared to Rs 1.2 billion, while Rs 98.8 million in old loans from the Ministry of Finance remained unpaid.

Alarming Financial Practices and Mismanagement

Among the noted irregularities, irrecoverable debts of Rs 14.6 million were written off without independent assessment; Rs 77 million, initially earmarked for a voluntary departure plan, were diverted to fund ongoing operations, and monthly allowances were disbursed to unqualified personnel.

Projects such as Le Moulin have resulted in substantial losses: the RBSEB contributed land valued at Rs 90 million but holds only 17% of the shares, with no certificate issued to date.

A Business Park costing Rs 161 million was launched without a feasibility study, and a joint venture with Corexsolar, concluded without a tender process, allocates 80% of profits to the private partner, contravening principles of transparency.

The RBSEB also struggles to manage its receivables, with unpaid rents reaching Rs 53.87 million by the end of March 2023. Debts dating back over 25 years have never been recovered.

The “Land and Lease” section suffers from a lack of clear organisation and is led by employees without qualifications in land management.

Even the database of available rental properties is incomplete. In light of this accumulation of failures, the report recommended urgent reforms and a comprehensive overhaul of the management of the Rose-Belle Sugar Estate.

Source: Defi Media