Mauritian Regulator Refutes Hindenburg Research Allegations

The Financial Services Commission (FSC) of Mauritius has responded to allegations in a Hindenburg Research report, denying claims about shell entities and tax haven status. The FSC emphasized Mauritius' robust regulatory framework and clarified that they do not permit the formation of shell companies.

The Financial Services Commission (FSC) of Mauritius issued a statement on Tuesday addressing allegations made in a recent report by US short-seller Hindenburg Research. The statement refuted claims that Mauritius allows the creation of shell companies and can be described as a 'Tax Haven.' The FSC serves as the integrated regulator for the non-banking financial services sector and global business.

'FSC has taken cognizance of the contents of the report published by Hindenburg Research on 10 August 2024, which mentions 'Mauritius-based shell entities' and describes Mauritius as a 'tax haven.' The FSC emphasizes that Mauritius' legislative framework does not permit the creation of shell companies and that it has a robust regulatory regime for global business,' the FSC's statement read. 'All global business companies licensed by the FSC must meet ongoing substance requirements as per section 71 of the Financial Services Act, strictly monitored by the FSC. Furthermore, Mauritius complies with international best practices and is rated as compliant with Organisation for Economic Co-operation and Development (OECD) standards,' the statement added.

The FSC also clarified that the fund 'IPE Plus,' mentioned in the Hindenburg report, is not licensed by FSC Mauritius. 'Hindenburg's report cited 'IPE Plus Fund' as a small offshore Mauritius fund,' the FSC stated. 'We wish to clarify that IPE Plus Fund and IPE Plus Fund 1 are not licensees of the FSC and are not domiciled in Mauritius.'

Hindenburg's report alleged that in a complex structure, a Vinod Adani-controlled company invested in the 'Global Dynamic Opportunities Fund' in Bermuda, which then invested in IPE Plus Fund 1 in Mauritius. The report also implicated the SEBI Chairperson and her husband, Dhaval Buch, in having hidden stakes in these funds. In response, SEBI Chairperson Madhabi Buch and her husband released a joint statement emphasizing that the investment was made in 2015 when they were private citizens in Singapore and well before Madhabi Buch joined SEBI.

Additionally, on Tuesday, global index provider Morgan Stanley Capital International (MSCI) announced it would remove the freeze on Adani Group stocks. This decision follows ongoing scrutiny concerning the Hindenburg Research allegations. Starting from the August 2024 Index Review, MSCI will implement changes, including updates to the Number of Shares (NOS), Foreign Inclusion Factor (FIF), and Domestic Inclusion Factor (DIF) for Adani Group and associated securities.

(With inputs from agencies.)