December 8, 2006

DUBAI COMPANY OFFERED SMB PRAWN FARM

Was Faure’s statement to the National Assembly another government smokescreen?

The SPPF members, of what’s left of the National Assembly following the boycott by  SNP MNAs, were treated to a surprise appearance in their midst last week by the newly appointed Minister of Finance, Danny Faure. Faure came to inform them of the new privatisation plans the government has for SMB (Seychelles Marketing Board). Faure is not only the Minister of Finance but also the “Chairman” of SMB.

But the “surprise” announcement, ostensibly meant to lay out the “privatisation plans” for the largest and most controversial parastatal, is being interpreted as an elaborate smokescreen to cover up a decision already taken by the Government to dispose of the Coetivy Prawn Farm to a company from the United Arab Emirates. The information also talks of a secret Memorandum of Understanding (MOU) already having been signed with the Government.

Faure’s statement on SMB was unprecedented coming just one week before making his maiden budget speech. In the past President Michel, as Minister of Finance, would reserve such details to be unwrapped in the budget speech as Christmas goodies. News this week that President Michel has gone on an official visit to Abhu Dhabi – one of the member states of the UAE - throws a lot of light onto the appearance of Faure in front of the National Assembly.

Faure was appointed Chairman of the controversial parastatal by President James Michel soon after the latter’s election, even though the SMB Act, under which the parastatal operates, clearly states that the Chairman of the Board must be the President of the Republic, to whom the Board must also report. This oxymoron has essentially taken a new twist, as Faure effectively becomes an “impostor president of the Republic” when it comes to SMB’s affairs.  That, it appears did not faze the government one iota. Critics doubt if Faure actually reports to State House, but rather to Maison du Peuple which, critics also say, has taken over the privatisation of the parastatal.

Setting a commercial value to the prawn business could be a bit more “complicated” than anyone could imagine, if information we are getting turns out to be true, that some of the ponds in which the little tiger prawns grow to giant ones, are owned not by SMB directly but by bearer share companies registered in the Cayman Islands. This information, albeit unconfirmed, say that the giant prawns are then “sold” to SMB in foreign exchange, which the latter in turn exports to earn the foreign exchange.  If true, this scenario will be a new one in the annals of commercial endeavours. Instead of scheming profits from the top, we would have invented scheming from below.

Unravelling the financial mystery will be a hard task since SMB publishes consolidated accounts.  A consolidated account is one where a company owns other companies called subsidiaries and associates; this is usually done for share evaluation purposes. In the case of SMB, the ulterior motive was to hide the losses of some of its entities. SMB’s accounts are audited not by local accounting firm but by an obscure arm of the international accountancy firm KPMG, based in Paris, France – at least that’s who they claim they are.

Setting a commercial value on SMB Prawn, as for the rest, is even more difficult, since SMB is not a creature born out of commercial necessities (that is, the profit motive – the essence of capitalism) or taxation laws. SMB was created by a law erected during the one-party state, has been and continues to be a law onto itself. Like the one-party state, from which it was spun, SMB was cooked up by Rene as a means to achieve the total control by the State of all the commercial activities in Seychelles, from private individuals and the commercial class. It was exempted from paying business tax by a clause inserted in the Business Tax Act itself, when it was made law in 1987. 

While Rene was SMB’s progenitor, Guy Morel – who died recently and has been praised in eulogies – was its midwife. The supreme irony for Morel was that some years ago, he was the one who put his name to a legal challenge of SMB’s supposed immunity from the law in respect of price control, which everyone else was afraid to do. His attempt was frustrated by Chief Justice Vivekenan Alleear who ordered the Registrar of the Supreme Court to reject the plaint in a typical unprecedented and unlawful move.

SMB Prawn operates on an outlying (coral) island. The operation is supported by two landing craft style reefer vessels as well as a state of the art propeller driven aircraft which flies to neighbouring countries such as Mozambique on SMB’s behalf, as well as to ferry staff to and from Mahe.  No customs or immigration officers have ever been based on the island, thus there are no official government records of what or who the aircraft brought into the Seychelles territory via the island. It remains to be seen if the new Arab owner will also enjoy the trappings of a state within a state, as Mukesh Valabhji was able to enjoy since he was put in charge of the parastatal in 1985. SMB Prawns’ employees are mostly expatriates.

The island accommodates all its workers but also has, according to reports, a “plantation” style grand house and an ocean going cabin cruiser which some say existed for the exclusive use of the then Managing Director – Mr Mukesh Valabhji and the SMB Chairman, President Rene.  It remains to be seen whether these perks will be considered as assets for the operation of the prawn farm or will remain a playground for the President of the Republic and his close entourage at the expense of the Arab owner.

Reports, however, point to an environmental disaster of unprecedented proportion in the making on Coetivy. It claims that a large track of land around the ponds has been contaminated by discarded hydrocarbon residues dumped on the sandy soil.

The “privatisation” plan of the largest but very controversial parastatal, as announced by Faure, departs completely from President Michel’s own elaborate privatisation plans announced with great fanfare by Minister Jacquelin Dugasse in June last year in a document called Privatisation Strategy. Indeed, Faure’s plan makes a total mockery of the whole process of privatisation of President Michel’s administration, just as the “privatisation” of SACOS was. Ironically, information about the UAE connection comes from Dugasse’s office.

The official document (Privatisation Strategy) published by Jacquelin Dugasse in June 2005, defines what it called specific Principles of the Privatisation Process. These were listed as 1) All transactions will be conducted in an open and transparent manner and consistent with normal standards of commercial discretion; 2) all sales will be on a cash basis and/or secured terms of payment not linked to the divested assets; 3) A prospectus or offering memorandum will be prepared and publicised for each privatised entity to be divested, and a full body of financial, management and other information will be available for disclosure to the investing public; 4) Fair and equitable bidding process will be established; 5) criteria for ranking bids will be established and publicised by the National Tender Board. Bids will be opened in public and upon completion of the sale, the names of the purchasers, the prices paid and the conditions of sale will be made public and the valuation of the assets and the details of all offers will be placed in the public domain.

It is evident that Minister Jacquelin Dugasse’s  Privatisation Strategy and the commitment he gave on behalf of the government, not just to us here in Seychelles, but also to the international community at large was meant to be just an attempt to pull the wool over our eyes. The privatisation of the State Assurance Corporation is already proof that President Michel has no intention of keeping his word.

Copyright 2006: Seychelles Weekly, Victoria, Mahe, Seychelles