Mauritius to help SEBI probe stock scam

NEW DELHI DEC. 12. The Securities and Exchange Board of India and the Financial Services Commission of Mauritius today signed an agreement for sharing of information on securities dealings that would assist SEBI to investigate the securities scam of 2000-01 and prevent similar incidents in future. The memorandum of understanding (MoU) envisages assistance in discovery of and taking action against insider dealings, market manipulation and other fraudulent practices in securities dealing. "This is a general agreement. We have been looking at incidents (of market manipulations) that have already occurred,'' the SEBI Chairman, G. N. Bajpai, told presspersons, adding that the agreement would assist the regulator to investigate live cases of securities scam of 2000-01. There had been allegations that some brokers involved in the scam had used the Mauritius route to siphon off money. Admitting that there were `legal impediments' earlier, the Mauritius Minister for Economic Development, Sushil Khushiram, said his country had amended the laws for facilitating regulators to cooperate in investigating scams and market infringements. "With this MoU, we see a decline in recurring problems and increase in the long term sustainability in economic cooperation between the two countries,'' he said. The agreement also covers enforcement of laws, supervising securities and derivatives markets, clearing and settlement activities, takeovers and mergers. The two countries would sign another agreement for prevention of money laundering after India. "All the clouds that have occasionally arisen over our relationships will be cleared once and for all by preventing malpractices,'' Mr. Khushiram said, adding foreign investment flows between the two countries were unlikely to be affected after the agreement. The proposed agreement also assumes importance in view of the inability of regulators SEBI and the Reserve Bank of Inia to trace back within a short period the scam money that was laundered through overseas corporate bodies located in Mauritius. "Mauritius has upgraded the anti-money laundering authority and set up a financial intelligence unit that will exchange information on a worldwide basis. We hope, with the passage of Money Laundering Bill in India, we will exchange with India as well,'' Mr. Khushiram said. Mr. Bajpai clarified that incidents of tax evasion would be dealt with separately by the Income-tax Department. The SEBI chief also pointed out that similar agreements had already been signed with the Securities and Exchange Commission of the U.S. and the market regulator of Malaysia. "This agreement is part of International Organisation for Securities Commission's agreement to share information with other regulators,'' the FSC Chairman and Bank of Mauritius Managing Director, Baboo R. Gujadhur, said. The agreement comes after the Finance Ministers of two countries met in April to put in place mechanisms for exchanging information on securities dealings.