Offshore: Mauritius Cited in a Case of Round-Tripping

SEBI has issued notices to five major Indian companies, including United Spirits, Unitech, Essar, GMR and Sterlite on suspicion of price manipulation actions and operations insider trading, with funds parked abroad.

The opinion is based on the report sent by the UK market regulator, the Financial Services Authority (FSA) in 2010, targeting the international bank UBS. The latter is a financial services company, whose headquarters are in Basel and Zurich, Switzerland. It is the largest bank in asset management in Europe (Private Wealth Management). Its main activities are private banking, investment banking and asset management.

SEBI is trying to determine whether there has been connection between UBS and the five Indian entities, whether these have raised funds abroad through external commercial borrowings and other instruments, then use the scheme the "round-tripping", that is to say, using an investment fund to invest in shares in India between 2005 and 2008. round-tripping is a step to get out of a country's capital in this case India, then reinvest through a foreign entity (eg Mauritius), and while taking advantage of tax incentives offered by the offshore center where the entity is registered.

According to the Times of India, the Mauritian financial center which is believed to have been used as a medium of investment for these operations alleged round-tripping.

Recall that the same report the FSA had brought SEDI investigate the Anil Dhirubhai Ambani Group (ADAG), believed to have used a based in Mauritius to illegal investments in another group company funds. But no prosecution was initiated, as the regulator and ADAG had agreed through a consent procedure in early 2011. Conversely, two ADAG companies, namely Reliance Infrastructure and Reliance Natural Resources have spent about Rs 250 million as consent fee. "Consent does not imply acceptance or opposition to the charges," the newspaper The Hindu.

This is not the first time that Mauritius is quoted in a case of round-tripping. At the beginning of the year, the Minister Cader Sayed-Hossen, who was on mission in India, recalled that "when funds flow through several countries, it is very difficult for anyone to identify the original source of money. But original sin is a system that allows that kind of money without control. "While insisting that Mauritius does not allow operations" round-tripping ". " There has been a lot of talk about round tripping by Indian entities operating from Mauritius, but nothing has ever been proved " he had said.