Most of you not working in the Offshore industry must have one day wondered, either from a newspaper article, or a fancy money laundering plot in a movie, what does Offshore really mean. Those of you outside Mauritius must perhaps be viewing it with a suspicious and curious mind while those of you in Mauritius must be thinking that working in Offshore must be a great way to earn loads of money quickly. Well… yes and no. This year I will (finally!) have worked 3 years in the offshore industry, and I should be in a better place to tell you more about it. I feel that this should be documented, as I have never read anything anywhere about offshore from the point of view of a critical, curious, gold-digger, not-keen-to-work-too-hard, feel-superior-than-everybody 26 year old point of view…
I started to work in the Offshore industry because it seemed to be making a lot of money back in 2009 and they offered to pay some expensive professional exams for me and I had nothing else better to do. You must understand that, in my opinion, for a young professional in Mauritius, most of the time, from my 5 years working experience, you either choose to do a boring and stressful job and earn loads or risk everything and do your dream job, but then you can afford only a dalpuri (cheapest street meal there is) for lunch (OK maybe I am being a little satyrical, but believe me, this is not that far from the truth from my point of view). So in Mauritius, most ambitious social ladder climbers either opt for working in banks, big financial institutions such as insurance companies, or (here we go!) offshore management companies (OMCs or MCs in Mauritius slang). We have the big huge ones which employ hundreds of people, where it takes you lots of sleepless zombie years (approximately 10) and sucking up to become a manager, and there are smaller ones which employ dozen of employees where they hire people with experience from the bigger MCs at more or less the same pay, but with fancier titles so that these gullible people receive a (false) sense of achievement of having climbed up the hierarchy, but do they really?
So what do all these people actually do all day? Offshore products range from companies (domestic or foreign), funds (open and closed ended), trusts, societes, and more recently in Mauritius, partnerships. The usual team structure in MCs is made up of administrator, senior administrator, team leader, manager, senior manager, head of X Product, Director, etc… And then there might be fancy shared services such as business development, product development, tax planning etc. So what do they DO?? Ok, I am getting to that part! They come to the office at 08 30, get a huge cup of coffee, and set about administering a portfolio of offshore products: filing with the authorities, drafting of financial statements, payment of regulatory fees, liaising with the clients, chasing them to pay their fees, investing the clients money, buying posh villas and maintaining them, holding board meetings with corporate directors and drafting endless minutes of meeting, and in the best case scenario, making sure that everything is financially and legally sound. This can range from really interesting structuring of investments to reallyyyyyyy boring paperwork, depends on the days, really.
So what about money laundering? Well, I would like to point out that money laundering is a serious crime, so we do not do it 😛 We do something called enhanced due dilligence, which means making sure that we know our client, and especially their source of funds. Local regulatory regulations are quite stringent, especially after political and popular pressure from India. But some structures are so elaborate and so spread out across the world that one cannot assure you that they can be 100% convinced of the source of funds in certain cases, but legally it is the very first administrator who cashed in some shady funds without ascertaining the source who is to blame.
Mauritius is a lucky country, we are friends with everybody – Africa because of our strategic position, Europe because of our being past British and French colonies, and most importantly, India, our beloved mother India – because most of our ancestors come from India, we love Bollywood, our grandparents wear sarees and speak broken Hindi dialects, our food, our culture, our TV channels all are very much India-centric. Yes I am coming to it, we have enjoyed the benefits of the India double taxation treaty (DTA) for decades now. I am pretty sure that the offshore industry in Mauritius has largely fed off and developed from the India DTA. This means that Indian people find ways to invest all of their money in Mauritius companies and thus pay much lesser taxes than what they would have paid had it stayed in India. HOWEVER, the Indian government is now realizing how much it is losing in taxes through this DTA, and it is a sure thing that they are going to eliminate it anytime soon.
So what will happen to the Mauritius offshore industry then? It is an industry which has fed off the friendly diplomatic ties and regimes the island has enjoyed since independence. But this is not sustainable, as we will soon witness with the India DTA. What then? Will the thousands of Mauritian youngsters lose their jobs? Maybe… But let’s hope not. We dream of a day that “Mauritius will be to India what Monaco is to France” or what Cayman Islands is to USA or what Jersey is to UK… What about being the bridge between Asia and Africa that we have heard politicians speak about ever since we were kids? Singapore, Marshall Islands, even Seychelles are tough competition. We need to build on expertise, find niches, and grow sustainably. Let us hope that the business leaders will act now.