Tuesday, April 12, 2016

Oxfam, IFC & Carlyle's Two Subsidiaries in Mauritius

Reuters reported:

The World Bank's investments in sub-Saharan Africa came under attack on Monday by global charity Oxfam which said the vast majority of loans made by the bank's private lending unit in the region went to companies using tax havens.
The charity said 84 percent of the bank's International Finance Corporation's (IFC) investments in the region in 2015 went to companies whose use of tax havens had no apparent link to their core business and with a low level of transparency.

I searched the Oxfam report for company names.  None were listed.  I'd hoped to see if any IFC investments went to private equity affiliates.

The Carlyle Group has a sub-Saharan African fund, which received a $50 million investment from the African Development Bank in 2012.  Carlyle has two subsidiaries in Mauritius, the African tax haven cited in Oxfam's report. 

The OxFam report had this to say about Mauritius:

Mauritius is the most preferred offshore destination for IFC clients

In 2015, 40 percent of total projects included companies with a subsidiary or headquarters in Mauritius. This is either clients themselves or indirectly through sponsors, technical partners or others involved in the project and thereby indirectly benefitting from the investment. But this small island is widely recognized for facilitating ‘round-tripping’ investment, which allows companies and individuals to take their money offshore, shroud it in financial secrecy, and then bring it back into the country disguised as FDI. This allows them to reap the reward of tax benefits only available to foreign investment; the money is subject to tax breaks rather than capital gains and income tax that should rightly be charged on domestic investment. As an example, 34 percent of total investment to India from 2000 to 2015 has come from the small island of Mauritius, most of it from the same building in Port Louis, the capital.

It's the PEU way, facilitated by the greed/leverage boys and their political sponsors.

Note:  IFC invested in Carlyle Mexico in 2007 and hosted a private equity meeting focused on emerging markets in 2006 where Carlyle co-founder David Rubenstein gave the opening address.