A “pre-meditated Rs25 billion Ponzi scheme” according to the prime minister, echoed by the minister of finance. “No report talks about a Ponzi scheme” contradicts the minister of tourism. “We should not use the term Ponzi” the conservators warn. And policyholders serving notice to the government for using the term ‘Ponzi’. Allegations of ministers harassing and intimidating members of the Rawat family. A letter signed under duress, according to Dawood Rawat’s lawyer… The British American Investment (BAI) saga is a topic on which a wise editorialist would be very wary of offering an opinion. Much safer to keep your mouth shut and write about global warming or healthy eating. But let’s strike a compromise and talk about Dawood Rawat, the man behind the BAI empire. I hasten to say that he is neither a friend nor a foe.
Rawat could be construed as our local Jamsetji Tata. Both men were entrepreneurs par excellence with a slight chip on their shoulders. And, just as Tata, according to legend, vowed to build a luxury hotel after he had been refused entrance into a European-owned one, Rawat set himself the task of outdoing the local ‘traditional private sector’ in Mauritius. If Tata started with a hotel, Rawat started with an insurance company and grew his business to cover just about anything, from retail to a state-of-the art hospital. Setting out to extend his tentacles even further, he started buying anything that was going. You wanted to sell it; he was willing to pay for it.
Rawat did benefit from his proximity with former Prime Minister Navin Ramgoolam. He, however, competed on an equal footing with other businesses in several activities. He may have received land to build a hospital for a symbolic Rupee. He, nonetheless, introduced standards of medical care hitherto unknown in Mauritius and pushed his competitors on the back foot. And it was certainly not through political patronage that even his detractors started queuing up for the high-quality care his hospital was offering. He complemented that with an outstanding nursing school devoted to training nurses, recruiting largely form the lower strata of society.
Then his appetite grew further and he took even more risk. He could not get a loan? Why not set up a bank? Bramer Bank was born and soon the cracks started appearing. According to rumour, there was a serious liquidity crisis. Reportedly, however, there were no complaints about insurance claims not being settled, his businesses not paying suppliers or depositors not being able to withdraw their money. Were there irregularities? Certainly. The BAI was investing 58% of its capital in its own companies. The regulator looked the other way until 2013. Institutions are, after all, only as independent and efficient as the men and women heading them. Did Rawat bite off more than he could chew? Probably.
But that is not what he is being accused of. He is being accused of being a Ponzi scheme swindler – the exact opposite of a risk-taking investor. And overnight, everything he, his family, his 4,000 employees and thousands of depositors and policyholders worked for all their lives went belly-up. How that happened is something historians will arguably one day write books about. Was the crisis engineered or at least precipitated through the government’s withdrawal of around Rs1.5 billion, followed by other substantial withdrawals by parastatals where the government calls the shots and the general panic which ensued? Was the Central Bank’s refusal to grant a loan cautious or politically-motivated? Was the BAI a disaster waiting to happen? Was Rawat intimidated into signing away his companies for a symbolic rupee? Worrying questions which remain without any answer.
Was Rawat a role model, then, or a Ponzi scheme swindler? Neither. He was a businessman who used the system and benefitted from political patronage in the same way many before him did. He may not have played by the book. He however, worked hard to earn his living. He was neither black nor white. He belongs to the many shades of grey. Which makes what is happening all the more sad for all of us.