7.1Office Accommodation – SICOM Tower
7.1.1Lease Agreement
A Lease Agreement was entered into between SICOM Ltd and Government of Mauritius, represented by the Ministry of Finance and Economic Development (MoFED), the lessee, for the renting of 161,036 square feet of office space at the SICOM Tower, a building situated in Ebene, comprising ground floor plus 14 others, to house Ministries/ Departments/ Government Agencies/ Institutions for an initial period of 10 years on 20 May 2015.
The agreed monthly rental was Rs 34 per square foot, inclusive of VAT, Syndic Fees and Amenities (including partitioning), and was being met from Vote 28.1: “Centrally Managed Initiatives of Government” – Item 22030 – “Rent”.
The Ministry explained that the lease agreement entered into between SICOM Ltd and the Government of Mauritius reflected the ‘new wholesale approach’ adopted by Government for long term renting of office space.Under this approach, instead of each Ministry having its own individual lease agreement and payment of rental, MoFED is acting as a fiscal agent on behalf of Government.That is why payment of rental is centralized and being met under Vote 28.1: “Centrally Managed Initiatives of Government” although the occupants may be another Ministry or Government Agency.This new concept enables Government to negotiate better terms including competitive rental rates over long term periods.
On 17 August 2015, MoFED signed a Memorandum of Understanding (MoU) with the Ministry of Financial Services, Good Governance and Institutional Reforms (MoFS) for the use of Floors 8 to 14 of the SICOM Tower. Ground Floor and Floors 1 to 7 were to be occupied by MoFED. Three of the floors, namely Floors 3, 4, and 5 were reallocated to MoFS upon their request on 11 October 2016, and a fresh MoU signed on 20 December 2016.
In March 2016, following changes in Ministerial portfolios, it was decided that MoFED would not move to SICOM Tower. The eight floors identified for its relocation were reallocated to other Ministries. As of 31 December 2016, the Ministry of Energy and Public Utilities was occupying part of the Ground Floor and Floors 1 and 2, whereas Floors 6 and 7 were being occupied by the Ministry of Technology,Communication and Innovation. The remaining 10 Floors were assigned to MoFS to house the Ministry and some of the institutions under its aegis, namely the Financial Intelligence Unit and Financial Services Promotion Agency. Three of the 10 Floors were still unoccupied.
7.1.2Change in Ministerial Portfolios
With the change in Ministerial portfolios, the location of certain Ministries had to be reviewed.This has resulted in SICOM Ltd claiming from Government additional costs of some Rs 55.8 million, including some Rs 26.6 million for MoFS, as detailed below, for among others, revised partitioning works, accelerating works for early handing over, demolition works and interior design fee. As at 31 December 2016, some Rs 24.9 million had already been paid.
Ministry of Financial Services, Good Governance and Institutional Reforms
In January 2015, the newly created MoFS, as well as Statutory Bodies/ Institutions falling under its aegis had to be urgently accommodated and office space at the SICOM Tower in Ebene was identified. The agreed rental of Rs 40 per square foot, inclusive of VAT, Syndic Fees, amenities and furniture was given the green light by the Valuation Department. Thereafter, in May 2015, a Lease Agreement under new revised terms, excluding furniture, at the rate of Rs 34 per square foot was signed by MoFED on behalf of Government of Mauritius with SICOM Ltd.
Prior to the above, certain costs relating to revised partitioning works, improved furniture, vertical IT Cabling, Local Area Network and covered parking had already been incurred by SICOM Ltd on behalf of MoFS. In July 2015, SICOM Ltd submitted a claim amounting to Rs 24,159,850 for the abovementioned additional works, subsequently revised to
Rs 21,903,309.A part payment of Rs 15 million had been effected by MoFS in September 2015.
Partitioning was done on Level 10 to accommodate the Internal Control Unit, supposed to function under the aegis of MoFS. Subsequently, it was decided that the Financial Intelligence Unit would be housed on that floor and partitioning had to be revised to meet its requirements. Additional costs of Rs 4,743,641 were incurred to meet variations due to changes in layouts. (Furniture - Rs 1,095,406and Variations due to changes in layouts -
Rs 3,648,235).
MoFED explained that it requested that Ministry to seek the assistance of an Architect, a Civil Engineer and a Quantity Surveyor from the Ministry of Public Infrastructure and Land Transport (MPILT), and an Engineer from the Energy Service Division (ESD) to verify the claim submitted by SICOM Ltd. In the meantime, a part payment was made by MoFS upon insistence on the request for payments, and it was agreed that the remaining payment would be effected only if the claim would be duly certified by MPILT and ESD.
SME Bank & One-Stop-Shop
As per the Budget Speech 2015-2016, the Small and Medium Enterprises (SME) Bank and the One-Stop-shop were to be initially located on the Ground Floor and the first three floors respectively at the SICOM Tower and were to be operational with effect from 15 July 2015. In June 2015, in view of time constraint, the project management, interior design and procurement of furniture were entrusted to SICOM Ltd.
In July 2015, MoFED decided that it would occupy the Ground Floor and Floors 1 to 7 at the SICOM Tower and a Stop Order was issued in respect of ongoing works. SICOM Ltd claimed an additional sum of Rs 9,732,174, representing costs of demolition works already undertaken and replacement of part of the existing partitioning works to suit the needs of MoFED.
MoFED explained that, Government later decided, for convenience sake, that the SME Bank and the One-Stop-Shop should be strategically located in Port Louis together with the Ministry of Business, Enterprise and Cooperatives for easier access from around the island. It was also found appropriate to accommodate all bodies dealing with financial matters under one and the same roof, and thus the reason for the relocation of MoFED, as well in the SICOM Tower.
Other Partitioning Works
Similarly, partitioning works on other floors of the SICOM Tower had already started and were nearing completion when modifications were requested to meet new requirements of MoFED. These modifications in layout also brought changes to the provision of air conditioners in terms of size, resulting in additional claims of Rs 1,100,978 from SICOM Ltd.
MoFED explained that owing to representations made by some staff members and also taking into consideration the health and safety of staff, minor modifications had to be brought to some offices to enable them to work in a conducive and safe environment.
Acceleration Costs
Acceleration costs, for early handing over of certain floors to relocate MoFED to SICOM Tower without delay in order to avoid disruptions in the ongoing 2016-17 Budget exercise, were claimed by SICOM Ltd. The use of carpet flooring had already been agreed upon, ordered and received. At end October 2015, MoFED requested SICOM Ltd to change to laminated flooring, and for which an additional cost of Rs 3,756,336 was claimed. In order to meet the targeted delivery date specified by MoFED, the Contractor had recourse to increased labour force to work during the end of year break.Acceleration costs were hence charged. As at end October 2016, acceleration costs totalling Rs 947,319 were paid to SICOM Ltd for earlier handing over of certain floors.
MoFED explained that due to complaints received from staff members and taking into consideration their safety and health, SICOM Ltd was requested to change the carpet flooring to laminated one.
Fit Out and Other Additional Works
SICOM Ltd submitted claims totalling Rs 29,214,832 for fit out and other additional works (not included in the monthly rental fee) carried out on Ground Floor and Levels 1 to 7 of the SICOM Tower. Claims in respect of additional works undertaken solely on Floor 7, which was to accommodate the office of the Minister and other senior officers, amounted to
Rs 13,678,025, including interior design fee of Rs 945,473.
7.1.3Rental Charges Paid for SICOM Tower
A total amount of Rs 74,070,158, inclusive of a refundable deposit of Rs 5,475,224, in consideration of the lease of the ground floor plus 14 others of the SICOM Tower for period April 2015 to December 2016 had been paid to SICOM Ltd.
Following changes in Ministerial portfolios which resulted in MoFED’s decision not to move to SICOM Tower, the eight floors (Ground + 1 to 7) identified for the relocation of MoFED and handed over during the period January to March 2016, had remained unoccupied for period ranging from three to 11 months. As at end December 2016, Floors 3, 4 and 5, subsequently assigned to MoFS on 11 October 2016, were still unoccupied.
Out of total rental amounting to Rs 68.6 million (Rs 74,070,158 less Deposit Rs 5,475,224) paid to SICOM Ltd up to December 2016, some Rs 32.9 million were for unutilized office space.
MoFED explained that following changes in Ministerial portfolios, in March 2016, the Ministry fell under the aegis of the Prime Minister’s Office. Thus, for obvious reason, MoFED could not move to SICOM Tower. The eight floors were subsequently re-allocated to other Ministries and Institutions during the period July to December 2016.Moreover, in view of the delay for MoFS to occupy levels 3, 4 and 5, as of February 2017, MoFED was proceeding with the allocation of the vacant space to the Ministry of Technology, Communication and Innovation.
7.1.4Payments for Fit Out & Other Additional Works Undertaken by SICOM Ltd
As of October2016, only a part payment of Rs 9,947,021 in respect of fit-out and other additional works carried out at SICOM Tower had been effected at end of June 2016.
No provision was made in 2015-16 Estimates under Capital Item “Improvement of Furniture, Fixtures and Fittings” to cater for above expenditure. Virement was made from Vote 6-1 Item 28212019 – “Decentralised Cooperation Programme for Socio Economic Empowerment” to a new Item: “Improvement of Furniture, Fixtures and Fittings – SICOM Tower”.
Out of the above amount paid, only Rs 8,054,229 had been certified by MPILT. The remaining amount paid (Rs 1,892,792) represented Interior Design Fees and Acceleration Costs.
In its reply, MoFED informed that the part payment made was in respect of claims assessed and certified by MPILT. As regards the outstanding claims, these were still under process, and funds have been earmarked in the 2016-17 Budget.
7.2Expenses under Vote 28-1: “Centrally Managed Initiatives of Government”
7.2.1Shares and Other Equity Purchase - MauBank Holdings Ltd
MauBank Holdings Ltd was incorporated on 3 September 2015 as a public company limited by shares with stated capital of Rs 100,000, fully subscribed by Government.
With the creation of MauBank Holdings Ltd, the existing Government’s shareholdings (754,371,664 Ordinary Shares) in the Mauritius Post and Cooperative Bank (MPCB) Ltd, and in the National Commercial Bank (NCB) Ltd (70,000,000 Ordinary Shares of no par value, representing an investment of Rs 700,000,000, held by Government) were transferred to MauBank Holdings Ltd on 17 September 2015.
MauBank Ltd was created on 1 January 2016 to take over the merged activities of MPCB Ltd and NCB Ltd.
During financial year 2015-16, Government injected a total amount of Rs 1,600.1 million as Equity in MauBank Holdings Ltd:
Rs 1,600 million as onward equity investmentby the MauBank Holdings Ltd in MauBank Ltd to enable the latter to meet its Capital Adequacy Ratio; and
Rs 100,000 as Stated Capital of MauBank Holdings Ltd.
In the absence of budgetary provisions, the total amount of Rs 1,600.1 million was provided to MauBank Holdings by way of Advances of Rs 300.1 million and Rs 1,300 million from the Consolidated Fund on 21 October 2015 and 6 January 2016 respectively.
The sum of Rs 1,300 million was transferred to the Consolidated Fund from the National Resilience Fund.
The Advances were cleared in June 2016. The National Assembly, through the Supplementary Appropriation (2015-16) Act 2016 voted a sum of Rs 1,600 million under Vote 28-1: “Centrally Managed Initiatives of Government” – Item: “MauBank Holdings Ltd” for the purpose of Equity Investment in that Company and provision was made for an additional amount of Rs 100,000 to be reallocated from Item: “Rent” under Vote 28-1: “Centrally Managed Initiatives of Government”.
In September 2016, an additional amount of Rs 6 million was injected inMauBank Holdings Ltd as equity to enable the Company to meet its operating expenses as no provision was made in the Budget Estimates 2016-17. Funds were reallocated from Vote “Contingencies and Reserves” to Item “Shares and Equity Participation - MauBank Holdings Ltd”.
7.2.2Share and Other Equity Purchase - Unquoted Shares - Mauritius Post and Cooperative Bank Ltd
In view of the precarious financial situation of the Mauritius Post and Cooperative Bank (MPCB) Ltd, in June 2015, Government approved the additional equity injection of
Rs 753 million in the Bank, as follows:
Conversion of subordinated loan of€ 6,455,812.50 (equivalent to Rs 253 million)
Cash Injection of Rs 500 million
In the absence of budgetary provisions in the six month Budget Estimates ending 30 June 2015, an Advance Account of Rs 500 million was opened to enable the above transaction in June 2015. The Advance Account was retrospectively cleared and the subordinate debt converted into Equity on 6 August 2015. A new Item of Expenditure, namely “Unquoted Shares - Mauritius Post and Cooperative Bank Ltd” was created under Vote 28-1: “Centrally Managed Initiatives of Government” for the six month period ended 30 June 2015, and the sum of Rs 753 million charged to it.
7.2.3Shares and Other Equity Purchase - Unquoted Shares - National Commercial Bank
Following the revocation of the Banking Licence of Bramer Banking Corporation Ltd by the Bank of Mauritius, it was decided that a new Bank would be set up to take over the assets and liabilities of the ex Bramer Bank. The National Commercial Bank (NCB) Ltd was thus incorporated as a public company with Government as the sole shareholder on 6 April 2015.
Given that no provision was made for the above in the six-month Budget Estimates ending
30 June 2015, two Advance Accounts totalling Rs 700 million (Rs 200 million on 13 April 2015, and Rs 500 million on 30 June 2015) were opened in order for NCB Ltd to start its operations, as well as to partly meet its Capital Adequacy Ratio.
The Advances were cleared retrospectively on 6 August 2015 as equity injection in NCB Ltd, by charging to the newly created Item of Expenditure, namely “Unquoted Shares - National Commercial Bank” under Vote 28-1: “Centrally Managed Initiatives of Government” for the six month period ended 30 June 2015.
7.2.4Shares and Other Equity Purchase - Unquoted Shares – National Insurance Co (NIC) Ltd and Unquoted Shares – NIC - General
On 15 April 2015, two new companies, namely the National Insurance Company (NIC) and the NIC General Insurance Company were set up under the aegis of the Ministry of Financial Services, Good Governance and Institutional Reforms, with the main objective to safeguard the interests of some 135,000 regular premium life insurance policy and health insurance policy holders of the ex-BAI Co Ltd. The Insurance Act provides that General Insurance activities and Life Insurance activities should be carried out under separate entities.
To enable the above twocompanies to start their operations and meet the Financial Services Commission’s insurance requirements, equity investments of Rs 30 million in each of them by Government were approved.
As the Budget Estimates 2015 (January to June) were not yet appropriated on 15 April 2015 by the National Assembly, two Advance Accounts of Rs 30 million each were opened on the following day. The Advances were cleared retrospectively on 6 August 2015 by charging the two newly created Items of Expenditure, namely “Unquoted Shares - National Insurance Co Ltd” and “Unquoted Shares - NIC General”, created under Vote 28-1: “Centrally Managed Initiatives of Government” for the six month period ended 30 June 2015.
7.2.5Retrospective Virement
For the clearing of the five Advances totalling Rs 1,260 million mentioned above, and for the conversion of subordinate debt of Rs 253 million of MPCB Ltd into equity, three retrospective Virements were effected in August 2015 for a total amount of some Rs 1,499 million from many items under different Votes/Sub-Heads and a fourth one for an amount of Rs 15 million from Vote 29-1: “Contingencies and Reserves”.
Mauritius Revenue Authority
Taxes other than Customs and Excise
7.3Arrears of Revenue
Collection of taxes, excluding Customs and Excise Duties by the Mauritius Revenue Authority (MRA) for the year ended 30 June 2016 totalled some Rs 53 billion.
As at 30 June 2016, arrears of revenue, that is collectible taxes other than Customs and Excise Duties, were Rs 5,845,669,373, details of which are shown in Table 7-1.
Table 7-1 Arrears of Revenue
Taxes / As at31 December 2014 / As at
30 June 2015 / As at
30 June 2016
(Rs) / (Rs) / (Rs)
Income Tax ( Including Companies & Body Corporate) / 1,985,720,458 / 2,279,207,916 / 2,698,626,602
Value Added Tax / 2,253,007,556 / 2,446,532,741 / 2,580,182,097
Betting & Gaming Taxes / 234,163,589 / 210,853,007 / 186,756,326
Environment Protection Fee / 26,705,536 / 29,824,374 / 16,527,801
PAYE / 128,105,600 / 152,840,157 / 164,874,596
TDS / 122,993,807 / 101,939,241 / 103,788,901
Others / 60,354,588 / 76,869,266 / 92,906,036
Sub Total / 4,811,051,134 / 5,298,066,702 / 5,843,662,359
Sales Tax / 2,007,014 / 2,007,014 / 2,007,014
Total / 4,813,058,148 / 5,300,073,716 / 5,845,669,373
Source: Annual Report of the Accountant General
In accordance with financial instructions, Returns of Arrears are submitted by the MRA to the Accountant General, for the figure of arrears to be included in the Annual Report of the Accountant General.
7.3.1Age Analysis of Arrears
An ageing of arrears of taxes, excluding Sales Tax, is as shown in Table 7-2.
Table 7-2 AgeAnalysis of Arrears
Period / Arrears as at 30 June 2016(Rs)
1984-1990 / 11,479,367
1991-2000 / 126,537,988
2001-2010 / 1,302,803,306
Sub Total / 1,440,820,661
2011-2015 / 3,558,581,814
Jan - June 2016 / 844,259,884
Total / 5,843,662,359
Source: Collectible Debt Report - Debt Management Unit
The following were noted:
Value Added Tax was introduced in 1998 to replace Sales Tax. Since then, assessments in respect of Sales Tax had not been raised. As at 30 June 2016, a total amount of
Rs 2,007,014 owed by five Sales Tax debtors was still outstanding.These debts related to as far back as 1993-94. Since 2013, no movement had been noted for these debts.