PORT LOUIS , April 3 (Reuters) - A “Ponzi” investment scheme has been found at Mauritian lender Bramer Banking Corp Ltd (BBCL), the Indian Ocean’s premier said on Friday, after the country’s central bank revoked its banking license and appointed liquidators.
The central bank said an onsite examination conducted at BBCL from Jan. 22 to Feb. 20 revealed a number of significant deficiencies which had been conveyed to the bank.
“The Bank of Mauritius has appointed PricewaterhouseCoopers (PwC) as receivers for BBCL,” Prime Minister Anerood Jugnauth told reporters on Friday. “We had to act rapidly because we are in (the) presence of a Ponzi scheme of about 25 billion rupees ($693 million).”
He gave no further details and did not say how many depositors would be affected or the likely scale of any losses.
Calls to the bank went unanswered and its website could not be viewed.
A Ponzi scheme involves returns being paid out to investors from incoming money rather than from genuine returns on investments.
The Bank of Mauritius said BBCL had been experiencing large withdrawals, placing it in a precarious liquidity situation. The situation was worsened by difficulties faced by the bank in raising funds on the interbank market.
The regulator said BBCL had relied heavily and continuously since March 6 on overnight facilities from the central bank.
Jugnauth said the Financial Services Commission also appointed PwC as conservator for insurer BAI Co (Mtius) Ltd, to safeguard the interest of policy holders, in the light of the systemic risk posed by the revocation of licence of BBCL.
BBCL, which is listed on the Stock Exchange of Mauritius, was issued with a banking licence on Aug. 27, 2008.
Shares in BBCL, which had closed unchanged at 4.30 rupees on Thursday, have been suspended. ($1 = 36.0500 Mauritius rupees) (Editing by Drazen Jorgic; Editing by David Holmes)