Leader of the Opposition Government Howse, Port Lous, Republic of Martius Y Tel=(230)201 2417 — Fax: (230) 210 5332 NA/CBRD/001 04 May 2020 ‘The Director of Insolvency Service Corporate and Business Registration Department ‘One Cathedral Square Building Jules Koenig Street Port - Louis Republic of Mauritius Dear Madam, RE: INQUIRY INTO, INTER ALIA, THE CONDUCT OF MR. Al ABDOULA (ONE OF THE ADMINISTRATORS APPOINTED FOR AIR LIMITED) On 22 April 2020 at 14:00 hrs (Mauritius Time), Mr A. Sattar Hajee Abdoula ((SHA" and/or “Mr Abdoula”), CEO of Grant Thornton Mauritius ("GTM") and Chairman of SBM Holdings Ltd, and Mr Arvindsingh Gokhool were appointed as Administrators of Air Mauritius Ltd ("MK") pursuant to sections 215 and 216 of the Insolvency Act 2009 ("the Act”) Mr Abdoula, incidentally - or coincidentally ~ happens to also be a political nominee of the main shareholder of MK (the Government of Mauritius). He was appointed as Chairman of the board of SBM Holdings Ltd (the holding company of SBM Bank (Mauritius) Ltd, MK being placed into voluntary administration has too far-reaching implications for (i) the State of Mauritius; (i the travel and tourism sector with a multi-verse and multi- sectorial impact; (ji) some 12,000 equity investors whose investments amounting to hundreds of millions are at great stake; (iv) the 3,000 employees of MK and their families; (x) the 12,000 indirect jobs and livelihoods which are today at stake; and (vi) the creditors and other stakeholders. ‘Through this letter, I am formally requesting your office, being the regulator of Insolvency Practitioners in the Republic of Mauritius, to undertake the following actions, in line with your powers under the Act:Leader of the Opposition Government House, Port Lous, Republic of Maurits ‘Tels(230) 2012617 — Fax (230) 2105332 To keep under strict review the current and future conduct and performance of the Administrators during the period MK is in voluntary administration and as provided by section 375 (1) and (3) of the Act. It goes without saying that your office should engage appropriate actions whenever and wherever applicable to ensure that the interests of MK’s creditors, employees, shareholders, and stakeholders are protected To ensure forthwith that the remuneration of the Administrators of MK is reasonable in the circumstances and that there is no abuse in that respect, as provided by section 217(1) of the Act. To institute an immediate INDEPENDENT inquiry on the basis of representations made in this letter to your office pursuant to section 375 (Q(a) of the Act and seck comments from the Insolvency Practitioners acting as Administrators of MK on matters represented herein. The purposes of the inquiry would be, inter alia, to: Investigate and establish, in light of the previous financial and commercial inducements which the Administrators and the firm which employs them benefitted from the State (which is the principal shareholder of MK and SBM Holdings Ltd) and State-owned enterprises, whether the Administrators of MK can discharge their duties in compliance with the ethical principles of ‘Integrity’, ‘Objectivity, ‘Professional Competence and Due Care’, ‘Confidentiality’, and ‘Professional Behaviour’ (the “Principles") as set out by the International Code of Ethics for Professional Accountants (ICEPA") issued by the International Ethics Standards Board for Accountants ("IESBA") Determine whether there have been any potential breaches of established laws, regulations and procedures laid down for the ‘appointment of the Administrators of MK, and to refer same for further investigation by the Independent Commission Against Corruption (ICAC"), wherever applicable; and Address any purported unethical professional behaviour; inability to discharge the duty of an Insolvency Practitioner; breaches of the Insolvency Act, the Companies Act, the Financial Services Act, the Securities Act, and the Prevention of Corruption Act (‘POCA’); and any failure to comply with the above-mentioned Principles, amongst others,d ‘Leader of the Opposition Government House, Port Lows, Republic of Mouritias Tel: (230) 2012417 — Fax: (230)210 S332 urge you to inquire into the following: 1, Previous ‘inducements’ causing actual and/or perceived intent to improperly breach the Principles Considering the matters set out further below, Irequest you to investigate any potential conflicts of interests, potential breaches of the POCA (which are to be referred to the ICAC) and any non-compliance with established laws and regulations, including the Act, amongst others to determine whether the Administrator(s) of MK will be able to properly discharge his/their responsibilities in the best interests of all stakeholders (creditors, contributors, persons dealing in good faith with a debtor, the shareholders, the employees amongst others): fa. Investigate and establish a list of all previous professional engagement/s which Mr Abdoula, personally or through his accountancy firm GTM, conducted for MK and/or any of its related entities. If in the affirmative, the professional fees and terms of reference of such involvement in the affairs and decision-making process of MK is to be further investigated and. determined, as well as whether all procedures were scrupulously followed. to appoint him and/or GTM; , Investigate and establish whether Mr Abdoula or any member of GTM attended and participated in board meetings of MK in 2019 and/or 2020, prior to his appointment as Administrator. If in the affirmative, the professional fees and terms of reference of such involvement in the affairs and decision-making process of MK is to be investigated and determined; . Investigate and establish whether GTM performed “transaction and valuation” work for MK in 2018/2019 for the share swap between MK, Airports of Mauritius Limited (‘AML"), and Mauritius Duty Free Paradise (/MDFP"), amongst others. If in the affirmative, the professional fees and terms of reference of such involvement in the affairs and decision-making process of MK is to be determined, as well as establish if all procedures ‘were scrupulously followed for his appointment;Leader of the Opposition Government House, Port Lous, Republic of Matus Tel: (230) 2012417 — Fax: 230) 2103332 4. Investigate and establish whether GTM performed “transaction and valuation” work for MK in 2018/2019 in relation to the sale of Pointe Coton, Resort Hotel Co. Ltd, which is a subsidiary of MK. If in the affirmative, the professional fees and terms of reference of such involvement in the affairs and decision-making process of MK is to be determined, as well as establish ifall procedures were scrupulously followed for his appointment; and . Investigate and establish whether as a result of GTM's valuation of MK shares in the share swap deal between MK, AML, and MDFP, AML (which is a related party of MK) incurred losses of some Rs 250 million as a result, of an overly optimistic valuation of MK shares (at Rs 15 per share), which valuation GTM had concluded to be reasonable. It is also to be investigated, whether critical information contained in a Cautionary Announcement made by MK on 19 June 2019 in relation to the liabilities arising from the purchase of two Airbus A350-900 aircraft had been deliberately excluded from the valuation exercise performed by GTM. 2, Prior commercial dealings which may impair the conduct and professional behaviour of the Insolvency Practitioners in the discharge of their duties as Administrators of MK. T urge you to investigate and determine whether current and previous ‘commercial dealings and inducements by Mr Abdoula and/or GTM may impair the conduct and professional behaviour of the Administrators of MK in the discharge of their duties under the Insolvency Act. I request your office to inquire and establish whether, since January 2017, Mr Abdoula and/or GTM, have benefitted from such preferential treatment, rights and privileges, that ‘would give rise to a conflict, casting doubt on the ability of the Insolvency Practitioners of MK to properly discharge their duties in the best interests of MK, its creditors, employees, shareholders and other stakeholders. Some ‘examples of such instances calling for an inquiry are as follows: a, Express payment of some Rs 26 million to Mr Abdoula in 2017, despite that the Financial Services Commission ("FSC"), had at its 217% board meeting held on 6 June 2018, rejected this claim. Under what circumstances was the FSC asked to reverse its decision in 2017 and who instructed the Special Administrators of the British American Investment Co. (Mtius) Ltd to pay Rs 26 million to Mr Abdoula, when in fact the real beneficiaries of this sum had to be the victims of Super Cash Back Gold and Bramer Asset Management Limited policies?Leader of the Opposition Government House, Port Lous, Republic of Maurits "Tel (230) 2012417 ~ Fax: 230) 210 $332 go . Appointment of Mr Abdoula as Transaction Advisor for the sale of the National Insurance Company Ltd ("NIC"), the main shareholder being the Government of Mauritius. Who proposed the name of Mr Abdoula to be appointed as Transaction Advisor? Were proper procurement procedures adopted?; c. Appointment of Mr Abdoula as of the National Property Fund Ltd ("NPFL") negotiator with various financial institutions in 2017/2018, the main shareholder being the Government of Mauritius; 4, Appointment of Mr Abdoula as “Independent Commissioner" on the Britam Commission of Inquiry, while Mr Abdoula was at the same time providing his professional services in return for fees to NIC and NPFL, and had also negotiated his payment of Rs 26 million for 18 days of work (which had previously been refused prior to 2017); €. Appointed as Transaction Advisor/Independent Valuer for MK in the share swap deal of MK shares with AML in exchange of MDFP shares, the main shareholder being the Government of Mauritius; and f, Transaction Advisor/Independent Valuer for MK in the sale of Pointe Coton Resort Hotel Co. Ltd to AML, the main shareholder being the Government of Mauritius. . (Injability of the Administrators to investigate the affairs of MK in strict compliance with the principles of independence, integrity, objectivity, and professional competence and care Albeit that one of the main roles of the Administrators of MK is to consider all, possible ways of salvaging MK’s business in the interest of creditors, employees, and shareholders, they have other vital duties under the Act, which, are, inter alia, to fa. Investigate MK’s affairs under section 222 (1)(b) of the Act; . Investigate MK’s business, property, affairs, and financial circumstances as provided by section 228 (a) of the Act; and Report offences involving dishonesty, negligence, default, breach of duty or trust of past or present officers, which also includes the acts and doings of present and past directors of MK under section 231 of the Act.Leader of the Opposition Government House, Port Lous, Republic of Maurits Tel: (230) 2012817 — Fax: (230) 2105332 ‘The above mentioned statutory duties of Administrators of MK constitute an equally important and non-negligible part in the determination of the causes, acts, omissions and doings of management (including officers of MK), previous ‘management (including previous officers of MK), directors and. previous directors that led MK being “unable to meet its financial obligations in the foreseeable future” (stated by the Board of MK in its Communiqué dated 22 April 2020). It goes without saying that this delicate investigative exercise requires the highest level of diligence, integrity, independence, objectivity and due professional care from the Administrators of MK, In this context, tis of utmost importance for your office, the regulator of Insolvency Practitioners. to ascertain that this investigatory leg does not involve any cover-ups stemming from the matters and facts already set out in points 1 and 2 above. More importantly, the investigation of your office should pay special attention fs to whether the current Administrators and/or GTM have conducted work {for MK in the recent past on the basis of which material financial decisions were taken by the board of MK. Also, it is important that the investigation covers any situation where the current Administrators and or representatives of their firm may have Participated in management meetings and board meetings of MK prior to their appointment as Administrators. This would constitute a serious self-review threat which cannot be taken lightly and must be addressed forthwith, | further expatiate on the Principles applicable to the Administrators, who are Insolvency Practitioners, in the discharge of their duties, and you are Tequested to ensure that the Principles are complied with: * Integrity Your office is to ascertain that the Administrators of MK have communicated in an honest and professional manner all business relationships their firm and themselves have had with the main shareholder of MK and any related parties of the main shareholder, including the Board of Directors of MK, and details of which are already ‘et out in Points 1 and 2 of this letter. On this basis, conclusions can be drawn on whether the principles of integrity were and are being met by the Administrators,Leader of the Opposition. Government House, Port Lous, Republic of Morita ‘Tel: (230) 201 2417 — Fax: 230)210 3332 i, Your office is also duty-bound to determine how the Insolvency Practitioners will not compromise their professional judgment by bias, conflict of interest or undue influence from others, including from the directors and the principal shareholder of MK, in relation to the details set out in Points 1 and 2 of this letter. ii, More importantly, ifit is established that the Administrators and/or their firm were already involved in assisting MK on the advisory, transaction ‘and/or valuation work in the recent past, your office needs to determine whether the objectivity test is being breached by the Administrators and their firm. This could be a potentially conflicting situation whereby the ‘Administrators will be called upon to investigate their own work on the basis of which MK took material financial decisions. iii, Needless to highlight your attention that the principal shareholder of MK is the one that appointed the Directors of MK (current and previous) and also the one that appointed Mr Abdoula as Chairman of the SBM Holdings Ld. In this context, the fundamental question is how the Administrators will investigate the management and directors of MK in a situation of, potential actual and perceived contict as both parties (MK Directors and Administrators) have close commercial and business proximity with the principal shareholder and its related entities. Your office should, therefore, determine whether this situation can seriously impair the objectivity of the Voluntary Administrators in the discharge of their duties, + Professional Competence and Due Care It is also important for your office to establish whether the current appointed Administrators and/or their firm have the appropriate competence, experience, subject matter expertise and human capital to discharge their duties. In this context, the investigation should also determine the circumstances and process that led to the nomination of the Administrators and the reasons as to why other firms and Insolvency Practitioners with far more hands-on aviation experience and expertise ‘were not chosen in the best interests of MK, its creditors, employees and shareholders.Leader of the Opposition Government House, Port Lous, Republic of Marius ‘Tel: (230) 2012417 — Fax: @30) 210 8332 ‘+ Professional Behaviour Under this principle as set out by the ICEPA, your office should conduct ‘an investigation to determine how the Administrators of MK are complying with the relevant laws and regulations, and determine whether in light of their past dealings with MK and its principal shareholder they have ‘engaged in conduct that they know or should know might discredit the profession. To this effect, your attention is drawn to Sections 369 (e} to (j of the Actand it would, therefore, be worth considering a joint collaboration, with the Mauritius Institute of Professional Accountants (‘MIPA") to determine whether the acts and doings of the current Administrators constitute a breach of the ethical conduct applicable to professional accountants. Conclusion ‘The current situation has too far-reaching implications for our national airline, our country, the travel and tourism industry along with interrelated sectors of the economy and our fellow Mauritian citizens at large. I trust that you will urgently address the issues which I have set out in this letter and spare no efforts to act diligently and in all independence, within the precincts of the powers conferred upon your office by the Insolvency Act 2009. Yours faithful Dr the Honourable Arvin Boolell, G.0.8.K. Leader of the Opposition