SUGAR INVESTMENT TRUST – ECONOMIC COLLAPSE (4.07 p.m.) The Minister of Agro-Industry, Food Security, Blue Economy and Fisheries (Dr. A. Boolell): Madam Speaker, with your permission, I wish to make a Statement with regard to the Sugar Investment Trust (SIT). The Sugar Investment Trust is on the verge of an economic collapse. It is owned by some 40,000 small planters who own 95% of a company. The remaining 5% shareholding is owned by Government. The Sugar Investment Trust has accumulated a debt of around Rs1.6 billion over the last ten years. It is being driven by deficit at all levels and within all its clusters, inter alia, Land Holdings, Leisure, Property and Corporate Services. The Sugar Investment Trust is generating losses to the tune of Rs150 million annually and debt levels increasing by around 10% annually. This recurring trend from the last ten years has led to a deterioration of the asset base of the company coupled by a deep negative cash flow and a fragile balance sheet with all its assets encumbered with charges and pledges. Overdrafts are being employed to pay salaries and other auxiliary dues. The previous management has been engaged in massive mismanagement and inaccurate reporting. The situation of the SIT is as follows – (i) In 2014, the SIT’s share valuation stood at Rs15,000 per share and has since, been depleted of its value by more than 92 %. The net asset value per share has fallen to Rs1.78; (ii) The SIT has pledged all remaining assets against debts; (iii) In 2014, the SIT had a land bank of 7,000 arpents and is today left only with 2,100 arpents; (iv) The sale of the land has been made with no benchmarking, no official valuations, and conducted in an unprofessional manner discounted by more than 40-60% below normal market rates; (v) In many instances, related party individuals, that is, directors and other related entities have engaged with the SIT to purchase these discounted lands, never settled accordingly, but continued to harvest sugarcane thereon; (vi) The proceeds of the above land sale have never been employed to repay outstanding liabilities, but rather to re-launch property projects with overstated costs and understated selling rates; (vii) According to SBM, loans of the SIT are close to reaching stage 3, that is, close to entering seizure proceedings; (viii) The SIT has invested in the rental building at Ebène named ‘The Core’. This asset has cost the SIT Rs876 m. and has totally been financed by liabilities. The return on investment on this building is very low and is not adequate to service the debt incurred thereof; (ix) The Sugar Investment Trust income stream comprises Rs30 m. from rental; Rs35 m. from 10,000 tons of sugarcane cultivated on 265 hectares of land which adds up to approximately Rs65 m. Finance costs are in excess of Rs115 m., which rendered the SIT insolvent; (x) The debt capital is not being serviced at all since 2014 whilst interest is being serviced partly; (xi) Rs12.8 m. have been taken from DBM Ltd to undertake sugarcane cultivation in 2023, but it never happened; (xii)The SIT Leisure Water Park has been running on loses to the tune of Rs2 m. per month since 2015, whilst hefty unfinished investments have been apparently vested in this park without any feasibility plans or reports. At this instance, the park is in a dangerous state and requires immediate closure. Rs100 m. have been invested in 2018 without any strict plans, and a further Rs250 m. have been normally invested with a loan from MauBank. None of these investments can be seen at Belle Mare; (xiii) Many contracts from service providers have expired in 2020 and have never been renewed by normal practice of tendering. The service suppliers have continued to be renumerated, often at higher than market rates, which is totally illegal; (xiv) Loans undertaken and proceeds of sale of land cannot be matched against projects and cash flows. Accounts provided are totally flawed and against international financial reporting standards; (xv) It unconceivable to see that the SIT has sold in excess of 5,000 arpents, but still bears a debt of more than Rs1.6 billion, together with a negative cashflow; (xvi) As at today, arrears relating to rental stand at Rs50 m. Madam Speaker, a proper forensic audit is warranted at the SIT and firms may be employed for same. Should the need arise or given strong suspicions of fraud and corruption, the matter may be directly referred to the Financial Crimes Commission for a more in-depth forensic investigation. Meanwhile, my Ministry is presently looking in the restructuration of SIT for the organisation to become effective and efficient. I hope we can do it. Thank you.

Thank you.