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Perception towards Unexplained Wealth
Legislation in Mauritius: An Ordered
Probit Approach
Audit Seeya Laxmi1, Vishal Chandr Jaunky2 and Vani Ramesh3
1University of Mauritius, Mauritius
2Department of Business Administration, Technology and Social Sciences,
Luleå University of Technology, SE-971 87, Luleå, Sweden
3Department of Commerce and Management, REVA University,
Bangalore, India
E-mail: 2vishal.jaunky@ltu.se, 3sarada889@yahoo.in
J
Abstract—The study is designed to understand the factors influencing the perception of the
Mauritians in understanding how the government is handling unexplained wealth. As an
empirical in nature, this study involves the public to understand the self-asse ssment of factors
associated with the performance of government in regulating unexplained wealth by
observing demographic, knowledge towards explained wealth and good governance,
technology and democracy. Using cross-sectional data, a drop-off survey was conducted
consisting of a sample size of 1016 observations. Ordered Probit, Ordered Logit, Ordinary
Least Squares methods of regression and Multivariate Normality tests were conducted to
analyze the effects of perceptions on the unexplained wealth law. The findings of this
research work demonstrate that variables which are statistically significant strongly influence
satisfaction on the unexplained wealth law.
Keywords: Motivation, Satisfaction, Perception, Unexplained Wealth, Ordered Probit
INTRODUCTION
Unexplained Wealth Order (UWO) laws, a relatively recent development in
confiscation and forfeiture jurisprudence, target the proceeds derived from
criminal activities. Like outmoded and in rem loss, their primary objective is to
deprive criminals from acquiring or benefiting from unlawful activities. However,
by using UWOs the state does not have to first prove a criminal charge, as is the
case with conviction based forfeiture. The latest findings from Transparency
International’s Corruptions Perceptions Index (CPI) and the World Bank Control
of Corruption Index, two well-recognized indices used to measure corruption
suggest that corruption is ever-present in both developing and developed
countries. Indeed, Transparency International deemed two-thirds of the
countries analyzed in its 2013 CPI were “perceived to have a serious corruption
problem.” The World Bank declares corruption to be “the single greatest
obstacle to economic and social development,” and research suggests corruption
maintains a stronghold in most countries examined.
UWO laws differ from traditional forfeiture laws in another important respect:
they shift the burden of proof to the property owner who must prove a legitimate
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source for his wealth and the forfeiture proceeding is instituted against a person
rather than against the property. These seemingly radical features of UWO laws
(no proof of the property being connected to a crime and a reversed burden of
proof) have, in practice, been tempered by courts, prosecutors and police, but
still are a powerful, and controversial, tool for seizing assets where traditional
methods likely would have been ineffective. Several countries have debated the
possibility of introducing UWOs into their legal systems, but most have decided
to maintain traditional confiscation regime, in personam following conviction,
and in rem proceedings targeting property. Few have ventured into the area of
UWOs, and some of those that have done so have faced constitutional and legal
challenges.
For example, in Italy the Constitutional Court declared law 12 quinquies to be
unconstitutional after two years of use determining that shifting the burden of
proof violates the Italian constitution. Other countries have adopted only some
aspects of UWO laws, e.g., United Kingdom, South Africa, some states in
Canada, and New Zealand, have a presumption in favor of forfeiture for
unlawful activities or specific offenses, but not full UWOs. Other countries have,
under the umbrella of the United Nations Convention against Corruption
(UNCAC), enacted illicit enrichment offenses targeting the proceeds of
corruption where the reversed burden of proof is part of the offense but yet
apply only to political officials and not to all crimes and individuals as do UWO
laws. A similar approach was followed by France with an amendment to its
criminal code which introduced reversed burden of proof forfeiture measures
targeting certain specific criminal offenders but it is still a post-conviction
method. Only three countries thus far have adopted full UWOs – no proof of the
property being connected to a crime and a reversed burden of proof. These are
Australia, Colombia, and Ireland. Under the parameters of this study, two
countries were selected for in-depth review. Owing to their shared traits with the
U.S.: common law legal systems (the courts of both countries frequently cite U.S.
decisions), long established democratic traditions, and a common language,
Ireland and Australia were selected. Moreover, Australia was selected as it is the
only country in the world that identified these laws explicitly as unexplained
wealth.The Republic of Mauritius is regarded as an Island State which is
prosperous and relatively free from fraud and corruption. Indeed, the country
has topped Mo Ibrahim Index of African Governance for eight consecutive years
to demonstrate that it is a nation which prides itself on being a ‘clean’ society
which is based on meritocracy and fairness.1 The low level of corruption could
have been a reason behind the fact that the country has made enormous
economic, social, and political progress despite the bleak prediction of Meade
stating that the outlook for peaceful development for Mauritius is poor.2 Defying
all odds, the 2050 square kilometre Island state is today one of the strongest
economy in Africa and the Indian Ocean Region.
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However, such as astounding success was not unplanned. Democracy and rule
of law were installed as the guiding pillars and the concept of constitutionalism
has been respected by the executive, the legislature and the judiciary a la lettre.
Several acts of parliament were drafted to ensure that the Mauritian society
remains a corruption free society and where a culture of merit and reward would
prevail. Those statutes played their respective roles, efficiently or not. And yet,
perhaps just as any country, an ideal Mauritius could not be achieved. Under the
previous regime, high level corruption was rampant which justifies why they
were severely condemned in the previous general elections in December 2014.
Visibly concerned by the situation of corruption and non-respect for good
governance in the country, the new regime has made the combat against
corruption and the instilling of governance as a Mauritian value in the genes of
each and everyone of its top priorities.3 This intention was materialized with the
advent of the Good Governance and Integrity Reporting Act of 2015 (GGIRA
2015). The purpose of this article is to introduce the GGIRA to a wider and
international audience. It is undoubtedly a first in the African region if not
worldwide. It adds to the already existing legal framework on corruption and
certainly is not a case of duplicity of the law. The aim of the GGIRA is simple to
ensure that unexplained wealth are civilly confiscated and redistributed to the
society. This article reviews the GGIRA and critically analyses the various
sections, underlying philosophies, implementation mechanisms, and agencies. It
also provides for an overview of the general debate that took place on the
creation of the new law especially related to the constitutional amendments and
its nexus with other existing normative framework on corruption and good
governance
THE CURRENT SITUATION AND EXISTING NORMATIVE
FRAMEWORK ON CORRUPTION
The Mauritian society has recently known acts of corruption at various levels.
High profile politicians have been involved in corruption cases causing much
discontent among the population. The leader of the Movement SocialisteMillitant
(MSM) party PravindJugnauth has recently been sentenced to 12 months of
imprisonment for an offence of conflict of interest related to his previous reign as
the Finance Minister under the Prevention of Corruption Act.4 There has been
much debate about it, forcing Jugnauth to resign as the current Minister of
Information and Communication technology pending the determination of his
appeal. The former Prime Minister, NavinRamgoolam has been provisionally
charged with several offences of money laundering after his home was raided
and around 220 million rupees were seized by the police. This has resulted in
several former senior ministers being interrogated by the authority on various
financial investments and money transactions. It has also been reported that
people who were close to political power under the former regime have
benefitted in an illegal and unfair manner much to the disapproval of the general
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population. The famous case of British American Insurance Mauritius which was
dismantled by the new regime as a case of Ponzi Scheme have arouse much
interrogation upon the protection that some people were receiving under the
previous government. The Betamax case would be another one which would
evidence the culture of corruption that allegedly was ruling in Mauritius. It is a
case where million dollars contract on petroleum trade was concluded without
respecting free and fair public procurement procedures. While some of the
above cases have been brought before the court of law in Mauritius, some have
only been dealt with in informal ways such as a political mediation. Others have
only been the subject of discussion. The scope of this article does not extend up
to the exercise of painting a full picture of corruption cases in Mauritius. It only
provides for a background based on which the actual government has made the
eradication of corruption in Mauritius its top priority.
At this stage, it is relevant to have a quick overview of the existing normative
framework on corruption and illegal financial activities. It is argued that such an
exercise would allow us to better critique the importance of the GGIRA. The
main legislation on corruption in Mauritius is the Prevention of Corruption Act of
2002 which main objective is to provide for the prevention and punishment of
corruption and fraud and for the establishment of an Independent Commission
Against Corruption (ICAC). It provides an impressive array of corruption
offences from sections 4 to 17 which arguably cater for a majority of corruption
related offences. Section 20 establishes the ICAC with an extended mandate
consisting of investigation, education, and sensitization. Section 29 also provides
for the Director of Corruption Investigation Division who has the duty to
investigate corruption cases referred to him by the ICAC. It to be pointed out
that the Prevention of Corruption Act finds its application only in the public
domain and regulates public officials. The Financial Intelligence and Anti-Money
Laundering Act of 2002 (FIAMLA) provides for money laundering offences.
Section 8 provides for very strict punishment such as fine up to the sum of two
million rupees and imprisonment term not exceeding 10 years. A major
component of the FIAMLA is the Financial Intelligence Unit (FIU) which is set up
to investigate financial transactions involving proceeds of crimes or amounting to
the offence of money laundering. The FIAMLA also provides for reporting
measures to combat money laundering such as reporting obligations of banks,
financial institutions, cash dealers, and members of relevant professions or
occupations.
The Asset Recovery Act 2011 provides for conviction-based and non-conviction-
based recovery of assets and for related matters. There is equally the Mauritius
Revenue Authority set up by the Mauritius Revenue Authority Act of 2004 which
has the mandate of combating fraud and other forms of tax evasions. The above
mentioned legislations would be the major law directly applicable to corruption
and fraud. There are other existing laws that are supposed to work in tandem
with the major ones to effectively combat corruption. However, each of them
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provide for offence which requires the normal procedure of the court and
conviction. It implies that the combat against corruption could then prove to be
a very tedious and lengthy one allowing time for criminals of corrupt people to
siphon their illicit and illegal wealth to safety.
In addition, all the above legislations are criminal laws for which the standard of
proof is one which is beyond reasonable doubt. The idea of the government was
to come up with a civil law with a very simple application. If an individual,
convened under the GGIRA, fails to explain wealth that he has amassed over
and above his emoluments and taxable incomes, the property is seized and used
by the state for poverty alleviation and other activities benefitting to the society
in general. The following section dissects the GGIRA for a better understanding.
The good governance and integrity reporting act, the main idea behind the
introduction of this Act is to cultivate a culture of good governance and integrity
reporting in Mauritius thereby encouraging integrity reporting in the public and
private sectors, boosting reports of acts of good governance and integrity,
divulging malpractices, recovering unexplained wealth and finally shielding and
rewarding those stepping up to make disclosures and reports.
Chapter IX of the Constitution of Mauritius, the Asset Recovery Act, the
Financial Intelligence and Anti-Money Laundering Act and the Prevention of
Corruption Act and will at no cost be considered as a law whose introduction will
limit the scope of or impair the existing laws mentioned. Section 9 of this act,
duty to Report Unexplained Wealth As per this section, irrespective of any other
enactment, whenever a judicial officer, the Ombudsman, the Director of Audit,
the Director of the FIU, the Director-General of Independent Commission
Against Corruption, the Director-General of the Mauritius Revenue Authority,
the Governor of the Bank of Mauritius, an integrity reporting officer nominated
by a public interest entity or an officer of a statutory corporation, or body
corporate, during the exercise of his functions has valid grounds to believe that a
person has acquired unexplained wealth, he needs to write a report to the
Agency toinform about this matter. In situations where any other person has
grounds to believe same, he shall initiate the same action as the above persons.
Finally these person can as far as possible provide their assistance to the Director
in any enquiry the latter can conduct with regards to the divulged issue. Section
10, Promoting Integrity and Reward System As per this section, whenever the
Agency determines that a public body, body corporate, or any other person has
encouraged a culture of good governance and integrity reporting in Mauritius,
stimulated integrity reporting in the public and private sectors, made positive
reports of acts of good governance and integrity and exposed malpractices
which have had as consequence the confiscation of unexplained wealth, it shall
make a report to the Board and recommend a reward. Section 11, Good
Governance and Integrity Reporting Campaign Upon consultation with the
Ministry, the Agency shall establish and supervise Good Governance and
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Integrity Reporting campaigns to boost the standing of Mauritius as an
international financial center of excellence of unimpeachable integrity with the
object of attracting investment.
Section 12, Privilege As per this section, before submitting a report to the Board
under section 5(2), the agency may inscribe a privilege in favor of the
Government on the property with regards to which, the person is not able to
give a satisfactory justification of the unexplained wealth. At this stage, it is
fundamental to note that the Agency shall have to deposit with the Conservator
of Mortgages two identical memoranda and notify the person mentioned above.
Then, on deposit of the memoranda, the Conservator of Mortgages shall inscribe
the privilege generally on the property referred to above and return one of the
memoranda to the Agency with a statement written or stamped on it to the effect
that the privilege has been inscribed. Finally, it should also be considered that
where a privilege is inscribed under this section, it shall take effect from the date
of the inscription. Section 13, Disclosure Order With regards to a suspected case
of unexplained wealth, the Agency may apply, to the Judge in Chambers for a
disclosure order to derive information on property held by a person or by any
other person on his behalf and can also require any person to divulge the
sources of funds used to acquire any property.
Section 14, Application for Unexplained Wealth Order When the Board has
strong reasons to believe that a person has unexplained wealth, it shall direct the
Agency to make an application to a Judge in Chambers for an Unexplained
Wealth Order which will lead to the confiscation of that unexplained Wealth.
Likewise, the Agency can even amend an application for an Unexplained
Wealth Order at any time before the final determination of the application by the
Judge in Chambers where reasonable notice of the amendment is given to every
person on whom the application has been served. Section 15, Service of
Application As per this section, whenever the Agency applies for an Unexplained
Wealth Order as highlighted in the above section, it shall furnish one copy of
that form to the Respondent and any other person deemed fit by the Judge in
Chambers. It is to be highlighted at this stage that the absence of the above
persons such as the respondent will not create any hindrances for the Judge in
Chambers to make the Unexplained Wealth Order in his absence.
Section 16, Unexplained Wealth Order Finally, this section accentuates on the
fact that once the Judge in Chambers is satisfied that the respondent has
unexplained wealth, he will then make the Unexplained Wealth Order.
Nevertheless, in situations where the Judge in Chambers is of opinion that an
application for an Unexplained Wealth Order cannot be granted on the basis of
affidavit evidence, he shall refer the matter to the Supreme Court. Section 17,
Realization of Property As per this section, whenever there are situations where
on being made, the Unexplained Wealth Order is neither subject to an appeal
nor discharged, the property recovered and confiscated shall vest in the Agency.
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It might be instrumental to note here that the Agency shall appoint a liquidator
to realize any confiscated property. Section 18, General Fund As per this section,
the Agency shall establish a General Fund into which all sums of money
received from the Consolidated Fund and any such source shall be paid. It is to
be highlighted here that the Agency may charge to the General Fund all
remunerations, allowances, salaries, grants, fees, pensions, gratuities, working
expenses, and all other charges properly arising, including any necessary capital
expenditure. Finally, the Agency shall submit for approval an estimate of its
income and expenditure for that financial year to the Minister. Nevertheless, this
should be done not later than three months before the start of each financial
year.
However, Mauritius was ranked on corruption as 52nd out of 177 countries in
2013 and 100 signifies a country is highly clean and 0 indicates it is highly
corrupt. In the year 2010, 138 cases of corruption were sent to the Director of
Public Prosecutor (DPP) while in 2014 it was 148. Also, 35 cases were heard in
Court in 2010 while in 2014 it was 24. A research done by Mo (2001) assessing
46 countries using OLS method of regression observed that corruption
undermines the political situation of a country where its adverse impacts affect
productivity growth. “Unexplained wealth law acts as a significant tool to
effectively combat corruption, deprive corrupt officials the enjoyment of their
illicit money and deter corrupted and would be corrupted public officials”
(Wodage, 2004).
The Independent Commission against Corruption (ICAC)1 is the principal legal
authority responsible to handle corruption in Mauritius. A survey conducted by
ICAC in 2014 on ‘Perception of Corruption in Mauritius’2 on 2100 residents in
Mauritius and Rodrigues deduced that 59% of the citizens believe that the
problem of corruption will prolong on the economy while 26.8% think the
situation will remain the same. However, 62.5% assume that ICAC can reform
the problems. The survey demonstrated that the respondents perceive
corruption as a minor problem (ICAC, 2014). The Mauritius International
Financial Centre has been launched in March 2016 as new dynamism, to
promote transparency, good governance, to facilitate the ease of conducting
business and to build strong relationships with investors where malpractices are
correctly handled and, integrity is enhanced. With technological advancement,
criminal activities are at their peak and poses great threats in an economy
(Cheng, 2012) which enables offenders to move their illicit wealth easily without
being identified. The government of Mauritius is at the forefront to fight against
unexplained wealth. The Ministry of Financial Services, Good Governance and
Institutional Reforms, Mr. Sudarshan Bhadain has introduced a new bill known
1Available at: http://www.icac.mu/
2Available at: https://www.icac.mu/national-survey-on-corruption/
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as the ‘Good Governance and Integrity Reporting Bill’3 which was voted by 84%
in the Parliament on the 23rd October 2015 and is yet to become an abiding law
in Mauritius. It is stated by the Minister Bhadain that the bill is an initiative to
bring a clean and transparent system of business. This will help to promote a fair
business environment where transactions of unexplained wealth will be
condemned. The bill has been introduced principally to promote equilibrium in
the system of government.
The ‘‘Good Governance and Integrity Reporting Bill’ has five major objectives to
fight against unexplained wealth:
x It aims to enhance a society of good governance and brings a system of
ethics.
x It encourages integrity investigation in the public and private sectors.
x It stimulates favorable reports of functions of good governance and
integrity.
x Forthcoming law will help to reveal cases of malpractices and confiscate
illicit property.
x The bill rewards and protects people who reveal cases of unexplained
wealth to the relevant authority.
The government basically targets people who possess money or property which
are of Rs. 10 million and above. Failure to give reasonable lawful justifications of
possession of illicit wealth, the asset will be seized. The bill is of civil nature, that
is, it serves a remedial purpose. Also, people who disclose cases of unexplained
wealth will be rewarded. Mauritius has a stringent legal and regulatory
framework recognized by the International Monetary Fund, Financial Stability
Board and the Organization for Economic Co-operation and Development
(OECD) to combat money laundering. Furthermore, Mauritius appears on the
OECD White List of Jurisdictions has regularized stringent legal framework at
Mauritius a listed jurisdiction. Recent peer review of Mauritius by the OECD
Global Forum, further upholds that Mauritius has all the essential elements in
place for an effective exchange of accounting, banking, and ownership/identity
information with other countries especially countries like India, Switzerland,
Indonesia and Singapore (Central Bureau of Investigation-India (CBI) illegal
mining case-2013). Mauritius is also compliant with norms prescribed by
International Organization of Securities Commissions, Iowa Interstate Railroad,
Financial Action Task Force on Money Laundering and the Basel Committee
and has enacted necessary legislation. In this regard, the Mutual Assistance in
Criminal and Related Matters Act and the Financial Intelligence and Anti-Money
Laundering Act 2002 which provides a framework for exchange of information
3Available online at: http://mauritiusassembly.govmu.org/
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on money laundering with members of international financial intelligence groups
are cases in point. The Asset Recovery Act was promulgated to enlarges the
scope for freezing ill-gotten assetscontrol benefits which must be high on the
agenda of the relevant policy-making community.
There have been many laws and guidelines which have helped to combat
money laundering in Mauritius. These policies include The Financial Intelligence
and Anti-Money Laundering Act of 2002 (FIAMLA). It provides for the
management and establishment of the Financial Intelligence Unit (FIU) and the
review committee to supervise activities, detects money laundering offence and
report suspicious transaction. Moreover there is the Anti-Money Laundering and
Combatting of Terrorism Financing Framework (AML/CFT). Furthermore, there
is the Financial Sector Assessment Programme (FSAP). Newly, there has been
the introduction of The Good Governance and The Integrity Bill.
Recognizing the newly introduced law of forfeiture, this study aims to highlight
perceptions of the public on the forthcoming law and to describe the important
features of the bill. The aim of this study is to assess how the public perceive the
unexplained wealth law and to know whether they believe that the confiscation
of unexplained wealth is an effective way to tackle the problem. The study is
dealt with variables such as education, age, gender, urban or rural, media
consumption, personal satisfaction, social trust, trust in the prime minister,
interested in politics and contact government officials, Perceptions about
Government Policies, Money laundering and Unexplained Wealth Knowledge,
Good Governance and Integrity Reporting Bill Knowledge. However, there has
been lacking in the variables such as awareness on information of money
laundering, conspiracy to commit the offence of money laundering, procedures,
jurisdictions and penalty.
The respondents were asked to rate to how well current government is managing
money laundering, how satisfied they feel currently with their economic
condition and to give their overall assessment of the performance of their
government’s fight against money laundering. The influence of observational
data on how well the government is managing corruption is examined.
Answering this question would help to understand whether perceptions of fight
against money laundering is due to characteristics of individual or not. A micro-
level analysis using public opinion survey data (question by question) is
important if empirical linkages are to be established. Knowing what citizens think
about government handling of corrupt practices will be helpful for understanding
if the fight against corruption is perceived favorably (1999- Afrobarometer). To
scrutinize the opinions of the public and verify which of three models; ‘Ordered
Probit’, ‘Ordered Logit’ or Ordinary Least Squares regressions is most pertinent,
statistical evaluation is conducted.
The remaining of this paper is organized as follows: The ‘Literature review’
section provides a review of the literature on Unexplained Wealth, The ‘Testing
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Frame work’ section describes the methodology, followed by the ‘The
Perception towards Unexplained wealth laws and data compiled for the study.
‘Results’ section presents the findings, subsequent to the ‘Limitation and Future
Research’ section. Finally the ‘Conclusion and Policy Implications’ section
concludes with the meaning of the findings and their implications for research
and practice.
LITERATURE REVIEW
This literature review will define unexplained wealth, will outline the menacing
impacts of crimes and will show how government system is being hindered due
to crimes prevailing in a society. It will show how forfeiting assets is considered is
an effective tool to tackle the problem. Furthermore, it will analyze the newly
voted Bill on unexplained wealth. Empirical analysis about the effects of
unexplained wealth and corruption will be mentioned. Also, a comparative
analysis between countries will be done to show how unexplained wealth laws
differ from country to country.“Unexplained wealth laws offer substantial
advantages to combat serious and organized crime” (Bartels, 2010). Contending
unexplained wealth effectually by the government will gain public confidence
and drive to contribute fairly to the society (Australian confiscation laws, Gray,
2012) to prevent criminals engaging in organized crime. It has been estimated
that illegal gains amount to 3.6% of worldwide Gross Domestic Product, and
2.7% which equals to $USD 1.6 trillion are laundered (United Nations Office on
Drugs on Crime). Chong and Silanes (2007) conducted a survey in 80 countries,
making use of cross-country data from 1996 to 2004 and OLS regressions and
observed that tax evasion is a prime feeder to promote further Money
Laundering (ML). Illicit wealth acquired from ML violates tax duties which
decreases tax revenues and increases government spending, weakens the
government, erodes financial institutions where criminals attempt to corrupt
public officials in order to succeed in their illegitimate work. A survey done by
the Financial Intelligence Unit of Mauritius found that 74% of the respondents
perceive ML as a major issue in the country.
Iroghama(2011) conducted a study on perception of public on government
handling corruption in Nigeria. In particular this study examines the genuineness
of government intention in combating the menacing effects of corrupt acts of
government officials, especially those of politicians. Against this background, a
survey was conducted by Afrobarometer Organization in 1999 to assess public
opinion on perceptions of government handling (fighting) of corruption.
Descriptive statistics provided background information on the sample, while
probit logistics regression using STATA “probit” routine were used to measure
perception of government handling of (how well current government is handling)
corruption in Nigeria. The findings suggested that in Nigeria, those that are
highly satisfied with their economic condition say that the government is
handling fight against corruption well. In addition, the findings also indicated
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that gender, residency, trust in president, social trust, interest in politics, and
contact with government officials affects perceptions of how well government is
handling fight against corruption. The study also finds that statistically significant
variables have the probability to strongly influence perceptions of government
handling of corruption.
Goredema (2005) executed an observation dealing with the proceeds of market-
based economic crimes encountered in Southern African countries and looks at
how authorities have responded to these crimes. The consequence was such that
police were capable to acquire comprehensive assessment reports on money
laundering since they have contact with statistics on crime. Conversely, there
may perhaps be certain deficiencies due to unreported cases that take place.
Consequently, corruption may possibly ascend in different segments such as
police force, revenue authorities, directorate of public procurement, immigration
department, registry of companies and estate agents. There is an anti-money
laundering bureau in the Southern African countries and officers often get hold
of crime statistics. Accordingly, this enables the officers to obtain pending cases
on money laundering as well as completed cases. Nonetheless, it becomes
difficult to disclose information due to confidentiality. The revenue authorities
gain evidence through scale and nature of inflow and outflow of imports and
exports, declarations of value, avenues of legitimate trade which may result in
corruption as record keeping may not be perceived. There is absence of
Governmental responsibility in the central bank and political pressure may result
in non-disclosure. However, the National Intelligence Department becomes
unreliable by the reason that it does not take into account unreported cases.
Notional audits have inadequate resources and time which disturb the
consistency of the investigation. Currency exchange may be affected due to poor
documentations. Insurance companies have poor record keeping as there are no
legal obligations to disclose information.
James Scott (2000), said that for developing countries, corruption could be
traced to the country’s colonial history, corruption being a necessary instrument
for dominion of the colonizer over their subjects. History of corruption of the
Philippines dates back to Spanish period (16th-19th century). Bribery, falsification
of accounting documents, arbitrarily set and excessively high taxes and fees,
embezzlement of salaries of public officials by governors and gift giving were a
common practice. Unethical practices were most especially found in the conduct
of government affairs. Positions in the government were even sold to the highest
bidder. Kaufmann (1997) distinguishes between the two types of anti-corruption
strategies: the ex-post or curative measures and the ex-ante or preventive
measures. Based on empirical studies, strong ex-ante anti-corruption measures
work better in fighting corruption in the long term. In a country study of the
Philippines conducted by Worldbank, it emphasized the need for focusing on
reducing opportunities and motivation for corruption by making it a high-risk,
low-reward activity. Within this framework, nine key elements focused on
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combating the root cause of corrupt actvities are recommended for the national
anti-corruption program12Combatting Corruption in the Philippines, Worldbank
2000.
Board of Financial Intelligence Unit (2006) execute a research from January to
March 2006 to identify nature, extent and perception of money laundering in
Mauritius. This was done through self-administered questionnaire as well as face
to face interview. The research worker found that about 75% know the law
vaguely. In addition, about 75% more know the law properly and they are
above 30 years old. Another question dealt with the role of the Financial
Intelligent Unit (FIU). From the responses, it was established that 87% of the
Reporting institutions are familiar with the role of the FIU while only 32% in
Non-reporting Institutions and 40.9% from the general public are aware of the
role of FIU. This shows that a greatest number of respondents are conscious of
the role of the FIU and are mainly in the Reporting Institutions. The survey
showed that there is a high level of compliance with AML regulations in
Reporting Institution. It was discovered that very scarce amount of responders
request for proof in Non-reporting institutions. Others accept cash by most
common method of payment. Similarly, general public used cash as the most
common method of payment.
Muzila et al. (2011) conducted a survey in 45 national authorities and found that
countries which have implemented unexplained wealth laws have been
successful to strengthen the fight against corruption and recovery of assets. Out
of 45 countries examined, 34 (77%) have adopted asset disclosure approach.
They also found that criminalization of unexplained wealth should be
discouraged in a system of weak government. Unexplained wealth is detrimental
and may lead to economic distortions for the country`s economy due to
instability in FDI and exchange rates. Companies which were once profitable
and productive may become sterile since the launders will launder funds leading
to a decrease in overall productivity of the economy. These illegally obtained
money transactions may lead to reduction in the tax revenue. These are the
evidences where the reputation of that particular sector`s credibility, trust and
goodwill with stakeholders. Furthermore, it may lead to a reduction in tax
revenue and sometime, it becomes difficult for government to recover revenue
which is related to transactions take place in the underground economy. In
addition there may be socio-economic factors related to money laundering in
the sense that this money is used to increase criminal operations or create new
one. In a long run, this may result in socio-economic disparity among the
different sectors.
Recently, there was the case of White Dot International Consultancy Limited,
Sunkai Company Ltd., JeT'aime Marketing Company Ltd and lastly Power
Masters Entrepreneur Cooperative Credit Union Ltd in Mauritius involve in
Ponzi scheme as well as money laundering. “A Ponzi scheme is an illegal activity
Perception towards Unexplained W ealth Legislation in Mauritius: An Ordered Probit Approac h
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where returns are paid to its 'investors' out of their own money or out of the
money paid in by subsequent 'investors' rather than from genuine returns /
profits earned from investments.” White Dot International Consultancy Limited
was a company without license to do transaction and it offered its customers to
place their saving in financial products with large profit in short term with rates
exceptional yield. It was reported that 100000 rupees was invested in six months
and interest of 50000 rupees. The largest amount deposited by a client was Rs.
12M and Rs. 7M in cash. Others were content to Rs. 5M, Rs. 2M, Rs. 1M and Rs.
500 000 in cash. The law states that any transfer which exceeds Rs. 500000
should be done by bank transfer or check. Therefore, the police had focus on
those clients which were suspected of money laundering. Also, there has been a
case of a political agent, and there were charges on the case former Prime
Minister who was accused of having committed of money laundering in
December 2014.
EMPIRICAL FRAMEWORK
Gujrati (2004) advocates the OLS method of regression analysis is a
mathematically uncomplicated technique. The principal assumption supporting
the use of the OLS method is that the dependent variable is evaluated on a
continuous and interval scale. Swan and Martin (1980) found the OLS
regression properties are violated when making use of ordinal dependent
variable since this yields errors in the model and thus data are wrongly
interpreted.
As a result, a series of difficulties may arise:
x Unclear estimates which are not in the range or between the values of
the ordinal dependent variable may arise;
x Invalid hypothesis estimate may arise in accordance to the coefficients
of the descriptive variables (t-values) and the regression line (F-values)
because of the existence of invalid sampling determinants and unstable
evaluated standard errors; and
x In the occurrence of (i) and (ii), the R² as an evaluation of goodness of
fit can be ambiguous. Evidently, the OLS regression models for
evaluation were wrongly conducted in previous dissertation where the
dependent variable was of ordinal nature.
Walker and Duncan (1967) and Mc Kelvey and Zavoina (1975) were the first to
develop the Ordered Probit and Ordered Logit models. The Ordered Probit
model uses maximum functions and hinges on “normal” probability distribution
and considers mapping of the latent scale to the response groups is done by
making use of continuous cut-points. For the Ordered Probit model, the
categorical dependent variable displaying ordered multinomial results relating to
Recent Advances in Business an d Economics
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perception (question 8) comprise of “strongly disagree”, “disagree”, “neither
agree nor disagree”, “agree” and “strongly agree” given by:
*
1
, 1,2...,
ijij
yj y j m
PP
(1)
where the latent variable y* is considered to be a linear function of a vector of
variables x’, adding a random error İ:
*
~ 0,1
ii ii
yx N
EH H
c
(2)
where xirepresents the independent covariates which interpret the level of
satisfaction ȕ.
01
, ,
jj m
PPPP
f d fare the cut-points where the categorical results
are separated.
Considering a normally distributed error term, to observe a given value of y, the
probability is given by:
>@
*
11
11
Pr Pr Pr
Pr
ij i j i j j i i j
ji iji ji
yj y x
xxFx
PPPEHP
PEHPE PE
cªºª º
¬¼¬¼
cc c
ªº
?
¬¼
(3)
where F(.) relates to the cumulative distribution function (CDF) ofİi. The
regression parameters ȕ and the (m – 1) threshold parameters ȝ1, …,ȝm-1 are
derived by maximum probability measures. The values of the ȕ’s verifies if the
latent variable y* increases with the explanatory variable or not. The marginal
effects are given by:
>@
^`
1
Pr i
ji ji
i
yj FxFx
x
PE PEE
w cccc
w (4)
where F is the derivatives of F.
The Ordered Logit model is obtained from the logistic distribution and is given
by:
*
1
, 1,2...,
ijij
yj y j m
PP
(5)
y i*= xi ȕ + İiİi ~ Log (0,1) (6)
01
, ,
jj m
PPPP
f d f (7)
Perception towards Unexplained W ealth Legislation in Mauritius: An Ordered Probit Approac h
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Furthermore, multivariate normality tests which comprise of Mardiam Skewness,
Mardiam Kurtosis, Henze-Zirkler and Doornik-Hansen. Mardia multivariates
analysis for skewness and kurtosis helps to assess null hypotheses which satisfy
the properties of multi-normality. Analytical estimates in these approaches are
the multivariate analysis of variance (MANOVA) which is generally assessed
under the following assumptions;
1. The measurements are separately distributed,
2. The measurements are randomly distributed from a multivariate normal
sample size,
3. The variance-covariance matrix of the observation is similar.
The Mardia’s multivariate skewness is given by:
Ȗˆ1d = ଵ
ே²σ݉³݆݅
ଵ, (8)
Where݉ =(ݔ െݔҧ)’ ܵିଵ (ݔെݔҧ). The statistic Nݕෝூௗ /6 follows a Ȥ²
distribution with df = d(d + 1)(d + 2)/6.
The Mardia’s multivariate kurtosis is formulated as:
Ȗˆ1d = ଵ
ேమσ݉ସ݅
ଵ, (9)
Where ݉²=(ݔ െݔҧ) ܵିଵ (ݔെݔҧ). The statistic N ݕෝଶௗ is normally distributed
with mean d(d + 2) and variance 8d(d + 2)/N, where d is the number of
variables under study.
RESULTS
From the survey conducted to collect data on the forthcoming unexplained
wealth law, out of 1645 questionnaires, 629 were not completed by the
respondents. Thus, the usable sample is 1016. To estimate public perception,
Table 4.1 shows multivariate public perception model using OLS, probit and
logit regressions of a five-type ordinal scale. Based on the level of significance
and signs of the coefficients, the three aforementioned models yield near
outcomes. The Ordered Probit model in this study is employed as a principal
technique to assess the perception of individuals on the unexplained wealth
legislation. Table 4.1 portrays the variables; confiscation, awareness, score-bill,
personal satisfaction and democracy are statistically significant. The Ordered
probit, in this study is the focal model employed to assess the perception of
individuals on the unexplained wealth legislation.
The following table depicts an illustration of the variables used in the
interpretation with full details on mean, standard deviation, minimum and
maximum value, and percentage of zeros of discrete and continuous variables.
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Table 1: Description of Variables
Variables Description Mean Standard
Deviation
Minimum
Value
Maximum
Value
Dependent
Effectiveness
Independent
Gender:
Male
Female
Age
Level of
Education
Secondary
Diploma
Undergraduate
Others
Geographical
Location:
Urban
Rural
Income:
Below Rs10 000
Rs10 001- Rs20
000
Rs20 001- Rs30
000
Above Rs30 000
Civil Status:
Single
Married
Divorced
Others
Confiscation
Awareness
Democracy
Technology
Media
Consumption
Personality
Profile:
Openness
Conscientiousness
Extraversion
Agreeableness
Neuroticism
Effectiveness of
UW laws
Age of
Respondent
Academic
Qualification
Residential
Area of
Respondent
Confiscation of
UW
Awareness of
UW
Democracy
Index
Technology
Index
Media
Consumption
Index
The Five
Personality
Traits
3.006
0.484
29.19
0.348
0.126
0.399
0.127
0.512
0.488
0.259
0.41
0.241
0.896
0.613
0.362
0.019
0.005
3.499
1.414
3.556
3.59
3.587
3.235
3.83
3.606
2.866
3.67
1.128
0.5
9.605
0.477
0.332
0.49
0.333
0.5
0.5
0.438
0.492
0.428
0.286
0.487
0.481
0.139
0.07
0.922
0.613
0.73
0.777
0.832
0.657
0.72
0.8
0.898
0.698
1
0
18
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
1
5
1
71
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
5
5
5
5
5
Source: Author’s computation
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As pointed out by Viega F and Wattenberg M, an appropriate representation of
data helps to get a better understanding and comparison of the data. In this
context, to have a clear visualization of the information, bar charts and pie chart
have been used where comparison of gender, education, residential area,
monthly income and civil status can be clearly identified. In essence, bar charts
are suitable to make better comprehensive trends than in tables. Furthermore,
pie chart is easy and simple to understand. The dependent variable which is the
effectiveness of government to control unexplained wealth takes a five-point
Likert scale: 1=strongly disagree, 2=disagree, 3=neutral, 4=agree and
5=strongly agree. By making use of a bar chart, the dependent variable is
represented below.
V(a) Effectiveness of the Government to Handle Unexplained Wealth
Fig. 1: Effectiveness of the Government to Handle Unexplained Wealth
Source: Author’s computation
The above figure unveils the level of satisfaction of the population on the
effectiveness of the government to handle the crime. 22.34% agreed while
24.51% strongly disagreed. Significant proportion of the population, 33.07% are
neutral. 10.73% strongly agreed and in contrast 9.35% strongly disagreed.
SCORE BILL LITERACY
Based on the answers obtained from the questionnaires, a score bill is constructed
ranging from 1 to 4 and accordingly relates to the distinct literacy categories. The
score-bill literacy comprises of ten questions; question 21 to question 304 and it
seeks to assess the knowledge of the respondents on the GGIRB.
Table 2: Good Governa nce and Integrity Reporting Bill Literacy
Value Meaning Number of correct % of correct
answers answers
4 Excellent 9-10 8.37%
3 Good 6-8 16.14%
2 Fair 3-5 58.76%
1 Poor 0-2 16.73%
Source: Author’s computation
4See Appendix B
95
249
336
227
109
9.35
24.51
33.07
22.34
10.73
0 50 100 150 200 250 300 350 400
1=Strongly Disagree
2=Disagree
3= Neutral
4=Agree
5= Strongly Agree
Percent Number of Repondents
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Table 3: Multivariate Models of Public Perception
Variables OLS Ordered Probit Ordered Logit
Coefficient Standard
Errors
Coefficient Standard
Errors
Coefficient Standard
Errors
Age
Age²
Gender
Male
Education
Level
Secondary
Diploma
Others
Residence
Rural
Income
Below Rs10
000
Rs10 001-
Rs20 000
Rs20 001-
Rs30 000
Marital
Status
Married
Divorced
Others
Confiscation
Awareness
Score Bill
Personal
Satisfaction
Q31
Q36
Democracy
Technolog y
Media
Consumptio
n
Extraversion
Neuroticism
Psycho
Constant
Cut point 1
Cut point 2
Cut point 3
Cut point 4
-0.0036657
0.0000759
0.1105279
0.3170053
0.06588333
0.0335712
-0.2362156
0.0671925
0.0727638
0.2161647
0.1810649
0.2854649
0.5514573
0.1136373
0.1342081
0.3490121
0.1434896
0.1794414
0.2252055
-0.0808058
0.2026483
0.0212755
0.0851544
-0.0205971
-1.391264
-
-
-
-
0.022339
0.0002654
0.0611969*
0.0745286**
*
0.1024839
0.1102411
0.0609973**
*
0.1628969
0.1458722
0.1261321*
0.0893091**
0.1982212
0.2771348**
0.0435468**
*
0.052522**
0.0421979**
*
0.0372469**
*
0.346358***
0.0527688**
*
0.0472635*
0.0427502**
*
0.05151171
0.0361015
0.0656182
0.5410896**
*
-
-
-
-
-0.004197
0.0001014
0.1225425
0.3934176
0.0917972
0.0155526
-0.2890502
0.0702584
0.0642742
0.2361015
0.1870914
0.300932
0.6589989
0.1392645
0.1536603
0.4390893
0.1678227
0.216653
0.2813654
-0.0993311
0.2255596
0.0230525
0.1021853
-0.0167344
-
3.566603
4.75916
5.866976
6.915798
0.0276214
0.0003365
0.0734184*
0.0916686**
*
0.1240188
0.1303584
0.072797***
0.1985199
0.1783077
0.1546156*
0.1072752*
0.2322234
0.3216066**
0.0530945**
*
0.0627277**
0.0528508**
*
0.0446714**
*
0.0417656**
*
0.0655298**
*
0.0547429*
0.0520799**
*
0.061949
0.043066
0.0795222
-
0.6750733
0.6809617
0.6866913
0.6915316
-0.001712
0.0000656
0.1927897
0.7669681
0.2020246
0.0357413
-0.5250725
0.0571439
0.00539459
0.4076483
0.2958172
0.5258864
1.176294
0.2658221
0.2236515
0.763753
0.2782482
0.4048278
0.5097909
-0.1889908
0.446862
0.0064419
0.1744777
-0.0581224
-
6.210285
8.353702
10.25895
12.11324
0.0480311
0.0005702
0.1313299*
0.1656521**
*
0.227908
0.2145078
0.1293526**
*
0.3376259
0.2999006
0.2567048*
0.1945219*
0.4284601
0.5765199**
0.0994468**
*
0.1094461**
0.0923536**
*
0.0803898**
*
0.0758936**
*
0.1222493**
*
0.0982989*
0.0919412**
*
0.1045171
0.0766772
0.1449992
-
1.170179
1.184656
1.197549
1.207556
Number of
Obs.
Ȥð-test
Prob> Ȥð
Pseudo-R²
F- Value
Adjusted R²
1016
-
-
-
29.94
0.3820
1016
394.5
0.0000*
0.16
-
-
1016
381.67
0.0000*
0.16
-
-
Note: *** represents 1% significance level, ** for 5% and * for 10% significance level of the
coefficients.
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An underlying factor relating to categorical outcome variable is that the OLS
technique may yield outcomes leading to extreme underestimation of the
significance of independent variables which are “size” and “level of significance”
of the coefficients. As per the findings of Mc Kelvey and Zavoina (1975), unlike
probit model, the relationship between regressor and error established to
evaluate the essential link when making use of the regression evaluation leads to
biasness. Thus, it misleads the interpretation of the analysis which instead of
demonstrating a strong correlation, a weak one is obtained. As a result, such
biasness may lead to extreme negative effects. Furthermore, the independent
power (R²) of the OLS method, despite high (0.38) for perception data is
potentially ambiguous as illustrated in Table 4.
Regarding the probit and logit models, the two variables; Age and Age² are
statistically insignificant. However, laws do not discriminate people on their age
or any other factor; instead they are fair to every person. The unexplained
wealth law when become enforceable will be applicable to each and every
citizen of Mauritius, irrespective of their age. The survey conducted a targeted
person above 18 years old, more precisely, minors were not asked to answer the
questionnaire. As per the findings of the model, as a person grows older, he is
less likely to be satisfied with the unexplained wealth law.
Assessing the probit model with regards to Gender, variable Male has significant
impact on the UW law. Male, earning, third category income level, as per the
data; Rs20 001 to Rs30 000 and acquiring secondary level of education are in
favor of the bill. This may be reasoned on the fact that males perceive high
expectations on the bill than females do.Using the Urban region as the baseline
category, perceptions on the effectiveness of government to handle UW offences
is significantly more affirmative in the rural region. Respondents residing in rural
areas are notably more in favor (p < 0.01) to approve the government’s aim in
tackling the UW offences.Respondents acquiring different levels of education
perceive dissimilar satisfaction level. Taking university level of education as the
reference category, respondents being secondary education holder are
significantly more likely to satisfy with the bill.
Confiscation, Awareness, Score-bill, Personal Satisfaction, Democracy,
Technology and Media Consumption provide significant results to perception of
government effectiveness. As mentioned in the Good Governance and Integrity
Reporting Bill, those convicted of unexplained wealth offence will have their ill-
gotten wealth confiscated. The Confiscation coefficient is highly significant,
explaining that the respondents are satisfied with the forfeiture of wealth
punishment. As per the findings of Hofmeyr (2013), seizing unexplained wealth
is a useful punishment to deter the crime. Score-bill variable assesses the
knowledge of the bill and Awareness assesses the understanding of UW of the
respondents. Respondents’ knowledge on the bill and UW offence influences
their perceptions.
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Thus, the findings show that it is an important positive impact on perception.
Score-bill is highly significant (p < 0.01) and Awareness is considerably
significant (p < 0.05), explaining that the respondents are well informed on the
bill. In an effort to give better understanding of the GGIRB, Minister Sudarshan
Bhadain organized a talk in October 2015.Concerning Personal Satisfaction,
question number 36 is on satisfaction on the forthcoming law to combat
organized crimes. It can be seen that respondents are strongly satisfied (p <0.01)
with the bill and approve the bill acts as an important weapon to deter and
combat illicit enrichment. Significantly, regarding question number 36,
respondents agree to disclose suspected cases of UW to the relevant person. This
demonstrates that the respondents are encouraging the government to combat
UW cases. Also, the fact that the bill has implemented rewards when disclosure
of the offence is done, this may act as an important motivator for the people to
agree to reveal crime.
Regarding to Democracy, for the bill to be well applicable, it is noteworthy to
have a good system of democracy which is the prime aim to implement the law.
Democracy variable is highly significant which explains that the population
perceives democracy as a good system to promote stability. From this we can
deduce that the more a country is democratically governed and sound, the more
confidence people will have on the government. Thus, as per the findings it is
found that to be able to deal with the offence effectively, it is wise to promote
transparency.
Technology and Media are significantly positive in the model. Respondents
perceive Media as a reliable source to inform people about the crimes happening
in a country. Indeed, nowadays media plays a significant role. News is easily
obtained through different applications. Technology is the fifth pillar of the
Mauritian economy. According to Mauritius Research Council (2001), to bring
technological advancement, the country rely heavily on foreign and high
technological driven economies and Mauritius has advanced a lot compared to
the last decade. According to Cheng (2012), technology is a double edged
weapon. On one hand it helps to detect crimes and on the other hand it helps
offenders to devise measures to launder money and escape ideas to turn the
illicit proceeds into licit ones. The technology coefficient is significant which
shows that the respondents perceive technology as a contributor to criminal
activities. Turning to Extraversion personality trait, according to Nettle (2007),
these are people who are cheerful and fun-seeking. Current research
demonstrates that extraversion is insignificant. Also, there is no significant impact
between public satisfaction and Neuroticism. Neuroticism is characterized by
people who are moody, stressful and emotional (Duijsens and Dieksha, 1996).
According to Aldrich and Nelson (1984), pseudo R² which is not similar to the R²
obtained from the traditional OLS analysis changes in computed likelihood
functions. Similar to the R², the pseudo R² takes values between 0 to 1, where
greater values indicates greater explanatory power and goodness of fit of the
probit and logit models. The predictive accuracy of the three models is reported
Perception towards Unexplained W ealth Legislation in Mauritius: An Ordered Probit Approac h
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in this section for ordered probit and ordered logit where each ordered public
satisfaction ranking generated predicted probability.
The OLS technique estimates values for the categorical dependent outcome on
an interval scale. Thus, the OLS method has failed to generate the integer values
of 1 to 5 for the categorical dependent variables. Table 4.2 describes marginal
effects of Ordered Probit estimates. According to Star and Berg (2011), the
marginal effect explains how the dependent variable varies when an
independent variable changes.
The five categories of the outcome variable are classified as 1, 2, 3, 4, 5; where
1 indicates strongly disagree,
2= disagree,
3= somewhat agree and somewhat disagree,
4= agree and
5= strongly agree.
The marginal effect of a specific independent variable is estimated by holding
other independent variables constant at their means.
Table 4: Marginal Effects
Variables
Coefficient Margina
l
Effects
Satisfac tion Satis factio n Satisfac tion Sa tisfacti on Satisfac tion
1 2 3 4 5
Age
Age²
Gender
(Baseline: Female)
Male
Education Level
(Baseline:
University)
Secondary
Diploma
Others
Residence
(Baseline : Urban)
Rural
Income
(Baseline: Above
Rs30 000)
Below Rs10 000
Rs10 001-Rs20 000
-0.004197
(0.027614)
0.0001014
(0.0003365)
0.12254245
(0.734184)*
0.3934176
(0.0916686)**
*
0.0917972
(0.1240188)
0.0155526
(0.1303584)
-0.2890502
(0.072797)***
0.0702584
(0.1985199)
0.0642742
0.0005247
(0.0034535)
0.0000127
(0.0000421)
-0.0153189
(0.0092984)*
-0.0491808
(0.113553)***
-0.0114755
(0.15506)
-0.0019442
(0.162915)
0.0361339
(0.0092133)**
*
-0.0087829
(0.0247994)
-0.0080349
0.0006376
(0.0041988)
-0.0000154
(0.0000512)
-0.0186171
(0.0111121)*
-0.0597694
(0.0140314)**
*
-0.0139462
(0.0188224)
-0.0023628
(0.0198099)
0.0439135
(0.0112062)**
*
-0.0106739
(0.0302057)
0.0000179
(0.0001198)
-4.33e-07
(1056e-06)
-0.0005233
(0.0009076)
-0.00168
(0.0028225)
-0.000392
(0.0008438)
-0.0000664
(0.0005598)
0.0012343
(0.0020534)
-0.0003
(0.0009744)
-0.0002745
(0.000873)
-0.0005794
(0.0038158)
0.000014
(0.0000465)
0.0169164
(0.0101792)*
0.0543094
(0.0124928)**
*
0.0126722
(0.017099)
0.002147
(0.0179902)
-0.0399019
(0.0101917)**
*
0.0096988
(0.0274044)
-0.0006008
(0.0039526)
0.0000145
(0.0000481)
0.0175431
(0.0105182)
*
0.0563212
(0.013482)*
**
0.0131416
(0.017773)
0.0022265
(0.0186605)
-0.0413801
(0.010519)*
**
0.0100581
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Rs20 001- Rs30 000
Marital Status
(Baseline: Single )
Married
Divorced
Others
Confiscati on
Awareness
Score Bill
Personal
Satisfaction
Q31
Q36
Democrac y
Technology
Media
Consumption
Extraversion
Neuro ticis m
Psycho
Cut point 1
Cut point 2
Cut point 3
Cut point 4
Pseudo R²
Log likelihood
(0.1783077)
0.2361015
(0.1546156)*
0.1870914
(0.1072752)**
0.300932
(0.2322234)
0.6589989
(0.3216066)**
0.1392645
(0.0530945)**
*
0.1536603
(0.0627277)**
0.4390893
(0.0528508)**
*
0.1678227
(0.0446714)**
*
0.216653
(0.0417656)**
*
0.2813654
(0.0655298)**
*
-0.0993311
(0.0567429)*
0.2255596
(0.0520799)**
*
0.0230525
(0.061949)
0.1021853
(0.043066)
-0.0167344
(0.0795222)
3.566603
(0.6750733)
4.75916
(0.6809617)
5.866976
(0.6866913)
6.915798
(0.6915316)
0.1610
-1284.196
(0.022269)
-0.0295148
(0.0192508)*
-0.0233881
(0.013519)*
-0.0376193
(0.0292246)
-0.0823809
(0.0405573)**
-0.0174093
(0.0067574)**
*
-0.0192089
(0.0079924)**
-0.0548902
(0.0072681)**
*
-0.0209794
(0.0058425)**
*
-0.0270836
(0.0053002)**
*
-0.0351732
(0.0081672)**
*
0.0124173
(0.0071494)*
-0.028197
(0.0065164)**
*
-0.0028818
(0.0077676)
-0.0127741
(0.0053638)**
0.002092
(0.0099472)
-0.0097648
(0.0271513)
-0.0358694
(0.0236819)*
-0.0284236
(0.0162871)*
-0.0457187
(0.0352118)
-0.1001174
(0.0488899)**
-0.0211576
(0.0080217)**
*
-0.0233446
(0.0095486)**
-0.066708
(0.0079458)**
*
-0.0254962
(0.0066521)**
*
-0.0329147
(0.006324)***
-0.042746
(0.0102064)**
*
0.0150907
(0.0086118)*
-0.0342678
(0.0080309)**
*
-0.0035022
(0.0093947)
-0.0155244
(0.0066406)**
0.0025424
(0.120679)
-0.0010082
(0.001788)
-0.0007989
(0.0013931)
-0.001285
(0.0023336)
-0.0028141
(0.0047732)
-0.0005947
(0.0009857)
-0.0006562
(0.0011094)
-0.001875
(0.0031372)
-0.0007166
(0.0012016)
-0.0009252
(0.0015537)
-0.0012015
(0.0020221)
0.0004242
(0.0007281)
-0.0009632
(0.0016027)
-0.0000984
(0.0003111)
-0.0004364
(0.0007549)
0.0000715
(0.0003605)
0.0088727
(0.0246375)
0.0325926
(0.0213796)*
0.025827
(0.0147263)*
0.0415422
(0.0322486)
0.0909715
(0.0446068)**
0.0192248
(0.007403)***
0.021212
(0.0086672)**
0.0606141
(0.0075659)**
*
0.231671
(0.0062507)**
*
0.0299079
(0.0056954)**
*
0.0388411
(0.0091543)**
*
-0.0137122
(0.0078325)*
0.0311374
(0.0072973)**
*
0.0031823
(0.008553)
0.0141062
(0.0059799)**
-0.0023101
(0.0109764)
(0.0284408)
0.0092014
(0.02553)
0.0338
(0.222171)*
0.0267838
(0.0155367)
*
0.0430811
(0.0331713)
0.0943416
(0.0460191)
**
0.019937
(0.0075172)
***
0.0219978
(0.0091254)
**
0.0628595
(0.0084193)
***
0.0240253
(0.0064787)
***
0.0310158
(0.0062701)
***
0.04028
(0.0096674)
***
-0.0142201
(0.0081372)
*
0.0322909
(0.0074786)
***
0.0033002
(0.0088751)
0.0146287
(0.0062617)
**
-0.0023957
(0.0113796)
Note: ***, ** and * represent significance level of the coefficients at 1%, 5%, and 10% respectively.
Robust standard errors are illustrated in brackets
Perception towards Unexplained W ealth Legislation in Mauritius: An Ordered Probit Approac h
[189]
As age increases, a person is 0.058% points less likely to be satisfied with the bill.
Being male a increases the probability by 2% points of being strongly agree. This
is explained by the fact that males support the UW bill more than females. For
income level between Rs20 001 to Rs30 000, an increase in income will reduce
the probability of satisfaction of the bill by 3% points in the strongly disagree
category, 4% points in the disagree category and 0.1% points in somewhat
agree and somewhat disagree. The remaining 2 categories; “4” and “5”
increases the probability by 3.2% points and 3.4% points. Married persons have
2.7% points higher probability of bill satisfaction.
Respondents’ perceptions on the confiscation variable help to know to what
extent they are satisfied with the implementation of the confiscation law to deter
UW offences. Respondents are 2.1% points less likely to disagree with the
confiscation regime while 2% points strongly agree. Perceptions about personal
satisfaction influence respondents’ willingness to disclose suspected cases of UW
and satisfaction with the law to combat organized crime. The marginal effect of
personal satisfaction support 2.4% points to strongly agree with the unexplained
wealth law and 3.1% points strongly agree they will disclose suspected cases of
UW.
The table below illustrates the multivariate test where the MardiamSkewness,
MardiamKurtosis, HenzeZirkler and Doornik Hansen are computed. Based on
the four multivariate normality estimates, all the four tests have p-value 0.000.
This illustrates that the four tests do not reject the null hypothesis.
Table 5: Multivariate Normality Tests
Multivariate Normality tests Variable Observations Ȥ²(2) Prob> Ȥ²
MardiamSkewness
MardiamKurtosis
Henze-Zirkler
Doornik-Hansen
Effectiveness of
government to
handle
unexplained
wealth
1016
55811
12671.862
1.26e+08
2.43e+05
0.000
0.000
0.000
0.000
Source: Authors computation
Democracy is an essential element for the bill to effectively serve to its purpose.
About 4% points fall in the category strongly satisfy. The marginal effects of
technology for the three categories; “1”, “2” and “3” have higher probabilities of
1, 2 and 0.04% points respectively. 3.4% points are less likely to disagree that
media is a reliable source to inform people about crime and the severity of the
crime while 3% points strongly agree. The marginal effects for extraversion,
neuroticism ad psycho variables are insignificant. Being extravert decreases the
probability by 0.35% points and 1.6% points respectively of falling in the
category disagree. For psychoticism, 0.25% points are somewhat agree and
somewhat disagree.
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[190]
PROTECTION OF WHISTLE BLOWERS
Personal Satisfaction which is one of the major variables affecting perception is
highly significant. This factor as mentioned in the findings section consists of the
willingness to disclose suspected UW cases. From a practical perspective, this
explains that the respondents are against the illicit enrichment. While some
people may consent to disclose UW cases, others may prefer turn to a blind eye
fearing they may be harassed or harmed or even both by the offenders in the
future. To note, Mauritius does not have punishment by death, instead criminals
are convicted by penal servitude and are released when the term of
imprisonment ends. Thus, people may fear to disclose crimes. A person who
discloses an illegal act to the relevant person is known as a whistle blower.
Therefore, the government should ensure safety and protection of whistle
blowers. By providing effective whistle blower protection encourages people to
report UW cases without the fear of being mistreated and as a result they will
have confidence in the investigation procedures.
FINDINGS AND ANALYSIS
In the research of assessing public perception, data have been obtained from
questionnaires and have been evaluated and explained by using econometrics
models which are Ordered Probit, Ordered Logit, Ordinary Least Squares
regressions and Multivariate Normality tests. Where the study emphasizes on
satisfaction and perception of the public, the Ordered Probit and Ordered Logit
models are useful. The underlying assumptions of the OLS, Ordered Probit, and
Ordered Logit methods are compared. The objectives of this section are to
outline the major hurdles when employing OLS techniques to estimate the
dependent variable which is of Likert type scales and to assess the level of
satisfaction of unexplained wealth. Explicit legislative provisions for the
confiscation of unexplained wealth exist in the confiscations legislation of
Western Australia1, the Northern Territory2, South Australia3 and New South
Wales4 as well as the Commonwealth.5 All of those provisions are directed
towards the recovery of criminally derived wealth(Serious and Organised Crime
(Unexplained Wealth) Act 2009 (effective from 29 August 2010). Unexplained
wealth provisions requiring a threshold suspicion of unlawful derivation of
property or engagement in serious crime related activity are unlikely to be
effective in attacking those who distance themselves from the criminal act but
benefit from the proceeds. Unexplained wealth investigations are likely to be
resource intensive with uncertain outcomes, factors which are likely to diminish
the utility of the provisions (Criminal Assets Recovery Act 1990). A research
done by Lede and Loayza (2005) using Ordinary Least Squares (OLS) method
of regression and Ordered Probit model found that a stable democracy, well
functioned parliament and freedom of press make it easy to combat corruption.
Perception towards Unexplained W ealth Legislation in Mauritius: An Ordered Probit Approac h
[191]
CONCLUSION
The findings of the research work demonstrate that respondents are satisfied
with the confiscation of ill-gotten wealth. Conviction of UW is purely civil as per
the GGIRB. More precisely, the government has introduced UW law which is
civil in nature where the illicit wealth is to be confiscated if the defendant cannot
lawfully justify the source of wealth. However, to better deal with the problem,
the law sanctioning UW should be rather of criminal punishment. Therefore
before committing such crime, criminals will think twice as they may be
imprisoned in addition to losing the wealth. Nonetheless, despite the fact that it
is practically impossible to put a complete halt to illegal transactions, criminal
sanctions may thus reduce UW offence together with the adverse effects
associated.
The difficulties that technology causes in an economy are clear. While
improvements in technology provide various advantages, it however makes the
task of criminals easy to devise techniques to launder money like electronic
money transfer. The technology coefficient is statistically significant in the
findings signifying that respondents perceive technology to be a major
contributor to crimes. An appropriate way to deal with the problem is to set up a
task force to concentrate on UW related cyber-crime. They should also be
equipped with the necessary infrastructure and receive intensive training to be
able to detect and fight UW related cyber-crime. Hence, the government should
invest in sophisticated systems to prevent offenders from using technology as an
intermediary means to launder illicit funds. Also, the government alone will not
be able to tackle the issue. To better combat this menace the private sector
should join hands with the government by sharing evidences and mustering
efforts to tackle technology. The government should also control electronic funds
transfer by introducing a single Act to condemn the offence.
As far as corruption is concerned, it is practically impossible for a country to
witness zero per cent corruption rate. Based on the corruption ranking, Mauritius
is ranked 37th among 150 countries in 2015. A measure to reduce corruption is
by promoting competition in different governmental institutions and within the
political structure. Increasing competition should be done in a way that officials
are appraised depending on their performance and dedication. This as a result
will encourage officials to work fairly, thus decreasing corruption and achieving
transparency. To prevent a situation of gloom and doom, it is substantial for the
government to ensure a clean and reputable image. This study has come to the
conclusion that the detrimental outcomes of UW do not only undermine the
reputation of a country but it obstructs investment, thus affecting an economy at
large. The Ordered Probit model- a principal technique of estimation was
employed to make analysis. Thus, myriads of results have been obtained. Based
on the quantitative research of the study, the findings provide understanding of
perception on the UW laws. The findings exhibit that personality attributes
Recent Advances in Business an d Economics
[192]
combined with other variables like Age, Gender, Education, Residence, Income,
Marital Status, Confiscation, Awareness, Score-bill, Personal Satisfaction,
Democracy, Technology and Media Consumption are substantial determinants
to deduce perception on the UW law. With the implementation of the bill,
respondents have showed satisfaction and even expressed their willingness to
disclose suspected cases of UW in an objective to encourage the government
combat the problem.
Therefore, focusing on the results obtained, in order to efficaciously regulate UW
offences, laws should have criminal punishment. The persons who have been
proved guilty of the offence should be liable to a considerable amount of fine
plus confiscating the illicitly acquired wealth and to imprisonment. This as a
result will help to handle the problem effectively and there aforementioned
severe punishments will act as deterrence and discourage people to engage in
these transactions.
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