Updated: July 30, 2019 7:06:54 am
One of the large international corporations which used the Mauritius route to propose a joint venture (JV) in India and maximise tax benefits is Minnesota-based Mayo Clinic and its subsidiary, the Mayo Foundation for Medical Education and Research (MFMER).
It was in 2011 that MFMER, described in the data of offshore specialist firm Conyers Dill & Pearman as a not-for-profit corporation, registered Mayo Clinic GBS Mauritius to be wholly owned by Mayo Foundation. The business plan of Mayo Mauritius states that “the main business activity of the company will be to invest in business that complement Mayo Clinic activities’’ and it should be structured in such a manner that it avoids giving Mayo’s US affiliates a taxable presence in India.
The purpose of setting up Mayo Mauritius became clear when on November 30, 2011, the company (set up by Conyers affiliate Codan) entered into a shareholders agreement with leading healthcare company, Apollo Hospitals and infrastructure giant, GMR Holdings, to establish and manage a tertiary high-end hospital at the Rajiv Gandhi International Airport at Shamshabad, Hyderabad. For this purpose (described as “Project Hospital” in documents), a private company by the name of AMG Healthcare Destination Private Limited was incorporated, with an office at the Hyderabad airport.
Both Mayo Clinic and Apollo Hospital now state that the proposed hospital project failed to take off. It is evident from the Conyers data and structure charts of the Mayo Mauritius plan that investments in India and the holding of equity in Indian entities was a principal objective. Thus, when the Mauritius firm was set up, the business plan stated, “the company will require a tax residency certificate to be issued by the authorities in Mauritius after the incorporation of the company to benefit from the double tax agreement between India and Mauritius”.
The proposal drafted by Conyers cleared a three-year “business forecast” for Mayo Mauritius. It was stated that the company would be initially capitalised with $30,000, and for the next three years will have an infusion of additional paid-in capital of $250,000, $500,000 and $16,000,000. The proposal states, “the company shall raise capital to the value of $30,000 from its own resources and also any additional paid-in capital will be raised from its own resources”.
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The investment in an Indian JV was the stated goal for Mayo Clinic at the outset and there is correspondence to show that Conyers had advised the firm on how to approach the investments for obtaining licence from Mauritius Financial Services Commission. They had advised it to include the following in their business plan: “The company (Mayo Mauritius) will act as an investment holding company for investments engaged in performing feasibility studies for Global Business Solutions investing activities in India as well as in the South Asian Region, the Middle East and the Far East…”.
Once Mayo Mauritius and AMG Healthcare were set up in 2011, the final agreements for proposed Hyderabad hospital took four years to be finalised. But the joint venture had a troubled start. A subsequent MoU (Memorandum of Understanding), signed between the four parties on March 14, 2014, provides a history of the “disputes”. The MoU states that it was Mayo which on March 6, 2013 served a “notice of termination” on GMR and Apollo which they refused to accept.
Following this, a meeting was held between the parties on September 20, 2013 in Rochester, Minnesota. It was decided that Mayo Mauritius would transfer its shares in AMG to Apollo and GMR. This share transfer agreement was dated March 14, 2014. Thus, 616,250 shares each were sold by Mayo to GMR and Apollo at the equivalent value of US $2 each. The “shared vision” that is listed in the March 14, 2014 MoU lists the following:
* To extend Mayo’s global outreach and Mayo model of patient/nursing care to India.
* To set up a world-class facility that will attract international patients and be competitive with similar facilities in Singapore and Thailand, which are meeting requirements to “target” patients from the US and other developed countries.
* A provision of training by Mayo staff to AMG staff in India to the extent permissible by Indian laws. * Meet requirements of Indian patients who travel to the US and other developed countries for specialised, high-end medical care.
Reached for comment, a spokesman for Apollo Hospitals stated in an email reply: “The idea behind the joint venture was to set up a high-end tertiary healthcare facility near the Hyderabad airport. The joint venture company (AGM Healthcare Destination Pvt Ltd) was registered and set up under Indian laws in India. We are unable to comment on Mayo’s decisions with regards to their investment. However, things did not take place as per the expectations of the US partner…” Mayo Clinic also responded to ‘Mauritius Leaks’ media partner, Minnesota Star Tribune’s questions on the proposed Indian hospital projects, stating: “The project that was being explored starting in 2011 was abandoned several years ago and there have been no recent efforts to revive it.”
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