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Seychelles former first lady in court over corruption scandal

Former first lady of the Seychelles-Sarah Zarqhani Rene

The former first lady of the Seychelles and several other high-profile figures were in court on Friday over a $50 million embezzlement scandal that has gripped the paradise island nation. In all, six people have been charged over the disappearance of the funds which were given to the Seychelles government by the United Arab Emirates two decades ago.

The case has thrown the spotlight on corruption in the tiny Indian Ocean republic, long seen as a tax haven for the world’s super-rich where business and politics are closely entwined.

On Friday, the court ordered that Sarah Zarqhani Rene, widow of late president France Albert Rene who ruled from 1977 to 2004, remain in custody on charges of money laundering, along with another three co-accused. The two others were previously released on bail.

Zarqhani Rene, 63, has failed several times to be freed from detention, with the court fixing bail at $2 million, a sum she says she cannot afford.

In 2002, when Rene was still in power, the UAE donated $50 million (44 million euros) to help the Seychelles, then facing an acute foreign currency shortage, to import food and other vital goods to replenish empty shelves.

Prosecutors say the money was syphoned off from the central bank to a bank account in Britain, passed through various shell companies and returned to the Seychelles to buy undervalued hotels being sold off in a privatisation scheme.

The suspected masterminds are prominent businessman Mukesh Valahbji, the former president’s economic adviser, and his wife, while the investigation has also ensnared a former finance minister, a senior finance ministry official and a senior army officer. All the accused have protested their innocence.

In the case of Zarqhani Rene, anti-corruption investigators are looking into payments totalling $700,000 into her Australian bank accounts. She insists it was her husband, who died in 2019, who managed the accounts.

A trial date has not yet been set as investigations are ongoing, and a seventh person was arrested at the weekend but not charged.

Since his election in October 2020, President Wavel Ramkalawan has embarked on a drive against corruption in the archipelago, renowned for luxury resorts and idyllic beaches. And in October last year, the European Union removed the Seychelles from its tax haven blacklist after committing to reforms to meet the bloc’s demands for greater transparency.

The EU move was criticized by British charity Oxfam, however, as the Seychelles featured prominently in the Pandora Papers, the vast trove of leaked documents that showed how the world’s rich and powerful use tax havens to hide assets worth hundreds of millions of dollars. 

A former British colony, the Seychelles is made up of 115 islands and according to 2021 World Bank data is the richest African country as measured by per capita gross domestic product.