Government agreed to waive taxes for Nexbis, reveals Parliament’s Finance Committee

The Maldivian government agreed to waive taxes for Nexbis as part of the controversial border control agreement signed with the Malaysia-based mobile security provider, parliament’s Finance Committee has revealed.

The People’s Majlis secretariat explained in a statement yesterday (December 11) that the committee has sent a letter to President Dr Mohamed Waheed Hassan Manik noting the findings of an inquiry to determine the possible financial burden on the state due to the Nexbis deal.

“The Finance Committee told the President that the ties and cooperation between state institutions necessary for the border control system was non-existent,” the Majlis press release read.

The Finance Ministry meanwhile informed the public accounts oversight committee on November 13 that it has yet to receive a copy of the border control agreement.

The committee observed that the government had “not considered” that tax exemption was within the legislative powers of parliament.

Moreover, the committee noted that “no government department has to date” initiated any effort to approve waiving taxes for the Malaysian company.

The Finance Committee also informed the President that the relevant government authorities lacked “authentic and valid information” of the border control project.

The committee further noted that the relevant authorities did not offer “adequate cooperation” in providing information for the inquiry.

In a letter to the Finance Committee on November 1, the Immigration Department explained that the border control system agreement was signed before the Business Profit Tax (BPT) came into effect.

However, the government agreed to exempt Nexbis from the tax with a final decision to be made by the Finance Ministry, the Immigration Department said.

Nexbis deal

Speaking at a rally last month, parliament’s Minority Leader MP Abdulla Yameen called on the government to “immediately” terminate the agreement with Nexbis and contended that the project was detrimental to the state.

The parliamentary group leader of the government-aligned Progressive Party of Maldives (PPM) also criticised the government’s “hesitancy” to cancel the agreement despite the Anti-Corruption Commission’s (ACC’s) findings of alleged corruption in the deal.

Local media meanwhile reported that the Finance Committee had decided during a closed-door session last month to instruct the executive to halt the project.

The decision would however have to be approved through a vote on the Majlis floor following consideration of a report by the committee.

In September, the ACC informed the committee that the deal would cost the Maldives MVR 2.5 billion (US$162 million) in potential lost revenue over the lifetime of the contract.

Following its investigation into alleged corruption in awarding of the contract to Nexbis, the ACC requested the Prosecutor General’s Office (PGO) press criminal charges against former Controller of Immigration Ilyas Hussain, brother-in-law of President Waheed.

Almost a year after the case was forwarded to the PGO however, no charges have been pressed against the former immigration chief to date.

The ACC alleged that Ilyas Hussain had abused his authority for undue financial gain.

Ilyas – a senior member of Dr Waheed’s Gaumee Ihtihad Party (GIP) – was transferred from the post under former President Mohamed Nasheed when the corruption allegations first surfaced.

His successor Abdulla Shahid expressed concern with both the cost and necessity of the project, calculating that with continued growth in tourist numbers, Nexbis would be earning US$200 million in revenue over the 20-year lifespan of the agreement.

Following Dr Waheed’s swearing-in as president on February 7, Ilyas was reappointed controller of immigration. He was however replaced in May with Dr Mohamed Ali and appointed State Minister for Defence.

Former President Nasheed meanwhile alleged in a rally last month that Dr Waheed’s GIP’s Deputy Leader Mohamed ‘Nazaki’ Zaki was complicit in any alleged corrupt dealings in his role as Ambassador to Malaysia.

“Before the [border control] system was established, before there was even a contract in effect, I later heard that equipment was kept in some warehouses in Male’,” he said, claiming that the warehouses were owned by Nazaki Zaki.

Nasheed added that he “agreed completely with Yameen” that the allegations should be investigated.

The border control system is now up and running at Ibrahim Nasir International Airport (INIA), after a Supreme Court ruling in September in favour of Nexbis ended almost two years of efforts by the ACC to block the project.

Under the ‘build operate and transfer’ (BOT) agreement with Nexbis, the government is obliged to pay the security firm US$2 for every foreign passenger processed and US$15 for every work permit for the 20 year lifespan of the contract. Nexbis remains responsible for the upgrading, servicing and administration of the system.

Nexbis has continued to dismiss accusations of corruption within its deal with the Maldives government. The mobile security solutions vendor last year threatened to take legal action against any party in the Maldives alleging that the company was involved in corruption. Nexbis claimed at the time that the speculation over corruption in the deal was “politically motivated” and had “wrought irreparable damage to its reputation and brand name.”

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