Tag: border control project

No legal authority for ACC to prevent signing of Nexbis contract, Supreme Court rules

The Supreme Court has ruled that the Anti-Corruption Commission (ACC) did not have the legal authority to order the Department of Immigration and Emigration not to sign a contract with Malaysian mobile security firm Nexbis in 2010, to establish a border control system (BCS).

The apex court today overturned a previous High Court judgment, which itself overturned a Civil Court ruling last year declaring that the ACC did not have legal authority to terminate the contract signed with Nexbis in November 2010.

However, the High Court judgment was appealed by Nexbis at the Supreme Court, which today ruled in favour of the Malaysian company.

The controversial BCS project was terminated by the government in August this year and replaced by the Personal Identification Secure Comparison and Evaluation System (PISCES) provided by the US government on August 20.

According to local media reports, today’s Supreme Court judgment was delivered with the unanimous consent of all seven Justices on the court bench. However, Chief Justice Ahmed Faiz Hussain and Justice Muthasim Adnan noted different points to the other five.

Delivering the majority decision at today’s hearing, Justice Abdulla Saeed reportedly said that the High Court violated judicial and legal principles in overturning the lower court verdict, noting that the ACC’s order was made after the agreement was signed.

Referring to domestic contract laws and the ACC Act, the Supreme Court upheld the Civil Court ruling, which had determined that the ACC did not have the legal authority to order the Immigration Department to terminate the BCS project based on alleged corrupt dealings.

The Supreme Court had also previously overturned a High Court injunction blocking the implementation of the BCS project, prompting ACC Chair Hassan Luthfy to claim that the independent body had been rendered powerless.

“If this institution is simply an investigative body, then there is no purpose for our presence,” Luthfy said in September last year. “Even the police investigate cases, don’t they? So it is more cost effective for this state to have only the police to investigate cases instead of the ACC.”

Luthfy contended that the ruling had rendered the ACC powerless to prevent corruption, even if it was carried out on a large scale.

“In other countries, Anti Corruption Commissions have the powers of investigation, prevention and creating awareness. If an institution responsible for fighting corruption does not have these powers then it is useless,” he argued.

Corruption allegations

In December 2011, the ACC submitted corruption cases to the Prosecutor General’s Office (AGO) against former Immigration Controller Ilyas Hussain Ibrahim and Director General of the Finance Ministry, Saamee Ageel, claiming the pair abused their authority for undue financial gain in awarding Nexbis the MVR 500 million (US$39 million) BSC project.

Ex-controller Ilyas – brother-in-law of President Dr Mohamed Waheed and current state minister of defence and national security – pleaded not guilty to the charges at the first hearing of the trial on April 10 this year.

Meanwhile, on December 25, 2012, parliament voted unanimously to instruct the government to terminate the BSC agreement with Nexbis.

All 74 MPs in attendance voted in favour of a Finance Committee recommendation following a probe into the potential financial burden on the state as a result of the deal.

In September 2012, 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.

The Finance Committee meanwhile found that the government had agreed to waive taxes for Nexbis despite the executive lacking legal authority for tax exemption.

Following the signing of a Memorandum of Understanding (MoU) with the US government in March this year to provide a border control system to the Maldives, representatives from Nexbis told Minivan News that the company was uncertain what the MOU would mean for the group’s own border control technology.  The technology has been in use at Ibrahim Nasir International Airport (INIA) since September 2012.

“We do remain confident that the Maldivian government will honour its obligations under the 2010 concession agreement,” read a statement from lawyers representing the company.

“We are confident also of the support we have received by the Immigration Department in implementing and fully operating the system, but remain cautious of individuals that continue to pose obstacles to prevent the success of this project is stemming the national security issues faced by the Maldives today.”

Concession agreement

Under the concession agreement signed with the Maldives government, Nexbis levied a fee of US$2 from passengers in exchange for installing, maintaining and upgrading the country’s immigration system.  The company also agreed a fee of US$15 for every work permit card issued under the system.

Nexbis in July 2013 invoiced the Department of Immigration and Emigration for US$2.8 million (MVR 43 million) for the installation and operation of its border control technology in line with the concession agreement – requesting payment be settled within 30 days.

Nexbis’ lawyers argued that the company had expected the fee to be included in the taxes and surcharges applied to airline tickets in and out of the country, according to local media.  However, lawyers argued these payments had not been made due to the government’s “neglect” in notifying the relevant international authorities.

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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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