Ahmed Naish – Page 55 – Minivan News

Parliament passes MVR 15.3 billion budget for 2013

Parliament today passed a MVR 15.3 billion (US$992 million) state budget for 2013, reduced by more than MVR 1 billion (US$64.8 million) from the MVR 16.9 billion (US$1 billion) proposal submitted by Finance Minister Abdulla Jihad last month.

The budget was passed with 41 votes in favour, 28 against and no abstentions. MPs of the formerly ruling Maldivian Democratic Party (MDP) voted against the budget.

In addition to changes imposed by the Budget Review Committee, the estimated budget was passed with eight amendments approved at today’s sitting.

Among the amendments voted through included the scrapping of plans to revise import duties on oil, fuel, diesel and staple foodstuffs, as well as any item with import duty presently at zero percent.

An amendment instructing the government to conduct performance audits of the Human Rights Commission and Police Integrity Commission and submit the findings to parliament was passed with 53 votes in favour, ten against and four abstentions.

Amendments proposed by MDP MP Ali Waheed to shift MVR 100 million (US$6.5 million) to be issued as fuel subsidies for fishermen and MVR 50 million (US$3.2 million) as agriculture subsidies from the Finance Ministry’s contingency budget was passed with 68 votes in favour.

A proposal by Dhivehi Rayyithunge Party (DRP) MP Dr Abdulla Maussom to add MVR 10 million (US$648,508) to the budget to be provided as financial assistance to civil society organisations was passed with 57 votes in favour and three against.

Budget review

Presenting the budget report (Dhivehi) at Tuesday’s sitting, Budget Review Committee Chair MP Gasim Ibrahim said the committee held 31 meetings, spent 45 hours studying the proposed budget and met senior officials from 27 ministries and state institutions.

The omissions approved by the committee to reduce the budget from MVR 16.9 billion to MVR 15.3 billion were largely made from recurrent expenditure, the Jumhooree Party (JP) Leader said.

While Finance Minister Abdulla Jihad had agreed to MVR 1 billion in cuts, the committee decided to trim the budget “by a little bit more than that,” according to Gasim.

The committee approved cuts amounting to a total of MVR 1.6 billion (US$103.7 million).

However, he added, the committee added MVR 389 million (US$25.2 million) for infrastructure projects such as harbours, sewerage and water for islands.

The budget items that the committee made cuts to included overtime pay (50 percent), travel expenses (50 percent), purchases for office use (30 percent), office expenditure (35 percent), purchases for service provision (30 percent), training costs (30 percent), construction, maintenance and repair work (50 percent) and purchase of assets (35 percent).

The committee estimated that the cuts to recurrent expenditure would amount to MVR 1 billion (US$64.8 million) in savings.

The committee also instructed the Finance Ministry to reduce an additional MVR 605.7 million (US$39.2 million) from office budgets.

On the measures proposed by the Finance Committee to raise revenue, the committee approved revising import duties, raising the Tourism Goods and Service Tax (T-GST) from eight percent to 12 percent in July 2013, increasing airport service charge from US$18 to US$25, leasing 14 islands for resort development and imposing GST on telecom services.

The Finance Ministry had however proposed hiking T-GST from 8 to 15 percent in July 2013 and raising airport service charge or departure tax from US$18 to US$30.

The committee also decided to limit loans obtained in 2013 to finance the budget to MVR 2 billion (US$129.7 million) and prohibit the government from taking loans for development projects with an interest rate higher than seven percent.

The government has meanwhile been asked to provide details of the loans and guarantees planned for 2013 for parliamentary approval as required by amendments brought to the Public Finance Act in 2010.

Professional opinion from MMA and Auditor General’s Office

According to the Budget Review Committee report, the Maldives Authority Authority (MMA) advised the committee to reduce total expenditure to MVR 15 billion and attempt to reduce public debt.

The central bank warned that the projected deficit in the 2013 budget was likely to adversely affect the foreign exchange market and foreign currency reserves.

The MMA also advised the committee to pass a budget that would “facilitate” the Maldives joining the International Monetary Fund’s (IMF’s) “Staff Monitoring Programme.”

The programme would provide access to loans from the international debt capital market, the MMA said.

Speaking to press at the conclusion of a visit by an IMF mission last month, head of the delegation Koshy Mathai explained that the requested “Staff Monitoring Programme” would not involve disbursement of funds from the IMF.

“We would basically see how the government is doing against its own targets – it would set targets for itself for performance of these different economic areas – and then if the track record is built up and things are going well, then maybe later we could discuss having a programme where money is disbursed,” Mathai said.

Meanwhile, in its professional opinion on the budget, the Auditor General’s Office expressed concern with the public sector investment programme (PSIP) being formulated without either a national development plan or population consolidation policy.

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Population consolidation, rightsizing public sector essential to address budget deficit: Auditor General

A policy of population consolidation together with effective measures to reduce the public sector wage bill is necessary to address continuing budget deficits, the Auditor General has advised parliament.

The recommendations were made in a report (Dhivehi) submitted to parliament with the Auditor General’s professional opinion on the proposed state budget for 2013.

Auditor General Niyaz Ibrahim observed that of the estimated MVR 12 billion (US$778 million) of recurrent expenditure, MVR 7 billion (US$453.9 million) would be spent on employees, including MVR 743 million (US$48 million) as pension payments.

Consequently, 59 percent of recurrent expenditure and 42 percent of the total budget would be spent on state employees.

“We note that the yearly increase in employees hired for state posts and jobs has been at a worrying level and that sound measures are needed,” the report stated. “It is unlikely that the budget deficit issue could be resolved without making big changes to the number of state employees as well as salaries and allowances to control state expenditure.”

The report noted that the bill on state wage policy recently passed by parliament would not address the issue as the legislation focused “mainly on reviewing salaries of state institutions.”

The Auditor General’s Office contended that “major changes” were needed to right-size the public sector and “control the salary of state employees and expenditure related to employees.”

The report observed that compared to 2012, the number of state employees is set to increase from 32,868 to 40,333 – resulting in MVR 1.3 billion (US$84.3 million) of additional expenditure in 2013.

This anticipated increase included 864 new staff to be hired by the Maldives Police Service (MPS) and Maldives National Defence Force (MNDF), the report noted.

In light of “existing inefficiencies” in the state, the Auditor General contended that hiring more staff for various independent institutions would be “a waste of public funds” as it would divert resources from service provision and development projects.

“Moreover, we note that increasing the number of employees would lead to an increase in office expenses and expenditure on employees’ retirement and pensions, decrease the number of people left to do productive work in the private sector (decrease the labour force), and slow the growth of the country’s economy,” the report stated.

Details of the state’s wage bill included in the report showed that MVR 187 million (US$12 million) was budgeted as salaries and allowances for 545 political appointees in 2012.

In addition, MVR 1.98 billion (US$128.4 million) was to be spent on 18,538 civil servants; MVR 999 million (US$64.7 million) on 6,244 police and army officers; MVR 362 million (US$23.4 million) on 1,455 elected representatives and attendant staff; MVR 485 million (US$31.4 million) on 3,372 employees of independent institutions; and MVR 345 million (US$22.3 million) on 2,714 contract staff.

In 2011, the Finance Ministry revealed that MVR 99 million (US$6.4 million) would be spent on 244 political appointees annually as salaries and allowances.

According to the weekly financial statement released by the Finance Ministry, recurrent expenditure as of December 20, 2012 has reached MVR 8.9 billion (US$577 million). Roughly half was spent on employees.

Fiscal imbalance

A report by the World Bank in May 2010 identified the dramatic growth of the public sector wage bill as the origin of the Maldives’ ongoing fiscal imbalances.

According to the report, increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, which was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“Between 2004 and 2009, the average monthly salary of a government sector worker increased from MVR 3,223 (US$250) to MVR 11, 136 (US$866),” explained a UNDP paper on achieving debt sustainability in the Maldives published in December 2010.

Former President Maumoon Abdul Gayoom responded to growing calls for democratisation with “a substantial fiscal stimulus programme” of increased government spending, “much of which was not related to post-tsunami reconstruction efforts.”

“This strategy led to a large increase in the number of civil servants from around 26,000 in 2004 to around 34,000 by 2008 or 11 percent of the total population. Thus the government simultaneously increased the number of public sector workers as well as their salaries,” the paper noted.

Consequently, recurrent expenditure – wage bill and administrative costs – exceeded 82 percent of total government spending in 2010. Presenting the estimated budget for 2013, Finance Minister Abdulla Jihad noted that more than 70 percent was recurrent expenditure.

“As in other years, the highest portion of recurrent expenditure is expenditure on [salaries and allowances for government] employees,” Jihad explained. “That is 48 percent of total recurrent expenditure.”

Population consolidation

Meanwhile, the Auditor General’s report noted that the government planned to carry out 406 projects under the public sector investment programme (PSIP) at a cost of MVR 3 billion (US$194 million).

The Auditor General however contended that the projects were formulated “without a national development plan” and that there was “no relation between the PSIP’s purpose and the proposed projects.”

While the stated purpose and policy of the government was population consolidation, the report stated that the harbour, sewerage, land reclamation, housing, coastal protection and other projects were included in the budget “without a plan” for integrating island populations in urban centres.

The Auditor General’s Office therefore advised against carrying out the projects planned for 2013 in the absence of a plan for population consolidation.

The report observed that “the main reason the state’s recurrent expenditure has increased” was developing 200 inhabited islands “as single units” and attempting to provide healthcare, education, social, administrative and legal services to small island populations.

The report stated that pursuing a policy of population consolidation was “essential”.

It added that the return on the investment for relocating populations of small islands would be seen in savings from the state’s budget for providing services to geographically dispersed islands.

While implementing such a policy could prove difficult, the Auditor General’s Office believed that “a national consensus” could be reached on the need for consolidating population.

Moreover, a glance at the state’s expenditure showed that continuing fiscal imbalances or budget deficits were “inevitable” if such a policy was not formulated, the report stated.

Deficit

The Auditor General explained that the fiscal deficit in 2012 was MVR 1.5 billion (US$97.2 million) more than forecast because of a shortfall in projected revenue from taxes and import duties as well as higher than budgeted expenditure on government companies and subsidies.

However, while revenue from Goods and Services Tax (GST), import duties and tourism land rent was lower than budgeted estimates, income from Business Profit Tax was more than expected at MVR 613.3 million (US$39.7 million).

The government also spent MVR 862.3 million (US$55.9 million) from the 2012 budget to settle bills outsanding from the previous year, the report noted

The Auditor General’s Office observed that revenue from the newly introduced GST was not enough to offset lost income from reducing and eliminating import duties.

“As a result of the change to the state’s taxation system, income to the state declined by MVR 495 million (US$32 million),” the report noted.

As reducing import duties had not resulted in a noticeable drop in prices, the Auditor General recommended reviewing the changes in consultation with the relevant authorities and amending the tax laws.

The 2013 budget

The Auditor General observed that the budget proposed for 2013 was 2.7 percent higher than 2012 and 19 percent higher than 2011.

An estimated budget deficit of MVR 2.33 billion (US$149 million) was to be financed by MVR 1.15 billion (US$74.5 million) in foreign loans and MVR 1.17 billion (US$75.8 million) in domestic finance.

Echoing a concern expressed by MPs during the recent budget debate, the Auditor General noted that projected revenue included MVR 1.8 billion (US$116 million) expected from new revenue raising measures that require parliamentary approval.

A recent mission from the International Monetary Fund (IMF) had urged the government to implement a raft of measures to raise revenues, advising that strengthening government finances was “the most pressing macroeconomic priority for the Maldives.”

The measures proposed by the Finance Ministry included revising import duties, hiking T-GST from 8 to 15 percent in July 2013, raising airport service charge or departure tax from US$18 to US$30, introducing GST for telecom services and leasing 14 new islands for resort development.

On the last proposal, the Auditor General advised that the islands should not be leased without consulting the tourism industry and studying the impact of the decision in consideration of the tourism master plan.

The Auditor General concluded that it was “unlikely” that the new revenue would be collected in 2013.

Consequently, if there was a significant shortfall in income, the Auditor General warned that government revenue would not be enough to cover recurrent expenditure.

“Therefore, we note that it is very likely that MVR 509.9 million (US$33 million) would have to taken as loans to cover recurrent expenditure,” the Auditor General stated, advising that it was “necessary” to reduce recurrent expenditure by that amount before the budget is passed.

As a result of financing budget deficits with loans for the past six years, the Finance Ministry revealed earlier this month that government spending on loan repayment and interest payments was expected to reach MVR 3.1 billion (US$201 million) in 2012.

Moreover, the total public debt would stand at MVR 27 billion (US$1.7 billion) in 2012 and MVR 31 billion (US$2 billion) in 2013 – 82 percent of GDP.

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PPM leaves “national movement”

The government-aligned Progressive Party of Maldives (PPM) has decided to part ways with the self-titled “National Movement” led by the religious conservative Adhaalath Party and senior government officials.

Speaking at today’s sitting of parliament, PPM MP Ahmed Mahloof revealed that the party’s council decided last night (December 24) to leave the movement out of concern that it was “moving in another direction”.

“I question today whether this campaign under the name of national movement is sincere or not,” Mahloof said. “I’m saying this because during the GMR issue, we said repeatedly that after that we should raise the issue of Nexbis [border control project]. But after that we saw them raise the issue of the People’s Majlis.”

Mahloof added that a speaker at a national movement rally on Sunday night “used obscene language” to attack PPM parliamentary group leader MP Abdulla Yameen.

The speaker in question accused MP Yameen of “threatening” the Adhaalath Party, during a rally held Sunday (December 23) to celebrate the first anniversary of the December 23 “mega-protest.”

Local media reported that the remarks led to heated exchanges between the speaker and PPM supporters, a number of whom left the area in protest.

In his speech following the incident, Islamic Minister Sheikh Mohamed Shaheem Ali Saeed, a senior leader of the Adhaalath Party, spoke in defence of MP Yameen and urged speakers to respect political leaders.

Meanwhile, in an appearance on private broadcaster DhiTV last week, Yameen suggested that intemperate rhetoric from senior government officials at rallies organised by the movement was responsible for strained ties with India.

Yameen further contended that the campaign by the national movement was not the reason behind the government’s decision to terminate the concession agreement with the GMR-led consortium.

The decision was backed by the political parties in the ruling coalition, Yameen noted, and questioned the wisdom and necessity of street protests led by senior government officials.

The “national movement” was born out of the unofficial December 23 coalition of eight political parties and an alliance of NGOs that rallied to “defend Islam” in late 2011 from the allegedly liberal policies and “securalisation agenda” of former President Mohamed Nasheed.

Following the transfer of presidential power on February 7, the “civil alliance” led a campaign dubbed “Maldivians’ Airport to Maldivians” calling on the government to terminate the concession agreement with Indian infrastructure giant GMR to manage and modernise Ibrahim Nasir International Airport (INIA).

However, the largest party in the ruling coalition, Dhivehi Rayyithunge Party (DRP), announced that it would not participate in the street protests. Moreover, senior leaders of other pro-government parties were noticeably absent from the anti-GMR protests and activities at the time.

Following the termination of the concession agreement, the national movement turned its attention to “reforming” the parliament and has organised poorly-attended rallies at the artificial beach in recent days.

At a rally last week, State Minister for Finance Abbas Adil Riza threatened to dissolve parliament. Riza criticised Speaker Abdulla Shahid for tabling a no-confidence motion in defiance of a Supreme Court injunction ordering parliament to halt secret voting pending a ruling on its constitutionality.

Meanwhile, speaking at a press conference today to announce PPM’s decision to leave the movement, MP Abdul Raheem Abdulla reportedly warned that the “national movement” could cause divisions in the ruling coalition and weaken the government.

The PPM interim deputy leader revealed that the decision was made after the party’s concerns were not addressed following discussions with the movement’s leaders.

PPM has appealed to the party’s members not to participate in the movement’s rallies and events.

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“Technical problem” prevented former President Nasheed from leaving, Immigration Department claims

Former President Mohamed Nasheed was prevented from leaving the country yesterday (December 21) to visit his ill father in Bangkok, Thailand due to a “technical problem,” the Department of Immigration and Emigration has claimed.

Nasheed was told by immigration officials on Friday morning that his passport was held because of a court order by the Hulhumale’ Magistrate Court that had been sent to the department on December 18 imposing a travel ban on the former president.

The formerly ruling Maldivian Democratic Party (MDP) presidential candidate is currently on trial at the Hulhumale’ Magistrate Court over charges of illegally detaining Chief Judge of the Criminal Court Abdulla Mohamed in January this year.

However, on December 18, the Hulhumale’ Magistrate Court authorised the former President to travel overseas between December 19, 2012 and January 6, 2013. The letter granting permission to travel was signed by Magistrate Hussain Mazeed.

Following the incident on Friday morning, the Hulhumale’ Magistrate Court confirmed to local media that the Immigration Department was informed of the decision on December 18.

In a statement later in the day, the Immigration Department said the court order lifting the travel ban was received and entered into the system.

However, Nasheed was told his passport had been withheld due to a “technical problem with the system,” the Immigration Department claimed.

“The issue has now been identified and fixed a short while ago,” the statement read. The department did not elaborate on the nature of the “technical problem”.

Controller of Immigration Dr Mohamed Ali told Minivan News today that the system error “affected both arrivals and departures from 7:30am to about 2:00pm.”

He added that the incident involving the former President was “the only case” of a passport being held due to the disruption.

“The system at airport did not show the release, while the release was entered on Wednesday (December 18). It was a simple system dependent decision by the duty officer at that time. We have apologised to [Nasheed] and all who were affected and even have a letter sent to him assuring that he can leave during the specified period,” Dr Ali said.

However, the Immigration Controller told newspaper Haveeru on Friday that Nasheed’s passport was held due to a court order.

“He cannot leave until the court orders [the passport] to be released. When he wants to go somewhere, the court will instruct us to release it within a certain period,” Dr Mohamed Ali was quoted as saying.

Nasheed was reportedly due to leave for Bangkok on a private visit ahead of his father’s surgery.

Former President Nasheed’s office meanwhile issued a statement contending the move blocking the former President’s departure was in violation of the constitution.

The statement noted that article 128 of the constitution entitles former Presidents to “the highest honour, dignity, protection, financial privileges and other privileges entitled to a person who has served in the highest office of the land.”

Moreover, article 41 of the constitution guarantees “the freedom to enter, remain in and leave the Maldives” to every citizen.

“This office condemns in the harshest terms the act by the current government to deliberately obstruct President Nasheed from leaving the country for his father’s operation,” the press release stated.

It added that the Immigration Controller’s claims in the media that a travel ban had been imposed by a court order on December 18 was a “deliberate falsehood.”

The Hulhumale’ Magistrate Court informed Nasheed’s lawyers on Friday afternoon that the Immigration Department was sent the court order lifting the travel ban.

The statement called on the government to “respect the constitution and immediately cease these attempts to harass and hassle President Nasheed.”

The former President’s office also called on the Hulhumale’ Magistrate Court to take action against the Controller of Immigration for making false claims regarding the court.

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STO owed MVR 1.45 billion in overdue bills from state institutions, government companies

A large portion of the national budget had been “managed through the cash flow” of the State Trading Organisation (STO), the Auditor General’s Office has said, revealing the state-owned enterprise is owed MVR 1.45 billion (US$94 million) in overdue bills from government companies and state institutions.

In his professional opinion (Dhivehi) on the proposed 2013 budget submitted to parliament’s Budget Review Committee and made public this week, Auditor General Niyaz Ibrahim stated that the “state’s cash flow was being managed through STO”.

“This shows that state expenditure is managed outside of the state budget, that this is an ‘off balance sheet’ finance arrangement and that the actual deficit will be much higher than stated in the state budget,” the Auditor General’s report to parliament stated.

The Auditor General stated that the practice was “worrying” and recommended changes to current treasury management “to put an end to depending on a government-owned company to manage the state’s cash flow.”

STO is a public company with an 81.6 percent stake owned by the government. The company was set up in 1964 to import and supply staple foodstuffs and fuel at controlled prices.

In its report to parliament, the Auditor General’s Office revealed that STO was owed MVR 398 million (US$25.8 million) in overdue payments from state institutions and government companies for goods released on credit.

Of the outstanding amount for items purchased on credit, the Finance Ministry owed MVR 388.1 million (US$25.1 million), according to the findings.

In addition, the Male’ Health Corporation (MHC) owes MVR99.4 million (US$6.4 million), Gan Airport Company owes MVR 61.8 million (US$4 million), Southern Utilities Ltd owes MVR 75.6 million (US$4.9 million), the State Electricity Company (STELCO) owes MVR 53 million (US$3.4 million) and the Works Corporation owes MVR 10.1 million (US$654,993).

Moreover, Fuel Supply Maldives, a subsidiary of STO, was owed MVR 186.2 million (US$12 million) for oil released on credit, mainly from government utility companies, the report added.

As a consequence, STO was owed a total of MVR 1.45 billion (US$94 million) in overdue bills, including outstanding bills worth MVR 289 million (US$18 million) from 2011 and MVR 8.2 million (US$531,776) from 2010 and earlier.

A total of MVR 1.15 billion (US$74 million) is owed to STO from overdue bills in 2012, according to a statement shared by the Finance Ministry showing STO’s receivables.

The government’s health insurance company ‘Aasandha’ meanwhile owed STO MVR 18 million (US$1.1 million) in overdue bills, the report noted.

The figures also showed that state institutions and government companies were “heavily dependent on STO’s working capital” to function.

“And as a result of not receiving millions of rufiyaa owed to STO from the state, STO has not paid any dividends to the Ministry of Finance and Treasury since 2009,” the Auditor General revealed.

In November 2011, the government sold five plots of land measuring 87,155.2 square feet to STO for MVR 522.9 million (US$33.9 million) and deducted the amount from monies owed to STO.

“This was carried out by the Ministry of Finance and Treasury following deliberations by the cabinet and based on the advice of the cabinet,” the Auditor General noted.

The Auditor General contended that the sale was in violation of amendments brought to the Public Finance Act in 2010, which stipulated that state assets and property must be sold in accordance with a law passed by parliament.

The plots were sold to STO in the absence of a law governing the sale of state properties.

“Therefore, we note that it is important to further investigate how this transpired and that the Ministry of Finance and Treasury’s plans to settle payments owed to STO from the government must be clarified before the budget is passed,” the Auditor General recommended.

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Parliament passes bill on state wage policy to create Pay Commission

Parliament yesterday passed a bill on the state wage policy to create a National Pay Commission tasked with determining salaries and allowances for the public sector.

The wage policy legislation was passed with 46 votes in favour, two against and two absentions. The bill was submitted by Independent MP for Haa Dhaal Kulhudhufushi Mohamed ‘Kutti’ Nasheed and sent to committee for further review on March 30, 2011.

If ratified, a five-member National Pay Commission will be instituted within 60 days with part-time members appointed by the president for a five-year term.

The commission would be chaired by the Finance Minister and would determine salaries and allowances for state employees and authorise pay raises.

The commission would also formulate standards and rules for determining the state’s pay scale or appropriate salaries based on qualifications and nature of employment.

The bill stipulates that the commission must consider the cost of living, inflation and the consumer price index in determining wages.

Moreover, salaries should incentivise government employees to work in islands with small populations.

The commission would also have to consider the state’s resources, public debt and social justice in approving salaries and allowances.

Once the law comes into force, articles in the Human Rights Commission Act, Civil Service Commission Act, Defence Forces Act, Police Act, Elections Commission Act, Prosecutor General’s Act, Anti-Corruption Commission Act, Judicial Service Commission Act, Broadcasting Act, Customs Act and the Civil Aviation Authority Act that allows the institutions to determine wages for officials and staff would be abolished.

IMF recommendation

At a press conference held upon conclusion of a visit by an International Monetary Fund (IMF) mission last month, head of the mission Koshy Mathai stressed the importance of instituting a Pay Commission to streamline the pay structure for government employees.

“We have a lot of independent institutions in this country and they are all on different pay scales,” he observed.

“There’s no harmonisation within the public service. There are radically different pay scales. And that has problems in terms of incentivising staff to belong to one institution versus the other. And it also implies a lot of cost for the government. So establishing a Pay Commission that can set up a rational system of compensation for the entire public service seems like a priority.”

According to a report by the World Bank in May 2010 which identified the dramatic growth of the public sector wage bill as the origin of the Maldives’ ongoing fiscal imbalances, increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, which was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

Consequently, recurrent expenditure – wage bill and administrative costs – exceeded 82 percent of total government spending in 2010.

However, the new government’s efforts to enforce pay cuts of up to 20 percent and downsize the civil service – which employs a third of the country’s workforce – were met with “a severe political backlash from parliament,” the UNDP paper observed.

Recurrent expenditure

Presenting the 2013 budget to parliament earlier this month, Finance Minister Abdulla Jihad noted that of the proposed MVR 16.9 billion (US$1 billion) of government spending, more than 70 percent was recurrent expenditure.

During the budget debate in parliament, Majority Leader MP Ibrahim Mohamed Solih ‘Ibu’ criticised Finance Minister Jihad for failing to mention budgeted salary increases for military and police officers as well as plans to hire 800 new officers for the security services.

Combined with the transfer of about 5,400 employees in the health sector to the civil service, Ibu explained that the wage bill would shoot up by 37 percent.

Echoing the concerns of the parliamentary group leader, Maldivian Democratic Party (MDP) MP Eva Abdulla revealed that MVR 6 million (US$ 389105) was added to the budget of the Maldives National Defence Force (MNDF) following the controversial transfer of presidential power on February 7.

Since the MDP government was ousted in the wake of a police mutiny on February 7, Eva said that the police and army have hired 250 and 350 new staff respectively.

Consequently, the institutions spent more than MVR 75 million (US$4.8 million) in addition to the approved budgets for 2012, she claimed.

The proposed budget of MVR 930.9 million (US$60.3 million) for defence expenditure in 2013 was meanwhile 14 percent higher than 2012.

Eva observed that the increase in the government’s wage bill of 37 percent was approximately MVR1.7 billion (US$110 million), which was also the amount allocated for harbour construction in the 2013 budget.

These funds should instead be spent for “harbours, education, sewerage and housing,” she argued.

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ACC to investigate alleged violations of public finance law by Prosecutor General’s Office

Parliament today approved a decision by the Finance Committee to instruct the Anti-Corruption Commission (ACC) to investigate alleged violations of public finance law by the Prosecutor General’s Office (PGO).

The decision was made in a report (Dhivehi) forwarded by the Finance Committee after studying violations of the Public Finance Act and regulations under the law flagged in the PGO audit report for 2010.

Reviewing audit reports and recommending measures to be taken by the relevant authorities is part of the mandate of the public accounts oversight committee.

The Finance Committee decision was approved with 51 votes in favour and two abstentions.

The audit report found that the PG office spent a total of MVR 145,596 (US$9,706) in violation of the Public Finance Act.

Among the cases uncovered in the audit that the ACC was asked to investigate, the PGO was found to have spent MVR 40,745 (US$2640) in additional expenses for interior design after moving to its new offices, without an agreement on price and quality of the work as required by section 8.21 of the public finance regulations.

Moreover, the PGO spent MVR 45,938 (US$3000) on an official dinner to participants of an e-crime conference participants in June 2010 without a publicly-announced bidding process.

The Finance Committee decided to send both cases to the ACC for investigation and inform the PGO to take measures to remedy the matters identified in the audit report.

The committee also decided that the Prosecutor General had breached article 17 and 20 of the constitution on non-discrimination and equality before the law as the office has prosecuted cases where the public finance regulations were similarly violated.

After the committee report was passed at today’s sitting, some MPs contended that Prosecutor General Ahmed Muizz would have to be removed from his post due to the decision.

However, Deputy Speaker Ahmed Nazim – also chair of the Finance Committee – said that Muizz would not be dismissed as the process specified in the constitution had to be followed to remove appointed officials at independent institutions.

Meanwhile, in a press release last week, the PGO said it would “always welcome” investigations by other state institutions into alleged violations of the constitution and laws by the office.

The PGO’s statement also assured that the office would provide “full cooperation” for the investigation.

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Defence Minister signs military aid agreement with China

Defence Minister Colonel (Retired) Mohamed Nazim signed a military aid agreement with Chinese National Defence Minister General Liang Guanglie during his official five-day visit that concluded yesterday (December 15).

Following official talks between the defence ministers, Chinese state-run Xinhua news agency reported Nazim as assuring Guanglie that the Maldives was “willing to cement relations between the two countries and their militaries.”

General Liang reportedly said China would “continue to develop friendly, cooperative and mutually beneficial relations with the Maldives under the principle of building a good-neighbourly relationship and non-interference in internal affairs”.

“China has always positively developed its military relations with the Maldives and hopes to enhance communication and cooperation, promote the construction of both militaries, and safeguard regional peace and stability,” he was quoted as saying by Xinhua.

According to a press release by the Ministry of Defence and National Security, Defence Minister Nazim held talks with his Chinese counterpart on December 11, which focused on Chinese military assistance to develop the Maldivian military.

The agreement to develop military ties and provide free Chinese aid to the Maldives National Defence Force (MNDF) was signed at the meeting, the press release stated.

Defence Minister Nazim also met the Vice Chairman of the Chinese Central Military Commission, Xu Qiliang, and discussed strengthening Sino-Maldives military ties.

During his visit, Nazim visited the Chinese National Defence University to discuss securing education opportunities and toured the People’s Liberation Army (PLA) Naval Submarine Academy as well as the PLA Navy’s North Fleet.

The Defence Minister met MNDF coastguard personnel training at the submarine academy, the press release noted.

Nazim’s official visit to China followed the government’s abrupt termination of a 25-year concession agreement with Indian infrastructure giant GMR to modernise and manage the Ibrahim Nasir International Airport (INIA).

The move fuelled speculation in the Indian media of a Chinese role in the government’s decision to void the agreement and evict the GMR-led consortium.

President Dr Mohamed Waheed Hassan Manik has however dismissed suggestions that China urged the Maldives to push out the Indian company.

“The only significant cooperation we have with China at this time is through development assistance… like building the museum, housing projects. I don’t think India should worry about it at all,” Waheed was quoted as saying by The Hindu.

Meanwhile, India’s The Economic Times reported yesterday that China’s strengthening of ties with the Maldives may be part of its larger plans of dominating strategically-important sea lanes in the Indian Ocean, “according to an assessment of the Indian intelligence agencies.”

“Beijing is reportedly wooing Male’ to pre-empt a US move to set up a new military base in the Maldives’ southernmost island of Gan,” The Economic Times reported.

The paper also took note of recent statements by former President Maumoon Abdul Gayoom suggesting that it was “natural for a country with such huge resources to come and help us.”

“China has been with us for 40 years,” Gayoom told Indian media last week.

In November 2011, China became the first non-SAARC nation to open an embassy in the Maldives.

AFP at the time reported Indian officials as expressing concern that it was “part of a Chinese policy to throw a ‘string of pearls’ – or a circle of influence – around India.”

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Former President Nasheed’s trial politically motivated: Bar Human Rights Committee

The trial of former President Mohamed Nasheed on charges of illegally detaining a judge appears to be a politically motivated attempt to bar the Maldivian Democratic Party (MDP) candidate from the 2013 presidential election, the Bar Human Rights Committee (BHRC) concluded in a report launched on Thursday (December 13).

The report was compiled by Stephen Cragg on behalf of the BHRC, the international human rights arm of the Bar of England and Wales, following a visit to the Maldives from November 3 to 6 to observe hearings of former President Nasheed’s trial.

“BHRC notes that Mr Nasheed’s lawyers have petitioned the prosecutor-general to review whether the prosecution of Mr Nasheed is in the public interest, and it seems to BHRC that this is an application worthy of very serious consideration,” the report stated.

“BHRC is concerned that a primary motivation behind the present trial is a desire by those in power to exclude Mr Nasheed from standing in the 2013 elections, and notes international opinion that this would not be a positive outcome for the Maldives.”

According to a press release by the BHRC, the report was based on “an investigation into the circumstances surrounding the trial of ex-President Mohamed Nasheed.” The BHRC observer, Stephen Cragg, is a member of the bar and barrister at Doughty Street Chambers.

Former President Nasheed faces criminal charges for the military’s controversial detention of Chief Judge of the Criminal Court Abdulla Mohamed on January 16 this year.

Home Minister Hassan Afeef sought to justify the arrest at the time on the grounds that the judge was a national security threat after he blocked investigation of his misconduct by the judicial watchdog and quashed a police summons for him.

The judge had “taken the entire criminal justice system in his fist,” Afeef said, accusing Abdulla Mohamed of obstructing high-profile corruption cases, releasing murder suspects, colluding with drug traffickers, and barring media from corruption trials.

Judge Abdulla “hijacked the whole court” by deciding that he alone could issue search warrants, Afeef contended, and had arbitrarily suspended court officers.

In the conclusions of the BHRC report, the author observed that the detention of the judge was “not a simple case of abuse of power.”

“Rather, the underlying narrative of the situation is that of a president desperate to bring change to a new democracy after decades of oppression, and finding himself thwarted by the inability of the organs of state set up by the constitution to deliver much needed reform,” the report stated.

Referring to “the large number of international reports” that have found the Maldivian judiciary to be flawed, the BHRC noted that the Judicial Service Commission (JSC) “failed in its twin tasks of ensuring that the judiciary has the appropriate experience and qualifications, and in bringing to book the judges who fail to fully and fairly implement the rule of law.”

“Implicit in these criticisms is that Mr Nasheed cannot be guaranteed a fair trial,” the report concluded.

The BHRC also expressed concern with the “deterioration of human rights protection in the Maldives since the transfer of power in February 2012” as reported by Amnesty International and the International Federation of Human Rights (FIDH).

“Again, a failure to comply with human rights standards by the Maldivian authorities is a grave threat to the democracy so recently achieved,” the report stated.

“How the Maldives deals with this prosecution and trial (if it goes ahead) may well decide the course of its government for years to come.”

Back in September, the government criticised Amnesty International’s report, “The Other side of Paradise: A Human Rights Crisis in the Maldives”, as being “one sided”.

The BHRC is a UK-based independent body “concerned with protecting the rights of advocates, judges and human rights defenders around the world.”

JSC and failure of oversight

The BHRC report also noted that article 285 of the constitution mandated the JSC to determine whether or not the judges on the bench possessed “the educational qualifications, experience and recognized competence necessary to discharge the duties and responsibilities of a judge, [and] high moral character.”

“However, the JSC failed to bring in any standards in the two years allowed and in August 2010 almost all judges, good and bad, were re-instated in post at that point amidst much controversy,” the report observed.

It added that the International Committee of Jurists (ICJ) expressed concern with the JSC’s failure to “fulfil its constitutional mandate of proper vetting and reappointment of judges.”

“The JSC (made up of politicians, lawyers and judges) has also been criticised as ineffective in its other role of overseeing complaints about judges. Complaints about the worst judges built up and were not investigated. A large number of complaints were made about the head of the criminal court in Malé, Judge Abdulla Mohamed,” the BHRC report explained.

“In an open letter to parliament in March 2011, former President Nasheed’s member on the JSC and outspoken whistle-blower, Aishath Velezinee, claimed that the politically-manipulated JSC was protecting Judge Abdulla.

She claimed this protection was provided despite the existence of “reasonable proof to show that Chief Judge of the Criminal Court Abdulla Mohamed was systematically committing the atrocity of setting free dangerous criminals and declaring them innocent with complete disregard to the evidence [presented at court].”

Despite Judge Abdulla having been sentenced for a criminal offence, Velezinee wrote that Speaker Abdulla Shahid pushed for his reappointment and later “bequeathed the Criminal Court to Abdulla Mohamed until 2026″ under the Judges Act, which was passed hastily during the constitutional crisis period in July-August 2010.

Velezinee meanwhile told the author of the BHRC report that it was “the State’s duty to remove [Judge Abdulla] from the judiciary”.

“She has written a remarkable memoir of her time on the JSC, describing the machinations and tribulations of the Committee, and its failure to establish ethical or moral standards for judges,” the report noted.

Meanwhile, on January 16, 2012, “frustrated by an inability to remove allegedly bad judges, President Nasheed (or one of his ministers, it is still not entirely clear) ordered the detention of Judge Abdulla,” the BHRC report continued.

“He was taken to an island and kept there for almost three weeks, despite the protests of lawyers and judges. It does not seem that he was badly treated, and the government emphasised the lack of other effective powers to justify its actions.”

It added that the Supreme Court demanded the immediate release of the judge “as he was arrested not in conformity with the laws and regulations, and the acts of MNDF [Maldives National Defence Force] was outside its mandatory power.”

The trial

Former President Nasheed’s trial is set to resume after the Supreme Court on December 5 decided in a 4-3 ruling that the Hulhumale’ Magistrate Court hearing the case was legitimate.

The BHRC report noted that Nasheed was charged under article 81 of the penal code, which states: “It shall be an offence for any public servant to use the authority of his office to intentionally arrest or detain any innocent person in a manner contrary to law. A person guilty of this offence shall be punished with exile or imprisonment for a period not exceeding 3 years or a fine not exceeding MVR 2,000.”

The former President’s legal team informed the author that “a range of defences will be advanced” in his trial.

“For example, is the President a public servant to whom the Article applies? Does the Article relate only to the person who, in fact, takes a person into custody or directly orders an arrest? What effect does the term ‘innocent’ have in the Article?” the report explained.

“The team is to request that the Prosecutor General reconsiders whether the prosecution against Mr Nasheed should proceed, arguing that it is not in the public interest that it should do so. It was explained that if Mr Nasheed is sentenced to more than a year in custody then (even if he is immediately pardoned) he will be excluded from running in the 2013 elections.”

The author of the report also spoke to a number of lawyers, politicians and the Prosecutor General during their visit, and “almost all criticised the failure of the JSC to bring about reform of the judiciary in the way expected by the new constitution.”

“Opinion was split between those who thought there was no option but to prosecute Nasheed, and those who wanted the wider context to be taken into account by the prosecutor,” the report noted.

“There was a strong feeling amongst some that the politicians of the old regime had escaped prosecution for much worse abuses of power. The foreign government representatives I spoke to clearly see Nasheed as a force for good in the region and desperately want a solution to the current proceedings which will allow him to stand in the election next year.”

Independent MP Mohamed ‘Kutti’ Nasheed, chair of parliament’s Independent Institutions Oversight Committee, meanwhile explained that the absence of powers to replace members of the JSC “severely restricted” the parliamentary committee from ensuring that the JSC was functioning effectively.

Nasheed also criticised the Supreme Court for overturning Acts of Parliament that “purported to legislate for the justice system” as part of its stance that “anything to do with the administration of justice was a matter for the [Supreme] Court.”

Former MP Ibrahim Ismail ‘Ibra’, chair of the constitution drafting committee of the Special Majlis, meanwhile contended that the President “had no choice but to arrest Judge Abdulla” as the only option to “remove a rogue judge from the criminal justice system.”

Ibra explained that the “backdrop to President Nasheed taking or authorising the action he did against the judge” was the JSC’s failure to investigate serious complaints, some dating back to 2005.

“However, when the JSC did adjudicate against Judge Abdulla in one case, the Judge went to the civil court and obtained an injunction against the JSC to stop them taking action against the judge. Essentially the system had ground to a halt,” the BHRC report stated.

Prosecutor General Ahmed Muizz however insisted that “it was right that Mr Nasheed should face trial and that even before Mr Nasheed had lost power it was considered the right thing to do.”

“I asked him whether there was a code of practice which governed prosecution decisions. He said that there was but that it was not in the public domain. He said that it was possible for prosecution decisions to take into account the public interest, but was a little vague as to how this was actually done,” the report stated.

“He mentioned that when Mr Nasheed had been president there had been a decision in the public interest not to pursue him in relation to fairly minor electoral offences. He did say that it was possible for the prosecutors to reconsider, following charge, whether a prosecution should continue.”

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