Author: Ahmed Naish

High Court upholds lower court verdicts over unpaid Bank of Maldives loans

The High Court has upheld Civil Court verdicts ordering Mahandhoo Investments and Kabalifaru Investments – two companies with ties to Dhivehi Rayyithunge Party (DRP) Leader Ahmed Thasmeen Ali – to repay millions of dollars worth of loans to the Bank of Maldives Plc Ltd (BML).

DRP MP Mohamed Nashiz, brother of the DRP leader and managing director of Kabaalifaru, and MP Ali Azim, a loan guarantor, were among the appellants at the High Court.

Both MPs had signed ‘joint and several guarantee and indemnity’ agreements for the loans issued in mid-2008.

In the verdicts delivered today, the High Court ruled that there were no legal grounds to overturn the lower court verdicts.

In the first case involving Mahandhoo Investments, BML had issued a US$23.5 million demand loan, a US$103,200 bank guarantee and US$30,090 letter of credit on July 10, 2008.

After BML sued Mahandhoo for non-payment, the Civil Court ruled on October 19, 2009 that the company was not paying the loans in compliance with the agreement and authorised the bank to sell mortgaged properties – including Reethi Beach Resort – to recover the outstanding debts along with incurred interest and fines.

The court ordered the company to settle the outstanding debt in a one year period. However the verdict was appealed at the High Court and remained stalled for almost two years.

The second case meanwhile involved a US$3.3 million loan issued to Kabaalifaru Investment and the appeal of a Civil Court verdict on September 30, 2009 ordering the company to settle the debt in the next 12 months.

Meanwhile a third case involving a Civil Court verdict in December 2009 ordering luxury yachting company Sultans of the Seas – with close ties to the DRP leader – to pay over US$50 million in unpaid loans and incurred interest and fines had also been appealed at the High Court.

In a BML audit report released in January 2009, Auditor General Ibrahim Naeem warned that defaults on bank loans issued to influential political players could jeopardise the entire financial system of the country.

Over 60 per cent of the US$633 million worth of loans issued in 2008 was granted to 12 parties, the report noted.

According to the report, US$45 million was granted to Sultans of the Seas and US$36 million to Fonnadhoo Tuna Products, two loans which comprised 13 per cent of the total loans issued in 2008.

The report noted that Fonaddhoo was owned by current DRP Leader Ahmed Thasmeen Ali – running mate of former President Maumoon Abdul Gayoom in the 2008 presidential election – while the owners of Sultans of the Seas were closely associated with the minority leader.

In September 2009, Maldives Customs filed a case at Civil Court to recover US$8.5 million from Sultans of the Seas in unpaid duties and fines for allegedly defrauding customs to import two luxury yachts.

In February 2010, the court ordered the company to pay Rf110 million (US$7 million) as fines and evaded import duties.

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Islamic Minister Dr Bari resigns

Islamic Minister Dr Abdul Majeed Abdul Bari has resigned from the position after pressure from the Adhaalath Party.

He confirmed to Minivan News today he that he had submitted the resignation letter to the President’s Office.

”I resigned out of respect for the decision made by the Adhaalath Party to break its coalition agreement with the government,” Dr Bari said. ”I sent the letter today and they have not responded yet.”

Dr Bari said that although he had resigned from the position as well as the Chairmanship of Adhaalath Party’s Religious Council, he would “remain active in politics.”

Recently, Dr Bari and State Islamic Minister Sheikh Hussain Rasheed Ahmed were asked by the Adhaalath Party to resign, however Sheikh Rasheed issued a statement explaining his refusal to do so.

Dr Bari had earlier resigned from the Chairmanship of Adhaalath Party’s Religious Council.

Today he told the media that he had resigned from the council’s chairmanship after the council issued a statement against his view on Imams, reciting Bismi aloud and permanently reciting Qunoot in Fajr prayers.

The President’s Press Secretary Mohamed Zuhair confirmed to Minivan News that Dr Bari had submitted his letter of resignation, but said President Nasheed had not had a chance to read it yet as he had been out this afternoon observing the implementation of the goods and services tax (GST).

Zuhair said he was “surprised” by Bari’s decision as he had “worked patiently and in accordance with the government’s policy” prior to his resignation.

“Even with the religious unity regulations, he worked patiently with the government in a non-partisan way, and he had the last word before it was published,” Zuhair said, noting that Bari had chosen the government’s side in 2009 over its previous alliance with the Jumhooree Party (JP).

Zuhair added that the President valued Dr Bari’s contribution and “patient and academic efforts” as Islamic Minister.

It was too early to speculate on a replacement, he said. However speculation today was that Sheikh Rasheed was among the most likely candidates.

Sheikh Rasheed did not respond to Minivan News at time of press.

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State cannot afford subsidies for fishermen: Finance Minister Inaz

Finance Minister Ahmed Inaz told parliament today that the state would have to reduce other subsidies to issue Rf100 million (US$6.4 million) as oil subsidies for fishermen.

Responding to a query during Minister’s Question time at the first sitting of this year’s final session of parliament, Inaz explained that parliament had approved reducing amounts from other budget items to free up funds to subsidize oil for fishermen.

“It would have been easier if parliament had decided to reduce from a particular item,” he said, noting that potential items included subsidies for water, oil and foodstuffs as well as state benefits for persons with special needs.

“If we cut any of the [budget] items, we would be cutting basic needs,” he said. “The Majlis has not asked the government to cut any particular item so the government cannot cut any item and hasn’t been able to find a fair way to issue subsidies for fishermen.”

Inaz noted that there were other government policies geared towards assisting fishermen and developing the industry.

The Finance Minister added that the 2011 budget was structurally in deficit and oil subsidies could be issued after new tax revenue is collected.

The oil subsidy was added to the budget by parliament when it approved the 2011 state budget in December last year.

During today’s debate on a binding resolution proposed by MP Riyaz Rasheed to compel the government to issue the fishermen’s subsidy, opposition MPs insisted that delays to releasing the funds were “unacceptable” while the government was continuing its “wasteful and useless expenditures.”

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DRP condemns Gayoom’s remarks on losing ground to MDP

Dhivehi Rayyithunge Party (DRP) has condemned its erstwhile ‘Honorary Leader’ and former President Maumoon Abdul Gayoom for saying the ruling Maldivian Democratic Party (MDP) outpaced the main opposition party while it was “in a slumber.”

Speaking at a rally in Thaa Atoll Guraidhoo on Saturday, Gayoom reportedly said that the MDP became both the largest political party and the majority party in parliament after the new DRP leadership took over.

In a statement put out yesterday, the DRP said Gayoom’s remarks concerning the party were misleading and “contained serious lies.”

Among the alleged falsehoods, the statement noted that the MDP came to power in 2008 after defeating Gayoom, who was DRP’s presidential candidate and ‘Zaeem’ at the time.

“One of the main reasons for DRP having to face one of its biggest defeats and MDP coming to power and causing despair for most citizens was the fact that the whole presidential campaign was run by Gayoom’s eldest son Farish Maumoon as a family matter,” it reads.

It adds that while the DRP under the leadership of Ahmed Thasmeen Ali emerged successful in the past two elections, “we note with regret that the party was unable to win a single election under President Maumoon’s leadership when it was in the government.”

On the loss of MPs in parliament, the statement noted that former President Gayoom lost majority control in the past despite the presence of eight appointed MPs after brother Abdulla Yameen left the DRP with a number of MPs.

Moreover, the statement continues, it was “questionable today” whether the Z-faction’s public criticism of the DRP leadership and “pointing accusatory fingers at the DRP, the party’s leadership, MPs, councillors, senior members sweating to enliven the party in the islands and the party’s common members” was in the service of “the nation and religion.”

The statement concludes by saying that since infighting among the opposition would benefit the ruling party, “it has become clear to the public today that such actions shows the lack of truthfulness and sincerity of the people around President Maumoon.”

Gayoom meanwhile returned to Male’ today after visiting islands in Laamu and Thaa atolls to promote the incipient Progressive Party of Maldives (PPM) and recruit new members.

The former DRP Zaeem was quoted in local media as saying that the DRP lost ground to the ruling party because of “lack of effort and attention” by the new leadership.

“We cannot achieve anything in the political arena in such a state,” Gayoom said. “That is why we are forming this party. We are forming PPM for a noble purpose.”

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Opposition launches campaign against income tax

The opposition Dhivehi Rayyithunge Party (DRP) launched “a special campaign” yesterday against the introduction of a personal income tax in the Maldives.

Speaking at a press conference at private broadcaster DhiTV, DRP Leader Ahmed Thasmeen Ali said that “the purpose of our campaign is to undertake efforts to inform citizens as broadly as possible of the effect of [the introduction of income tax].”

“Considering the state of the country today, economic growth has been considerably stalled,” he said. “The base for income tax – the tax base – is very small. If you look at the tax brackets, the number of people who have to pay income tax is very low. This is because our development has not reached that level and most citizens are not wealthy. This is something we have to consider before introducing such a tax.”

The consequences of levying a personal income tax under the prevailing economic circumstances would be reduced investment, slowed economic growth and worsening unemployment, Thasmeen argued.

As the number of people who earn Rf150,000 (US$9,700) a month are quite few, said Thasmeen, an additional tax burden would discourage them from investing and incentivise down-sizing or cost-cutting measures, such as layoffs, in their businesses.

In August, the party issued a booklet titled “DRP’s response to the government’s economic nuisance package” noting that all citizens would have to file tax returns.

“The charts of the government’s fiscal and economic nuisance package show Rf300 million will be received in 2012 from income taxes and 475 million in 2013,” it reads. “Instead of making all citizens file tax returns in order to earn 475 million two years after taxes are introduced, it would be far better to reduce the government’s useless expenditure by that amount.”

Thasmeen meanwhile asserted that administrative costs for collecting the income tax would be prohibitive: “MIRA [Maldives Inland Revenue Authority] has not revealed the figures yet, but we believe that will be a surprisingly high amount,” he said.

Following a meeting with Thasmeen in August to discuss the government’s economic reform bills currently before parliament, President Mohamed Nasheed told press that the minority leader of parliament had expressed concern with the personal income tax.

While the government was open to suggestions of lowering or reviewing the proposed tax rates, Nasheed said at the press conference following the meeting that financial experts had advised the government that an income tax was necessary for the tax regime to function as a whole.

Progressive taxation

Presenting the draft income tax legislation to parliament on July 18, MP Ilyas Labeeb of the ruling Maldivian Democratic Party (MDP) said that the purpose of the economic reform package was shifting away from custom duties in favour of direct taxation in the Maldives for the first time.

“Income tax will be taken from individuals whose total monthly income from their salary or other sources exceed Rf30,000 (US$1,900),” Labeeb explained. “The tax will be taken from income above that amount.”

All citizens and non-citizens who earn their income in the Maldives will be eligible for the tax. For naturalised citizens and residents, income earned abroad will be taxable as well.

Ilyas explained that the income tax would be progressive and divided into five tax brackets, whereby people with higher income would pay higher rates.

The tax rates are set at three percent for monthly incomes between Rf30,000 to Rf40,000; six percent for incomes between Rf60,000 and Rf100,000; nine percent for incomes between Rf100,000 and Rf150,000; and 15 percent for Rf150,000 and higher.

The legislation specifies 15 sources of income that would be considered taxable, Ilyas continued, while Zakat funds (alms for the poor), pension contributions, interest payments and capital allowance or investment would be exempt from taxation.

Individuals would meanwhile be required to submit an annual personal income tax statement.

If passed, the income tax law will come into effect on January 1, 2012.

Ilyas observed that the introduction of a 3.5 percent tourism goods and services tax (TGST) in January this year had revealed that the country’s GDP per capita was closer to US$4,060 than the previous estimate of US$2,840.

“We learned that the Maldivian economy is such that each citizen should get close to Rf5,000 (US$300) a month,” Ilyas said. “[But] the country’s wealth is shared by disproportionately few people. One in four people do not make even Rf1,000 (US$60) a month.”

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Fifteen suspected drug kingpins loose, President reveals

Some 15 suspected drug kingpins arrested on charges of drug trafficking are loose in society and “there’s no way to even know when they will face trial,” President Mohamed Nasheed revealed in his weekly radio address on Friday.

Speaking from Dhidhoo in Haa Alif Atoll during a tour of Thiladhunmathi, President Nasheed expressed concern with suspects in high-profile cases released from detention while they were awaiting trial.

“Since the Prosecutor General’s Office (PGO) can only press charges after the investigation is complete, a long period [spent on investigation] provides the opportunity to influence witnesses, change their testimony and produce false testimony,” he explained.

Among other main challenges for securing convictions, said Nasheed, “it is also a problem when scientific and other kinds of evidence has no weight due to the absence of rules or guidelines to assess evidence presented to trial and the crime is not proven in major cases.”

Moreover, he continued, suspects arrested with large amounts of cash were not required to account for the money while Criminal Court judges often issued inconsistent rulings in similar cases.

As drug-related cases are heard only by the Criminal Court in Male’, Nasheed observed that a large backlog of cases was pending and “[suspects] have the opportunity to repeat the offence until the trial date”.

He added that it was important to amend the law to allow island courts to try local drug dealers.

The Criminal Court meanwhile issued a two-page press release the day after the President’s remarks dismissing criticism of the courts as having “no legal weight” and stating that “trying to shift the blame to another every time you are faced with something is not responsible.”

The constitution assured all citizens the right to be considered innocent until proven guilty, the Criminal Court statement noted, “therefore all should believe that everyone brought before the court on suspicion of committing a crime cannot be detained and that everyone who faces criminal charges cannot be found guilty.”

The court also noted that lower court rulings, court orders and verdicts could be appealed at the High Court.

“The court does not consider the seriousness of the allegations against a person,” it reads. “The court considers the evidence presented against the person. Submitting evidence is not something the court does. What the court does is assess and weigh the evidence presented.”

The Criminal Court referred to article 49 of the constitution, which states that, “No person shall be detained in custody prior to sentencing, unless the danger of the accused absconding or not appearing at trial, the protection of the public, or potential interference with witnesses or evidence dictate otherwise. The release may be subject to conditions of bail or other assurances to appear as required by the court.”

The court also reiterated a recurring complaint that according to court records a number of suspects brought before the court had previously been sentenced to long jail terms and “no authority of the state could prove that even one of these people had been released to society on a Criminal Court order.”

Top six

Speaking to islanders of Dhevvadhoo on May 2, 2009, President Nasheed said that the identities of the top six drug dealers in the country were known to the government.

However, he added that the arrests would be viewed as politically-motivated because they included members of the opposition. Nasheed’s remarks were made a week before the parliamentary elections.

Press secretary Mohamed Zuhair told Minivan News at the time that arresting the six would effectively stop the supply of narcotics into the Maldives.

Of the six, who were responsible for “budgeting, importing and distributing” drugs, some had fled the country, he said, and Interpol had been notified.

Meanwhile, according to police statistics, the number of reported drug-related cases declined in 2010 from 2,484 in 2008 and 2,366 in 2009 to 1,618 last year. The Drug Enforcement Department (DED) investigated and forwarded 844 cases for prosecution.

However overall conviction rates were low – of the 17,854 cases closed in 2010, 3323 were sent to the PGO. Of these, 1108 were sent back and 776 ended in convictions. Only 75 convictions were recorded from cases begun in 2010.

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High Court overrules Civil Court injunction ordering JSC to halt appointment process

The High Court has overruled a Civil Court injunction issued on September 8 ordering the Judicial Service Commission (JSC) to halt its appointment of judges to superior courts pending a ruling on the constitutionality of the process.

The temporary injunction was appealed by the JSC at the High Court, which ruled today that the Civil Court did not have jurisdiction to rule on the constitutionality of laws and regulations.

A group of lawyers had filed a case at the Civil Court contesting that regulations drafted by the JSC – containing evaluation criteria for selecting judges to superior courts – conflicted with both the constitution and the Judges Act. The lawyers requested the court abolish the regulations and declare the commission’s shortlist void.

The final interviews of 17 shortlisted candidates were due to place on September 10, two days before the injunction or staying order was delivered.

In its verdict today, the  three-judge panel unanimously ruled that the Civil Court did not have jurisdiction to hear the case, citing article 143 of the constitution as well as provisions of the Judicature Act.

Briefing press after filing the case at Civil Court, lawyers Ali Hussein and Ismail Visham argued that the evaluation criteria formulated by the JSC unfairly favoured graduates of the College of Islamic Education (Kulliya).

Ali Hussein explained that under the regulations drafted by the JSC, a candidate with a masters degree and a graduate of Kulliya both receive 25 marks for educational qualification.

“We are saying this is not fair,” he said. “We especially note that the Faculty of Sharia and Law teaches shariah subjects to the same extent as Kulliya [Islamic College], but graduates of the faculty receive 20 marks while students from Kulliya receive 25 marks.”

Kulliya graduates also received higher marks than graduates of the Islamic University of Malaysia, he said.

The lawyers also claimed that two shortlisted candidates had close ties – as a spouse and a business partner – with two members of the commission, suggesting a clear conflict of interest as neither had recused themselves from voting in the JSC panel.

Moreover, the lawyers observed that the JSC criteria also conflicted with the academic rankings of the Maldives Qualification Authority (MQA), formerly the accreditation board, which places Kulliya certificates below those of overseas institutions.

Following today’s ruling, the lawyers are preparing to file their case at the High Court.

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Lack of skills main impediment for youth employment, says President

A number of young Maldivians are “left out” and unable to become productive members of society because they lack skills for employment, President Mohamed Nasheed has said.

According to the President’s Office, Nasheed made the remarks in Haa Alif Hoarafushi last night while addressing participants of the government’s ‘Hunaru’ (skills) training programme in the island.

President Nasheed unveiled the Rf360 million (US$23 million) national training programme on Independence Day, July 26, with an ambitious target of leading 8,500 youth to skilled employment in a variety of fields.

The government hoped that participants of the programme in Hoarafushi would find jobs upon completion of the courses in three to six months, Nasheed said last night.

The President urged participants to attend the course without fail and expressed satisfaction with the number of female participants in the programme.

Speaking at the inauguration of the first training course under the ‘Hunaru’ programme on Saturday – conducted by the Centre for Career and Technical Education (CCTE) to train 100 youth in heavy load vehicle operations – Nasheed asserted that the main impediment to national development was limited job opportunities for young people.

Nasheed observed that there were 12,000 expatriate workers with simple skills – including 645 forklift drivers – earning between Rf9,000 (US$580) and Rf10,000 (US$640) a month while 30 percent of working age youth could not find jobs.

The ‘Hunaru’ programme would provide instruction in 57 different kind of skills, said Nasheed, while training a single participant would cost between Rf10,000 and Rf15,000 as a course fee.

In addition, each participant is to be given a monthly allowance of Rf2,000 for the duration of their courses.

“The government is covering these expenses with a lot of expectation and hope,” he said. “The Maldives could only change when the youth and people in the workforce learn a skill and start working to change the country, to develop the country.”

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Civil Court issues injunction against releasing funds for MPs’ committee allowance

The Civil Court last night issued a temporary injunction ordering the Finance Ministry not to release funds to parliament for MPs’ committee allowance until the court rules on a case filed on behalf of a civil servant, contending that the allowance could not be given before deducted amounts from civil servants salaries were paid back.

A group of concerned citizens protesting the committee allowance filed the case on behalf of Maah Jabeen, Seenu Maradhoo Fenzeemaage, arguing that releasing funds for committee allowance without reimbursing civil servants violated constitutional provisions on fairness and equal treatment.

The committee allowance was approved on December 29, 2010 while wage cuts were enforced in October 2009.

In January 2010, the Civil Service Commission’s (CSC) decided to reverse the pay cuts, sparking an ongoing legal dispute between the commission and the Finance Ministry.

At the height of the dispute last year, permanent secretaries of line ministries were ordered to submit different wage sheets by the commission and the ministry.

Speaking to Minivan News after Judge Hathif Hilmy granted the injunction last night, lawyer Mohamed Shafaz explained that the case was based on article 43 of the constitution, which states that everyone has the right to fair and just administrative action, “by which we take to mean that constitutional provisions in articles 17 and 20 relating to equality and non-discrimination would be infringed of a civil servant if the Ministry of Finance chooses to release the funds for committee allowance to the People’s Majlis before the deducted amounts from the salaries of civil servants is paid to them.”

“Our argument was based on the principle of judicial review,” he continued. “For judicial review to be used in a case in the Maldives is relatively rare and this is I would say a novel case. Our idea is that anyone vested with legal powers must act within the limits of the constitution.”

Delivering the ruling on the request for a temporary injunction, the judge said that releasing the funds before the court issues a final judgment on the case “could cause irreversible damage to the plaintiff” and ordered the Finance Ministry not to take any action that could “defeat the purpose of the claim.”

While the state attorney insisted that neither the Finance Ministry nor the President’s Office has made a decision on releasing the funds, the claimants submitted video footage of President Mohamed Nasheed telling protestors that the executive could not overrule parliament’s decision without threatening separation of powers.

In April 2010, the Civil Court ruled that Finance Ministry did not have the legal authority to overrule the CSC. Although the government contested the ruling and refused to restore salaries to previous levels, the High Court upheld the lower court ruling in May this year.

The state attorney also argued that the case should not have been accepted by the Civil Court as the government has appealed the High Court verdict at the Supreme Court. The judge however ruled last night that the state could not produce documentation proving that the Supreme Court has decided to hear the appeal.

Attorney General Abdulla Muiz confirmed today that the AG office has appealed last night’s lower court decision at the High Court.

Shafaz meanwhile observed that “the ruling [yesterday] affirms that the court recognises that there is an issue here that needs to be rectified or subject to the system of justice.”

“It is also significant because by granting the temporary injunction the court has accepted and taken on an active role for implementing judicial review in the Maldives,” he said. “So this opens up the possibility for each and every action of the executive branch of the government, or the parliament or any other part of the state, to be challenged in the courts.”

Yesterday’s temporary injunction was also significant because “it was based on infringement of the rights of an individual,” Shafaz continued, adding that it was “a case where the act of a minister of the executive could infringe upon the rights of an individual.”

The favoured outcome for the group of concerned citizens would meanwhile be “for the court to recognise that giving parliamentarians their committee allowance before the deducted salary is given would be an infringement of the rights of a civil servant, or civil servants, under the constitution.”

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