Business & Tourism – Page 58 – Minivan News

Nexbis project one third completed despite ACC’s legal effort

Despite the legal complications surrounding the deal, the Nexbis border control project has completed its first phase, with Rf10 million’s (US$650,000) worth of installation work having been finished, according to Sun Online.

The project involves the installation of an electronic border gate system in Male’s Ibrahim Nasir International Airport (INIA), bringing technological upgrades such as facial recognition, fingerprint identification and e-gates to the Maldives.

Assistant Controllerof the Department of Immigration and Emigration Ibrahim Ashraf confirmed to Minivan News that “the first phase is, to a certain extent, finished.”

The Rf500 million (US$39 million) deal had been brought to standstill by the High Court earlier this month in the latest in a series of delays which have led the Malaysian firm to threaten legal action against the Maldivian government should it incur losses for the work already done on the project.

Sun reported a source as saying that there were three phases in the contract with Nexbis. The second phase involves the installation of further systems for an online visa service while the third phase would include improving passport mechanism services.

The deal ran into trouble soon after it was awarded in 2010, with the Anti Corruption Commission (ACC) demanding the project be terminated and re-tendered, citing allegations of corruption in the bidding process.

Legal suit was filed in November 2011 after the government decided to begin work on the project against the ACC’s advice. The subsequent decision by the Civil Court was that the ACC did not have the authority to order the Department of Immigration and Emigration to stop the project.

Subsequent appeals to the High Court earlier this month resulted in an injunction against any further work until the case had been resolved. At the time, the ACC had expressed concern that the project could be completed before the conclusion of the High Court case.

Ashraf said that staff training for the new system was planned for May 10 but had been cancelled due to the injunction.

Hassan Luthfee, President of the ACC, said that the commission had not investigated into the work’s current progress but believed the work on the first phase had been completed prior to the High Court injunction, as did Ashraf. Luthfee said the ACC had appealed to the court to “delineate” the role of the ACC and expected a verdict by the end of this month.

According to the Anti-Corruption Act (Act No. 13/2008) under which the ACC was established, following any inquiry and investigation the commission is empowered to forward the case to the Prosecutor General for prosecution. It is also granted the power to order the institution in question to correct any failures in management that may have led to corrupt practices.

Part of the roles and responsibilities of the ACC, as defined in the constitution, is “to perform any additional duties or functions specifically provided by law for the prevention of corruption.” The ACC’s objections to the Nexbis deal were based on its belief that the bidding process was flawed.

A source at the immigration department at the time of the ACC’s initial complaint in 2010 claimed that it was the finance ministry which evaluated all the bids. The same source also argued that the desire within the ACC to stop the project could have been politically motivated.

The ACC filed a suit against the Home Ministry in January, citing “unlawful practices” in the tender process while evaluating bids to set up partitions in the ministry’s office.

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Weak fisheries sector could benefit from strong tourism

The Minister of Fisheries and Agriculture Ahmed Shafeeu has suggested that the tourism industry might be “tapped” to improve the fortunes of the ailing fisheries sector.

“The internal market is there for agriculture and fisheries. The local demand for fish is huge, including resorts,” he said.

Shafeeu noted that there was potential in closer links between resorts and local producers, and that there had already been suggestions from some island communities that such links be further cultivated.

“The [fisheries] sector needs to be re-prioritised. Recently, the focus has been mainly on tourism. We are very vulnerable if we depend only on tourism,” said Shafeeu.

The most recent statistics from the Maldives Monetary Authority (MMA) have revealed that the volume of fish exports dropped by 63 percent in the twelve months from January 2011 to January 2012. The value of these exports dropped by 33 percent during the same period.

The statistics, provided by the Department of National Planning, show that tourism constituted around thirty percent of real GDP last year and is projected to represent a similar figure in 2012.

The fisheries industry is predicted to contribute just 1.1 percent of Maldives’ real GDP this year, dropping nearly two thirds from its 2006 contribution. The national significance of the industry however remains huge, providing employment to more than half of the population.

Potential issues that may act as potential barriers to the consumption of local fisheries produce in the resorts seem to be transport and product quality.

Deputy Tourism Minister Mohamed Maleeh Jamaal said that the opening of local airports and the development of transport may make it easier to increase the consumption of local produce in resorts.

He said that there had not been any research done on the exact patterns of consumption on resorts. The MMA figures show that the Maldives exported an average of 43 percent of its fish catch over the five years up to 2011.

“Currently, there are many challenges in the transportation of products,” said Maleeh.

“We hope domestic products can be consumed in our resorts. Fisheries have a high potential. All resorts consume a lot of fish. I think the demand for locally caught fish is very high,” he added.

Maleeh said that the sustainability of Maldivian fishing techniques were a strong selling point of the nation as a tourist destination. He saw this as part of what makes the Maldives unique.

The sustainability of centuries-old ‘pole and line’ fishing methods is not only considered a source of national pride, but also attracts buyers from premium supermarkets in the UK and Europe.

Shafeeu said that the resorts often imported only local reef fish, choosing to import other high value fish products which could potentially be available domestically.

A senior management source at one resort told Minivan News that they did source local fisheries’ produce in their restaurants and in their staff canteen, owing to the low cost.

“We don’t buy from outside,” said the source, although they said the choice was often limited: “It’s not every day we can get what we want.”

They added that this arrangement was possible due to the location of their resort, in North Male’ Atoll. For more isolated resorts, they explained, it is not viable for local fishermen to bring fresh fish every day.

This issue was also touched upon by Maleeh: “Resorts need continuity and consistency of supply,” he said, adding, “The quality of products needs to be maintained.”

Describing alternative methods of improving the prospects of the industry which has suffered greatly from foreign competition in nearby waters, Shafeeu raised the issue of the impact the “major shortage” of fresh ice had on the quality of produce.

“One of the major concerns is getting good ice across the country,” said Shafeeu, explaining that the delays imposed while vessels waited for ice, as well as the potential impact on the quality of the catch, were “not acceptable”.

He added that with the budget being “very limited” he was exploring the possibility of converting funds from other projects to meet this need.

Investment in ice processing plants was described as one of the areas he hoped would benefit from the resumption of fishing subsidies was announced by President Dr Mohamed Waheed Hassan last month.

The subsidies, amounting to Rf100million a year (US$6.5million), are yet to receive official approval from the Majlis, although Shafeeu said that the chair of the Finance Committee had indicated that a consensus in favour of subsidies had been reached.

He said that he had instructed ministry staff to advertise the availability of the subsidies so that fishermen could register and receive their vouchers as soon as the Majlis reconvened.

When asked if he felt the fishing industry to be in terminal decline, Shafeeu replied that he did not think this was the case, believing that the industry could still play a prominent role in the country’s economy “if we give it enough attention”.

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Transport Minister backs MACL, orders GMR to pay US$8.2 million

The Transport Ministry has said the government is “fully behind” an order given by the Maldives Airports Company Limited (MACL) to India-based infrastructure giant GMR, that it pay the sum of US$8.2 million deducted from concession fees for the first quarter of 2012.

GMR took over the management of Ibrahim Nasir International Airport (INIA) – then called Male’ International Airport – from the government-owned Maldives Airports Company Limited (MACL) in September 2010.

Speaking to Minivan News today, Minister of Transport Dr Ahmed Shamheed said the government fully backed an MACL order for GMR to return the US$8.2 million it deducted from concession fees for the quarter.

According to a statement released by the MACL earlier this month, the company said it had only received US$525,355 out of an expected US$8.7 million in concession fees for the first quarter of 2012, after GMR deducted the Airport Development Charge (ADC) and insurance surcharge.

The ADC was intended to be a US$25 fee charged to outgoing passengers from January this year, as stipulated in the contract signed with GMR in 2010. The anticipated US$25 million the charge would raise was to go towards the cost of renovating INIA’s infrastructure.

The deductions were made after the Civil Court blocked the India-based company charging an Airport Development Charge (ADC) last year, on the grounds that it was a tax not approved by parliament. As the ADC was stipulated in the contract former President Mohamed Nasheed’s administration had signed with the airport operator, the government at the time agreed that GMR would deduct the charges from the concession fees due the government, pending appeal.

The Civil Court case had been filed against the airport by the former opposition Dhivehi Qaumee Party (DQP) – now part of President Mohamed Waheed Hassan’s coalition government.

Parliament’s Finance Committee has meanwhile revealed that the Maldives is facing a skyrocketing budget deficit of 27 percent for 2012, and a parallel 24 percent increase in expenditure.

Last week, GMR released a statement proposing a compromise to the government whereby Maldivian nationals would be excluded paying the ADC when departing the airport.

MACL stance

MACL Managing Director Mohamed Ibrahim told local media today that MACL’s agreement with GMR under the previous government to deduct the ADC payment was “null and void”. Ibrahim told reporters that the deal was no longer relevant as it had been agreed by a former MACL chairman, and that charges could therefore no longer be deducted from GMR’s concession payment.

“We had informed that the letter from the former Chairman of MACL was now invalid and hence must not be followed. In addition we had also informed that no deductions can be made from the concession fee,” he told local newspaper Haveeru.

Ibrahim was not responding at time of press.

The MACL order was announced the same day that President Mohamed Waheed reportedly assured Indian Prime Minister Manmohan Singh that the government would uphold its commitments to foreign investors.

“It is only recently that the Maldives began working with large foreign corporations, and hence the Maldives has not much experience in dealing with large companies. That’s why we are currently trying to iron out some of these issues through mutual dialogue,” President Waheed said.

Transport Minister Dr Shamheed however told Minivan News that the President’s pledge would not affect MACL’s decision to order GMR to pay the deducted US$8.2 million.

“As per the concessions agreement, a fee has to be paid to MACL. That is my understanding,” he said.

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High Court issues injunction halting Nexbis project pending outcome of ACC appeal

The High court has issued an injunction temporarily halting the roll out of the Nexbis border control system, pending the outcome of the Anti-Corruption Commission (ACC’s) appeal against a Civil Court ruling that the ACC did not have the authority to halt the project.

The ACC in a hearing last week had requested an injunction, however Judge Azmirelda Zahir stated that such a decision could only be taken after both sides had presented their cases. The ACC had expressed concern that the project could be completed before the conclusion of the High Court case.

Immigration Controller Ilyas Hussain Ibrahim said he would not comment on the matter and referred Minivan News to Deputy Contoller Ibrahim Ashraf, who was not responding at time of press.

The case was delayed last week after the High Court ruled that Deputy Solicitor General Ahmed Usham could not represent the state in the case, as he had been a member of the tender evaluation board that had awarded the contract to Nexbis.

The case concerns a 20-year Build, Operate and Transfer (BOT) agreement with the Malaysia-based mobile security solutions provider to upgrade border security in the Maldives with new technology including facial recognition and fingerprint identification, facilitating the identification and tracking of expatriate workers and eliminating the opportunity for people to enter the country with forged paper documents.

The ACC had earlier ordered a halt to the project following the signing of the contract in October 2010, announcing that it had received “a serious complaint” regarding “technical details” of the bid, and that the agreement presented “instances and opportunities” for corruption.

In December 2011, the Commission forwarded corruption cases against former – and now reappointed – Controller Ilyas Hussain Ibrahim, and Director General of the Finance Ministry, Saamee Ageel, to the Prosecutor General’s Office (PG), alleging that the pair had abused their authority for undue financial gain in granting the contract to Nexbis.

On February 16 Illyas confirmed that the department would proceed with the border control project as there was no “legal obstruction”. He disputed the claims of corruption and insisted that the project was awarded to Nexbis through a transparent international bidding process.

The agreement stipulates that Nexbis will levy a fee of Rf30 (US$2) from arriving and departing passengers in exchange for installing, maintaining and upgrading its immigration system. The company would also charge a Rf231 (US$15) for every work permit card.

Former Immigration Controller Abdulla Shahid has contended that this would deprive the Maldives of US$200 million in revenue over the life of the 20 year contract. Comparing Nexbis’ earnings to the government’s estimated revenue of US$10 million, Shahid proposed the government instead maximize its income by operating a system given by a donor country: “Border control is not something we are unable to comprehend,” he suggested.

Minivan News reported on February 16 that Nexbis had filed a case in the Civil Court seeking Rf 669 million (US$43 million) in damages from Shahid, alleging that its reputation had been tarnished by negative media coverage.

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Police arrest 47 Bangladeshi nationals after raid on unregistered security firm

A total of 47 Bangladeshi nationals working for a local security firm were seized on Thursday by the Department of Immigration as part of a wider crackdown on unregistered migrant workers.

The detention of the expatriate workers comes after police late last year reported a “day-by-day” increase in human trafficking in the Maldives. The Maldives Police Service’s claims were based on a surge in the numbers of illegal expatriate workers found in the country.

Assistant Controller of the Immigration Department Ibrahim Ashraf told Minivan News that the 47 Bangladesh nationals were all apprehended following a raid of a company providing security guards that was not registered to employ foreigners.

Ashraf claimed that the company the men had been working for had been in operation for 10 -12 years, yet no information could be found on its operations.

“During the raid, we found 47 Bangladeshi nationals all wearing security uniforms along with equipment like walkie talkies and badges,” he said. “They were not registered for this work and we could not find any records linked to the company.”

While the Department of Immigration has said that it was not cracking down specifically on security firms employing expatriate workers, Ashraf added that concerns remained about ensuring the industry had correctly licensed its foreign staff.

“Until recently, the Ministry of Human Resources did not provide [expatriate] work quotas to security firms,” he said. “There has been a growing demand among local businesses to hire security services. The Ministry of Human Resources has therefore begun issuing quotas for hiring expatriates in security services.”

Ashraf added that the Immigration Department’s concerns were not focused just on security firms, but instead on companies from various industries that had failed to obtain and then correctly register staff.

“Right now we are looking for expatriate workers on the run. We have received a lot of reports from employers about staff going missing,” he said. “This is especially true in the outer atolls, where we are getting complaints about unregistered employees travelling between islands.”

Ashraf claimed that the 47 Bangladeshi nationals who had been detained Thursday would not necessarily be deported if a sponsor could be found to provide employment and accommodation for them.

“We will try and give the employees the opportunity to stay here and work if a sponsor is willing to regularise them,” he said.

High Commission

The High Commission of Bangladesh in Male’ said it had been made aware of the 47 detained workers, who had been seized for not having proper documentation.

The commission said it was often notified regarding such cases, and was presently awaiting travel documentation for the detained expatriates before considering possible deportation.

The High Commissioner of Bangladesh, Rear Admiral Abu Saeed Mohamed Abdul Awal, said today that he believed workers from the country were regularly being brought to the Maldives to perform unskilled work, usually in the construction industry. Awal alleged that upon arriving, expatraites from Bangladesh were suffering from the practices of “bad employers”.

“This is a real problem that is happening here, there have been many raids over the last year on unskilled [expatriate] workers who are suffering because of the companies employing them. They are not being given proper salaries and are paying the price for some of these employers,” he said.

Rear Admiral Awar added that it was the responsibility of employers to ensure expatriate staff had the proper documentation and suitable living standards.

Concerns about the treatment of expatriates from across the South Asia region were also shared by Indian High Commissioner Dynaneshwar Mulay. Speaking to Minivan News last month, Mulay raised concerns over the general treatment of Indian expatriates in the Maldives, particularly by the country’s police and judiciary.

Mulay claimed that alongside concerns about the treatment of some Indian expatriates in relation to the law, there were significant issues relating to “basic human rights” that needed to be addressed concerning expatriates from countries including Sri Lanka and Bangladesh.

Mulay’s comments were made following an alleged attack on a Indian resort worker, who was reported to have been struck with a hammer and mugged while staying in a hotel in Male’. The attack was allegedly committed by a former employee of the same resort.

Big business

Beyond concerns about the basic human rights of foreign employees in the country, labour trafficking is also believed to represent a significant national economic issue.

An ongoing police investigation into labour trafficking in the Maldives last year uncovered an industry worth an estimated US$123 million, eclipsing fishing (US$46 million in 2007) as the second greatest contributor of foreign currency to the Maldivian economy after tourism.

The authorities’ findings echo concerns first raised by former Bangladeshi High Commissioner Dr Selina Muhsin, reported by Minivan News in August 2010. The comments by Mushin were made shortly after the country was placed on the US State Department’s Tier 2 watchlist for human trafficking.

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GMR offers to exempt Maldivian nationals from airport development charge

GMR has offered to exempt Maldivian nationals from paying the contentious Airport Development Charge (ADC), in a bid to end a legal and contractual stalemate that threatens to bankrupt the Maldives Airport Company Limited (MACL) and deprive the government of the majority of all airport revenue.

The Indian infrastructure giant signed a 25 year concession agreement with former President Mohamed Nasheed’s government to upgrade and manage Ibrahim Nasir International Airport (INIA). Under the concession agreement, a US$25 charge was to be levied on all outgoing passengers to part-fund the US$400 million upgrade.

However while in opposition the Dhivehi Qaumee Party (DQP), led by Dr Hassan Saeed, now President Dr Mohamed Waheed’s special advisor, filed a successful case in the Civil Court in December 2011 to block the payment of the charge, on the grounds that it was effectively a tax not approved by parliament.

Nasheed’s government had agreed to deduct the ADC from the concession fees payable by GMR while it sought to appeal to verdict. As a result, Dr Waheed’s government received only US$525,355 from the airport for the quarter, compared to the US$8.7 million it was expecting.

In a statement today, GMR said the government had “expressed a desire to exempt Maldivian citizens from the ADC”, as “the majority of Maldivians travel abroad for the purposes for healthcare and education.”

“The ADC was conceptualised and incorporated into the concession agreement by the government to yield a maximum return to the Maldives while ensuring development of the airport and a reasonable return to the successful bidder,” GMR stated.

“We are sensitive to the apprehensions expressed regarding ADC; and would like to assure all concerned that the management of GMR Male International Airport is doing everything possible by offering viable options to reduce the impact on the Maldivians, thereby helping the government for the ADC implementation.”

GMR presented the government with two options:

Option 1: No Maldivian passport holder will have to pay ADC. Every departing foreign passenger will pay an ADC of US$28.00; or
Option 2: Maldivians travelling to SAARC countries will not have to pay any ADC. Every Maldivian Passport holder departing to countries other than SAARC and every foreign passenger will pay an ADC of US$27.00.

No fee would be charged to either Maldivians or foreigners using the domestic terminal, the company noted.

In the statement, GMR noted that the government received US$33 million in 2011 from airport concession fees, “three times the money the government ever made in a year [from the airport] before privatisation.”

Following construction of the new terminal in 2015 – including “a state-of-the-art 600,000 square foot integrated Passenger Terminal and a 20,000 square foot VIP terminal, and various other airside and landside developments,” expected revenue from the airport to the government was expected to reach US$50 million per year, GMR observed, and almost US$100 million from 2021 as passenger numbers increased.

“In effect, GMIAL’s contribution to the government would be over US$2 billion over the concession period of 25 years, which will make a very significant contribution to the economy of the Maldives.”

President’s Office Spokesperson Abbas Adil Riza said the government had not yet officially received details of the offer, but said that such an offer would be evaluated by the Attorney General’s office “to see whether it is in line with the Financial Regulation Act.”

Attorney General Azima Shakoor was yesterday reported as expressing concern that settling the issue would be “quite difficult”, but vowed that “the government would settle the issue for the benefit of the country.”

On May 2 President Dr Mohamed Waheed told media at the inauguration of the Civil Air Navigation Services Organisation (CANSO): “I do not believe [the ADC] can be charged in the current situation because of the court’s decision.”

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Government to consult tourism industry on potential T-GST increase

The government will hold a consultation with the tourism industry this week to test its appetite for an increase in the Tourism-GST (TGST), Tourism Minister Ahmed Adheeb has said.

The International Monetary Fund (IMF) has urged the Maldives to increase the T-GST from six percent to 12 percent, among several measures the organisation says are urgently needed to offset the Maldives’ spiraling budget deficit, and avoid miring the country in poverty.

Parliament’s Finance Committee last week calculated that the budget deficit would reach 27 percent of GDP, on the back of plunging revenues and a 24 percent increase in government expenditure.

Adheeb told Minivan News that the government would present the IMF’s report to the industry, and discuss how to proceed: “We have to be realistic,” he said.

“The IMF has recommended an increase to 12 percent – we need to discuss what kind of increase the industry would like to see over the next five years,” he said.

Adheeb emphasised the need for stability rather than sporadic increases in the tax, cautioning against a sudden change in the T-GST which would affect those tour operators who make pricing agreements and publish brochures up to a year in advance.

However, Secretary General of the Maldives Association of Tourism Industry (MATI), Mohamed Ibrahim ‘Sim’, warned that the tourism industry was already under pressure from a decline in traditional markets.

“Is there an appetite [to increase the TGST]? No, not really. The European economy is not doing well and we would like the costs to remain the same – GST is something we have to pass to the customer. We need to maintain it, at least for the moment,” Ibrahim said.

One resort manager told Minivan News on condition of anonymity that such an increase would have “serious ramifications on many of the markets.”

“Some operators will not accept the increase mid-contract and hence resorts will have to absorb this from revenue,” he explained. “The additional costs will need to be balanced somewhere in the operation and you will find resorts have to [reduce] some of the nice touches for guests, [cut] staffing levels etcetera in order to deal with these ever growing expenses.”

The manager expressed exasperation that resorts were being asked to shoulder the burden without a parallel commitment from the government to reduce expenditure.

“We have seen an increase in some public services salaries and a reduction on working hours in many government departments who are meant to serve the resorts. Many of these government departments make it difficult for the resorts to do their jobs, with bureaucracy and rules to keep extra people in a job rather than making it easier to support the resorts in order to do their job: build more business, increase revenue and hence increase GST [revenue] in a positive manner. An increase in GST right now is the wrong solution.”

The government “needs to take a more supportive approach to the resorts”, he suggested, “whether it be processing visas, expediting customs waits or speeding up the immigration process for guest at the airport. A serious revision of the various government departments is required.”

According to figures from the Maldives Inland Revenue Authority (MIRA), the T-GST brought in 32.4 percent of all government revenue in April.

Total revenue collected in April was Rf2.5 billion (US$162.1 million) – almost double that collected in April last year – however MIRA’s figures do not take into account the substantial revenues lost from the phasing out of import duties, previously the Maldives’ main source of tax revenue.

Former government to blame?

Adheeb blamed the need for the increase on the former government’s changes to the calculation of land lease rents, which he claimed were responsible for an Rf540 million (US$35 million) shortfall overall after the new taxes were introduced.

MATI’s Ibrahim however contended that the changes to the fixed rents were offset by the new taxes: “Our calculation at the time these taxes were introduced were that overall it balances out, but that some resorts pay more.”

Recent changes introduced by the new government to the payment of lease extensions – from a lump sum to an annual basis – have also pulled US$135 million in revenue from the 2012 budget, the ousted Maldivian Democratic Party (MDP) contends.

Economic indicators published by the Maldives Monetary Authority (MMA) meanwhile show a fall in the number of tourist arrivals for March 2012 compared to the previous year, from 80,732 to 76,469. The number of bed nights fell 6.8 percent for the same period, one of only a few recorded declines since the 2004 tsunami. February – a month of high political turmoil and widespread negative international media coverage – recorded a 2.5 percent decline.

An increase in prices would affect established markets already under strain, Ibrahim reiterated.

“It’s hard to say if emerging markets would be put off – China, Russia and the Middle East – maybe not. But [price increases] are affecting the established market. The market situation is not looking good at the moment.”

A survey of nearly 3000 tourists last year reported that 46 percent believed accommodation in the Maldives was too expensive. Soft drinks, alcohol were rated as expensive by 42 percent, while food, water and souvenirs received a similar rating from 41 percent of tourists polled.

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Stop buying iPads, computers and phones, ACC tells government

The Anti Corruption Commission (ACC) has ordered the Finance Ministry to cancel plans to buy computers, iPads and phones for government ministries, claiming that only the People’s Majlis can approve ministerial salaries and benefits.

The Finance Ministry on April 30 released a circular approving the purchase of mobile phones, computers, and iPads for ministers from state funds allocated to the respective ministries. Furthermore, the finance ministry said the treasury would cover up to Rf 4000 (US$260) in monthly payments for ministers’ phone bills.

However, the ACC has told the Finance Ministry that no state institution could approve salaries and benefits for its staff, claiming that the task fell under Majlis’ jurisdiction.

“Article 102 of the Constitution authorizes the People’s Majlis to allocate salaries and benefits for the President, Vice-President, Judges, Members of Parliament and staff of the state institutions. Instead of state institutions deciding for themselves on matters within Majlis jurisdiction, we have ordered the Finance Ministry on May 7 to approve such benefits through the Majlis,” an ACC statement read.

“We would like to remind you the Auditor General has repeatedly criticized such actions in his audit reports and called on state offices not to do so without Majlis authorization. Further, when this commission asked the Majlis for advice on phone allowances, the Majlis Finance Committee told us in a letter on 30 March 2011 to act according to the salary structure approved by the Majlis on 28 December 2011 until the Majlis decides otherwise,” the statement noted.

The Auditor General Ibrahim Niyaz last week released a report on the Department of Judicial Administration (DJA) noting that between October 2008 and December 2011, Supreme Court judges had paid their phone bills amounting to RF 281,519 (US$18,280) from the state budget, despite the fact that the parliament had not allocated phone allowances to the judges.

Niyaz has recommended the amount be reimbursed and that the granting of phone allowances be determined by the parliament.

The Supreme Court on 16 May 2011 released a statement claiming that no Supreme Court judge had received phone allowances, after local media accused judges of misappropriating state funds for phone allowances.

Meanwhile, Chief of the IMF mission in the Maldives, Jonathan Dunn, warned parliament in April that if the country does not reduce its expenditure, it risks running out of reserves and miring the country in poverty.

Furthermore, the Majlis Finance Committee last week has projected that the Maldives budget deficit will reach 27 percent of the GDP by the end of year 2012, a 175 percent increase on earlier forecasts.

Government spending in 2012 is expected to increase by almost 24 percent, reaching Rf17.45 billion (US$1.13 billion) at the end of the 2012, while government revenue for 2012 will be Rf2.6 billion (US$168.6 million) less than the projected amount of Rf10.87 billion (US$704 million) – a 23 percent plunge.

With the shortfall of revenue and increased government spending, Head of the Majlis’s Financial Committee, Deputy Speaker and People’s Alliance (PA) MP Ahmed Nazim observed that the budget deficit will exceed from Rf 3.9 billion (US$ 252 million) to Rf9.1 billion this year (US$590 million), amounting to 27 percent of the country’s GDP.

Finance committee member and MDP MP for Kulhudhufushi, Abdul Ghafoor Moosa, told reporters that unplanned spending on police and military personnel and planned reimbursement of civil servants pay cuts in 2010, are both significant causes for rising costs to the government.

He observed that the largest shortfall in revenue is a direct result of the US$135 million pulled out from the budget with new government’s recently revised policy on lease extension payments for resort islands.

Maldives Inland Revenue Authority (MIRA) anticipated receiving a total of Rf375 million (US$ 24 million) for lease extensions, however the income received dropped to Rf23 million (US$1.5 million) as a result of the decision to accept the lease extension fees in an annual installment instead of a lump sum as decided by former administration.

The loss of concession fees from Ibrahim Nasir International Airport (INIA), the result of a successful Civil Court case to block the Airport Development Charge (ADC) filed by the Dhivehi Qaumee Party (DQP) while it was in opposition, also saw the government receive only US$525,355 from the airport for the quarter, compared to the US$8.7 million it was expecting.

The government-aligned PA’s Deputy Leader Nazim however contended that the 23 percent drop in government income was caused by unrealised revenue from privatisation schemes and a shortfall of Rf 166.7 million and Rf435 million (US$28 million) from the projected dividends of Dhiraagu and import duties respectively.

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High Court denies ACC injunction as commission appeals Civil Court ruling on Nexbis

The Anti Corruption Commission (ACC) has appealed a ruling from the Civil Court blocking its order to halt the implementation of a border control system agreement between the Immigration department and Malaysian firm Nexbis.

The commission also called for an injunction on the installation of the system until the High Court case was resolved, however Judge Azmirelda Zahir said such a decision could only be taken after both sides had presented their cases. The ACC requested an injunction on the grounds that it would lose the possibility of appeal should the project be implemented before the conclusion of the High Court case.

The ACC in December forwarded corruption cases against former – and now reappointed – Immigration Controller Ilyas Hussain Ibrahim and Director General of the Finance Ministry, Saamee Ageel, to the Prosecutor General’s Office (PG), alleging that the pair had abused their authority for undue financial gain in giving the US$39 million to Nexbis.

The 20-year Build, Operate and Transfer (BOT) agreement with the Malaysian-based mobile security solutions provider was to upgrade border security in the Maldives with new technology including facial recognition and fingerprint identification, facilitating the identification and tracking of expatriate workers and eliminating the opportunity to people to enter the country with forged paper documents.

The agreement allows Nexbis to levy a fee of Rf30 (US$2) from arriving and departing passengers in exchange for installing, maintaining and upgrading its immigration system. The company would also charge a Rf231 (US$15) for every work permit card.

Immigration Controller under the later months of President Mohamed Nasheed’s administration, Abdulla Shahid, contended that the agreement meant that Nexbis would draw US$200 million in revenue from the project over the life of the 20 year contract, while five percent royalties to the government would equate to US$10 million.

Speaking to Minivan News following the ACC’s initial injunction, Shahid claimed that the deal would deprive the government of significant revenues, when “border control is not something we are unable to comprehend – it is a normal thing all over the world.”

Shahid estimated that a free system given by a donor country would cost at most several hundred thousand dollars a year, and said he was unsure as to why such an agreement had ever been signed.

However, Nexbis said in a subsequent statement that its agreement meant that neither the government nor the Maldivian public would pay upfront for “state-of-the-art border security protection”, and suggested that “reasonable persons will likely realise that once the hidden costs after are taken into account and adjusted for inflation, the benefits and efficiencies of the Nexbis system will far outweigh the risk, inadequacies and uncertainties of any such alleged cheaper system.”

The Civil Court in January 2012 ruled that the Anti-Corruption Commission (ACC) did not have the legal authority to order Immigration Department to terminate the agreement, with Judge Ali Rasheed ruling that while the ACC Act gave the commission the authority to investigate corruption cases, it was not able to annul contracts.

Judge Rasheed asserted that it was “unfair” to the contractors if ACC could annul an agreement without their input, as this violated their protections under Maldives Contract Law.

During the High Court hearing this week, the ACC charged that the State Attorney during the Civil Court case, Deputy Solicitor General Ahmed Usham, had a conflict of interest as he had been a member of the tender board responsible for awarding the project to Nexbis. Usham disputed the charge.

The case continues.

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