Day: October 4, 2011

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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MP Muthalib re-joins Adhaalath Party

Former Adhaalath Party MP Ibrahim Muthalib, who resigned from the party and joined the Jumhoree Party (JP) until August this year, has re-joined the Adhaalath Party.

In a statement, the party said that Muthalib resigned from the party due to differences in opinions between the party’s then leadership.

‘’Many citizens hope that other MPs in parliament who love the nation and the religion will join Adhaalath Party,’’ the Adhaalath Party’s statement said. Muthalib was the first treasurer of the Adhaalath Party.

Muthalib resigned from JP – led by local business tycoon Gasim Ibrahim – claiming that his dreams of making the JP the country’s third most active party had been “shattered due to lack of cooperation.”

‘’I resigned because I did not want to remain depressed with these thoughts. For now I just want to relax and remain independent for the time being,’’ Muthalib said at the time. Newspaper Haveeru quoted Muthalib as saying that his resignation came following Gasim’s vote in favor of the appointment of Dr Ibrahim Didi for Fisheries Minister and Thalhath Ibrahim for Defense Minister.

Until Muthalib last night joined Adhaalath, the party had no MP representing them.

Today Muthalib told Minivan News that he decided to join Adhaalath because the party was in need of his assistance and ‘’I have always said that I would join Adhaalath when the change I needed to bring to the party was brought. I resigned from Adhaalath Party on November 2011, and although when I was elected to the parliament I was registered in the Adhaalath Party, I was elected as an Independent MP,’’ Muthalib said.

‘’I had to resign from the Adhaalath Party because of some issues I don’t want to talk about right now,’’ he said. ‘’After resigning from the Adhaalath in November, I joined the Jumhoree Party at the request of some persons, and I worked to make the party a strong opposition party. But it did not work out that way so I had to resign from JP.’’

‘’I want to work with the scholars, I think that is the only way we can set this country the right way – by working with the scholars,’’ he added.

The Adhaalath Party recently terminated the coalition agreement made between the government, and asked Islamic Minister Dr Abdul Majeed Abdul Bari and State Islamic Minister Sheikh Hussain Rasheed to resign from their positions.

Dr Bari respected his party’s decision and resigned from the position yesterday, while Sheikh Hussain has said that he will not resign unless the President requests him to do so.

Dr Bari meanwhile withdrew his resignation from the Adhaalath Party’s religious council, of which he was formerly chairman.

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MP Ismail Abdul Hameed appeals Criminal Court ruling

MP Ismail Abdul Hameed, who was recently sentenced to one year and six months banishment after the Criminal Court found him guilty of corruption, has appealed the case in the High Court.

The Prosecutor General pressed corruption charges against Hameed alleging that he had abused his authority as the former Director of Waste Management at the Male’ municipality to financially benefit a Singaporean company named Island Logistics, in a deal to purchase a barge.

According to local media reports that time, Judge Abdulla Didi noted in the verdict that the agreement stipulated the barge was to be delivered within 90 days of signing the agreement, upon which 50 percent of the value was to be paid to Island Logistics.

Although the barge arrived in the Maldives on October 23, 2008, Hameed had however signed a document claiming that the barge was delivered on schedule on April 28, 2008.

The judge ruled that Hameed’s actions were intentional and in violation of the Anti-Corruption Act.

Under article 73(c)(3) of the constitution, MPs found guilty of a criminal offence “and sentenced to a term of more than twelve months” would be stripped of their seat.

Article 78 of the constitution meanwhile states that “whenever there is a vacancy among the members of The People’s Majlis, an election shall be held within sixty days from the date of the vacancy. A by-election shall not be held within six months prior to a general election.”

However, Elections Commissioner Fuad Thaufeeq previously told Minivan News that the commission does not consider the seat in the parliament is vacant, and noted that Hameed had requested the commission to delay the by-elections as he planned to appeal the case.

When Minivan News contacted Hameed for a comment today, he said he was busy.

Meanwhile, Jumhoree Party (JP) Youth Wing leader Moosa Anwar filed a case in the Supreme Court, requesting the court  determine whether the Kaashidhoo seat should be made vacant after the Criminal Court ruling or if it would  be vacant after appeals were exhausted.

The case was first rejected however Anwar resubmitted the same case to the Supreme Court on September 26. No further information about the case has been reported.

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“Democratisation has its costs”: Maldives comes to terms with tax reform

The Maldives is coming to terms with a reformed tax system, following the introduction of a General Goods and Services tax this week.

Finance Minister Ahmed Inaz said the new system, which has raised the eyebrows of businesses, consumers and politicians alike, is a natural consequence of recent political changes and requires everyone’s support to function sufficiently.

“I think anybody could see that after the 2005 democratic reform, costs increased. These costs had to be met by additional revenue, but they weren’t,” he said.

Currently, the Maldives’ has a state deficit of Rf1.3 billion (US$85 million). Since democratisation, the Maldivian government has surpassed other national governments’ employment rates by employing 10 percent of the national work force. One third of government spending goes to state employees, and nearly half of the 2011 budget was spent on salaries and allowances.

The Goods and Services Tax (GST), which became operative on October 2, has raised a 3.5 percent tax on certain items. Contrary to an earlier tax which was paid for at the point of import and effectively invisible to the customer, the GST requires most businesses to charge an additional 3.5 percent directly to the customer at point of sale.

Certain items are tax exempt, a detail which has allegedly made it difficult to implement at stores selling a variety of products.

Inaz is optimistic that new tax reform system will cut costs and improve business operations. He said many businesses are compliant with the new measures, and are trying “their level best to be sure that this happens.”

“Business owners will have to crunch the numbers, and that will show them more about what is happening in their businesses. They will be able to better see how things operate.”

The GST is part of a larger tax reform system described in “a package of policy reforms that will help stabilise and strengthen the Maldives’ economy” agreed to by the Maldives and the International Monetary Fund (IMF) in May.

The policy reforms include raising the Tourism Goods and Services Tax (TGST) from 3.5 percent to 6 percent from January 2012, and to 10 percent in January 2013. Tourism is one of the Maldives’ leading economic contributors.

Inaz stressed that the tax was a step towards self-sufficiency for the Maldives.

“The international community will not give us the money required to balance our deficit, it is us who have to raise that money and that’s everyone’s responsibility. We have to make sure we can stand on our own feet.”

Meanwhile, opposition party Dhivehi Rayyithunge (DRP) has expressed concern over the tax. After supporting its initial pass through Parliament, DRP released a booklet titled “DRP’s response to the government’s economic nuisance package.” The booklet said businesses were not sufficiently prepared for the transition, and requested a six month delay.

Noting “administrative confusion” and the country’s heavy reliance on imports, the DRP also suggested levying a customs duty at the entry point to the country as a more effective means of raising revenue.

“We believe the GST is a regressive expense. The government doesn’t have the infrastructure to support it, implementation of GST means it will have hire a lot of people.”

DRP Spokesperson Ibrahim ‘Mavota’ Shareef said today that the tax system had not been implemented prematurely, but that it would only benefit large businesses while harming smaller ones.

“The government is doing the opposite of what it preaches,” he said. “Our main problem with the bill is that the government has decreased the tax burden on the very rich, especially in the tourism sector. We want to see the current tax system overhauled and replaced with a modern one.”

Shareef said DRP supports other progressive taxes, and was in favor of the recently announced plan to decrease import duties starting in January 2012.

President Mohamed Nasheed yesterday said a policy to reduce import duties would bring prices down starting early next year.

The President’s Office Press Secretary Mohamed Zuhair told Minivan News that the waiving of certain import duties would be significant.

“Once the new tax system is fully operating, all will fall into place. Prices will drop to even lower than originally,” Zuhair said.

A bill to finalise the tax system is currently before the Majlis, and is expected to take another two or three months to be properly processed.

During the President’s tour of retail, grocery, and supermarket stores on October 3, Zuhair said that operations were “running smoothly”.

“The only issue was that many businesses had a shortage of coins. Maldivians have a habit of rounding up to avoid coin transfers, but in a successful economy coins are important. Maldives Inland Revenue Authority (MIRA) has been doing a commendatory job in distributing coins, and the Maldives Monetary Authority (MMA) foresaw the issue and has a distribution system in place,” he said.

When asked about the DRP’s opposition to the GST, Zuhair alleged that the party’s motives were political.

“They made their case to the President, but the President was advised by his advisors and economic experts that a taxation system needed to be implemented,” said Zuhair.

“It is true that the very rich have not been taxed appropriately as per their earnings,” he acknowledged. “Once the tax system is fully in place, things should stabilise.”

Shareef did not accept that there were political motivations behind the DRP’s objections. “It’s an economic and social issue, concerning the distribution of wealth,” he said.

Inaz did not wish to comment on the matter. “This is an economic issue,” he said.

State Minister for Finance Ahmed Assad previously observed that even with the new taxes proposed by the government, the Maldives still had the most generous tax system in the region – even compared with other island nations, and neighbouring countries such as India and Sri Lanka.

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New book analyses Maldives’ curricula

Dr Mustafa Luthfy has published a new book entitled, School Manhajaai Thauleem (Maldives School Curriculum and Education) in Dhivehi. The book was published independently, and released on September 28.

“It took me two years to write, I am very relieved that it has been published,” Luthfy said.

Luthfy has worked in the education sector since 1976, and previously was a student studying education. “I thought I would write what I thought and understood about Maldivian education for the benefit of people who come after me,” he said.

The book addresses curricula in the Maldives since the 1940s, and analyses tensions in its development. Luthfy cautions that the book is not a history, but instead is meant to serve the education sector from a socio-political perspective.

“Education is significant not just to itself, but even to understanding and developing political, societal and global trends,” he said.

Luthfy added that the book has been well receieved as “one of the best books written in Dhivehi.”

Luthfy currently holds the position of Maldives National University Chancellor (MNU) and was formerly Education Minister for the Maldivian government.

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Teachers’ Day tradition provokes financial dispute

Wednesday, October 4 will be celebrated as Teachers’ Day, however reports state that parents are objecting to some schools’ request for a Rf100 (US$6.50) donation towards the festivities.

Deputy Minister of Education Ibrahim Rasheed said that he had not received any complaints regarding the celebrations. Rasheed said Teachers’ Day celebrations were voluntary, and that it was up to the parents to contribute.

He expressly noted that donations were not required by the ministry.

“It’s up to the parents. If the parents organise an activity it’s up to them to decide how they will do it,” said Rasheed.

According to local media, all schools have asked for donations, but the request became an issue when some schools set a fixed amount. One parent allegedly said her child was asked to bring “good” gifts, and that she felt forced to donate to the celebrations because the school was keeping a record of contributors.

Rasheed said it was tradition for students to bring teachers cards and flowers in appreciation, and supposed that the request for donations had been organised by the school board or parent teacher associations (PTAs). He confirmed that no part of the school budget is set aside for Teachers’ Day.

PTAs play a significant role in school decisions. For many parents, education is important; one source indicated that parents have requested improvements beyond the state budget’s scope, and that they may be asked to supply the necessary financing to realise their demands.

The Principal of Ameeniya School, Athiya Naseer, had not heard of complaints at other schools but said state budgets are insufficient. “We can hold extra curricular activities, but depending on the type of activity we may have to fundraise,” she said. “Everyone shares in the fundraising though, parents and students and teachers.”

Teachers are important figures in the community “who are doing their jobs very well,” said Rasheed. However, some consider salaries proportionately low.

“The salaries are very low compared to the cost of living,” said Naseer. “Many teachers tutor on the side.” Naseer could not say if teachers felt pressed to tutor to make ends meet.

Rasheed did not wish to comment on matter.

“The whole world is undergoing a serious economic downturn at the moment,” said Deputy Director General of the Center for Continuing Education (CCE), Adam Sharaaf Umar. “It will certainly affect the education system and other sectors as well. But teachers are optimistic, and always working hard at their jobs.”

Tomorrow’s festivities will start in the morning with students and parents welcoming teachers to schools. The Teaching Excellence Award 2011 will be announced tomorrow evening at Dharubaaruge, an event which President Mohamed Nasheed is expected to attend.

On October 8, CCE will host a teacher conference “to share and contribute practices and exchange views on how to apply new ideas in the classroom,” said Umar.

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Maldives remains “partly free” environment for media: Freedom House

Media freedom has remained steady in the Maldives following significant gains in 2009, according to a report by Freedom House.

The country was found to be a “partly free” environment for media, with the constitution protecting freedom of expression “but also restricting freedom of speech ‘contrary to the tenets of Islam’.”

The report was published prior to the release of new regulations enforcing the Religious Unity Act, which bans media ‘from producing or publicising programs, talking about or disseminating audio ‘that humiliates Allah or his prophets or the holy Quran or the Sunnah of the Prophet (Mohamed) or the Islamic faith’,” imposing a 2-5 year prison sentence.

Freedom House noted that the overall legal framework protecting free expression “remained weak, with many proposed media reform bills still awaiting passage”, however it praised parliament for passing an amendment to the penal code in 2009 decriminalising defamation.

The organisation noted that legislation to transform the state broadcaster, the Maldives National Broadcasting Corporation (MNBC), into the Maldives Broadcasting Corporation, a public broadcaster, “was passed in April 2010, but the government delayed implementing the handover.”

Increased media diversity had improved coverage of major political events, including by the state broadcaster, “though the [MNBC] still suffers from pro-government bias.”

Investigative journalism, Freedom House noted, “remains hampered by the lack of an access to information law and a culture of secrecy at government departments.”

While the formation of the Maldives Media Council (MMC) was “cautiously welcomed”, given the preference of advocacy groups for self-regulation, the elections process was criticised for not being sufficiently transparent, and former members of political parties were nominated as candidates to the Council.”

The MMC is currently facing criticism from the Anti-Corruption Commission (ACC) for the payment of almost a million rufiya in “living allowances” to Council members beyond their stipulated salaries.

On the advocacy side, Freedom House observed that the Maldives Journalist Association (MJA) “regularly made statements regarding media freedom issues and journalists’ rights during the year, accusing the government and political leaders of interference with the private media in a number of cases”, however it noted that “an alternate group, the Maldives National Journalists’ Association (MNJA), was founded in 2010, reportedly in response to the perceived politicisation of the MJA.”

Private print media had expanded and represented a wide variety of viewpoints, the Freedom House report noted, “however some publications are owned by allies of former president Maumoon Abdul Gayoom or other political actors, who exercise considerable control over content. Most newspapers are not profitable and rely on financial backing from businessmen with strong political interests.”

The government had “generally” avoided interfering with internet access, used by approximately 28 percent of the population in 2010, however “the Ministry of Islamic Affairs announced in 2008 that Christian and anti-Islam websites would be blocked, arguing that they could negatively affect belief in Islam, and a number of websites were blocked by the Telecommunication Authority at Ministry’s request during 2009.”

Journalists meanwhile remained subject to “some harassment”, with incidents including an attack in August 2010 on the offices of VTV by “unknown assailants”, “and a police attack on journalists covering a political protest in October.” Verbal attacks included threats against media outlets from Maldives Democratic Party (MDP) MP Reeko Moosa, and repeated death threats against certain bloggers “from Islamist extremists”.

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Government plan to waive import duties, reduce costs

President Mohamed Nasheed has said the prices of goods will drop after the government implements a plan to waive import duties on certain products, starting January 2012.

Yesterday, Nasheed paid visits to several Male’ shops to observe the impact of the Goods and Services Tax (GST), which went into effect on Sunday, October 2.

Several shop owners said they had noticed several difficulties from the start of the GST, but that Maldives Inland Revenue Authority (MIRA) was taking necessary actions to resolve these issues.

Others noted that the majority of businesses had been well prepared for the new tax system.

The tax system was applied to the Maldives as a means of increasing state income, which in turn is expected to support the growth and development of national public services such as social security, public welfare, and health coverage.

Nasheed said a more efficient tax administration system would be established once legal formalities are completed.

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