Day: June 18, 2012

Majlis discusses cuts to MPs salaries and allowances

Proposals have been made in the Majlis’s Finance Committee to reduce the salary of MPs as well as to remove allowances received for committee work.

The proposal comes the day after the Anti Corruption Commission (ACC) announced its intention to investigate the decision to pay the committee an allowance of Rf20,000 (US$1,298) for the month of March – a month in which no committees convened, other than the Finance Committee itself.

Mohamed ‘Colonel’ Nasheed is reported by local media to have been both among the committee members who supported the decision to pay March’s allowance, as well as the progenitor of today’s proposal to reduce salaries and allowances.

Parliamentary activity was curtailed for the month of March after anti-government protesters and MPs blocked the official opening of the Majlis on March 1. The Majlis was officially opened amidst further protests on March 19 before reconvening on April 2.

Kulhudufushi MP Abdul Ghafoor Moosa voted against this decision.

“The administration sent a letter to the committee to make a decision on the payments. The public are not happy about this,” said Moosa.

“Some members of the committee argued that they were prepared to come into the meetings,” he continued.

Moosa said the ultimate decision on MPs pay and allowances would have to be made on the full floor of the house.

The ACC President Hassan Luthfee said that he had received a complaint about the committee allowances decision and was now investigating the matter, adding: “MPs should be more careful. They know about the financial problems in the country. They should be role models.”

Last month, Minister of Finance and Treasury Abdulla Jihad announced his intention to convene a pay review board in order to “harmonise” the pay of government employees in an attempt to reduce the state’s budget deficit.

He also announced his intention to reduce non-wage spending by 15 percent. Haveeru has today announced that the Majlis is cutting it’s budget by Rf25million (US$1.6million) , 11.2 percent of its total spending.

The Finance Committee predicted in May that the year’s deficit was likely to reach Rf9.1 billion (US$590 million), amounting to 27 percent of the country’s GDP.

Today’s proposals suggested reducing the pay of MPs to that of the highest paid civil servants.

The basic rate of pay for MPs is Rf42,500 (US$2,759) per month whilst the highest ranking civil servant receives Rf20500, according to local media reports. This is around the same amount MPs involved in committee work can expect to receive each month on top of their basic salary.

Transparency Maldives’ Aiman Rasheed explained that his organisation had been looking into the issue of MPs expenses since 2010.

Rasheed said that MPs already received a Rf20,000 (US$1,298) per month allowance in phone, travel, and living expenses, even for those MPs who live in the capital Male’.

“However, all MPs are paid the additional 20,000 regardless of actual expenses,” added Rasheed, “We strongly recommend that allowances to MPs must be released based on actual expenditure.”

“The 20k committee allowance is in addition to the basic salary and the living/phone/travel allowance. The justification by the Majlis for 20k is to incentivise MPs to attend committee meetings and to help their constituents,” said Rasheed.

“Some MPs made public statements that they would distribute the money among their constituents and that the money will go towards constituents’ medical bills etc. We at TM think that is plain corruption, abuse of authority and amounts to using state funds for campaigning.”

Regarding the decision to award the allowances for March, Rasheed noted that the Majlis’s regulations stipulate that MPs must attend 75 percent of their committee’s meeting to be eligible for the allowance.

Luthfee echoed these concerns, arguing that changes ought to be made to the way all allowances are distributed.

“In other countries such as the United Kingdom, the MPs travel and then submit expenses after spending,” said Luthfee.

Following a 2011 decision to reject a resolution to cut the controversial committee allowance bill, MP Ahmed Easa told Minivan News that, despite not supporting the allowance, he empathised with the needs many MPs had for additional finance.

”It’s true what they say – MPs have so much to do with their salary each month. People can’t even imagine how many calls a MP receives each day asking for help,” Easa explained.

“Anyone in trouble from any area will run to their MP first. MPs have to lend money to people in need of medication, even for reasons such as people coming to get money to pay the school fees of their children,” he continued.

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EC to investigate claims 2500 MDP members transferred to JP without their knowledge

The Elections Commission (EC) will investigate claims by the Maldivian Democratic Party (MDP) that more than 2500 MDP members were found to have been unknowingly deregistered from the party and registered with government-allied parties – mostly the Jumhoree Party (JP) – without their knowledge.

Elections Commissioner President Fuad Thaufeeq confirmed that an MDP official yesterday met with the EC and made the complaint. The commission has asked the MDP to send all the names and ID card details of the persons unregistered.

‘’After we get the names and ID card details we can check how many forms have been forwarded to the commission under their names, whose fingerprints were on the forms, and from which political party we received the forms,’’ Fuad explained.

He said the MDP has not yet sent the information requested, and that the commission will commence the investigation as soon as the information was received.

‘’If it requires police assistance for the investigation we will ask the police,’’ he added.

MDP Elections Committee Chair Ibrahim Waheed has claimed that more than MDP 2500 have unknowingly been transferred from party to the party of local business tycoon, MP Gasim Ibrahim.

Waheed said the issue was noticed when MDP members who turned out to vote in the MDP internal elections over the weekend complained that their names were not on the list of eligible voters.

According to Waheed, more than 2500 complaints were received over the same issue from the islands as well as from Male’.

When the Elections Committee looked into the matter, it discovered that most of the names were registered with different political parties, most of them with Gasim’s Jumhoree Party, he said.

Waheed said the MDP Membership and Complaints Committee will hold a meeting soon to discuss the issue.

The MDP’s President Dr Ibrahim Didi and Vice President MP Alhan Fahmy were recently voted out of their positions in a near-unanimous no-confidence motion by the party’s National Council. Soon afterwards, the pair joined the JP were immediately promoted to the party’s leadership in parallel positions.

Local media reported that during a press conference last week, Dr Didi accused the MDP of “undemocratic acts” and accused his former party of subverting political freedom.

Internal elections

Two-thirds of the MDP’s 48,181-strong membership base turned out to vote in the party’s single-candidate internal elections, held over the weekend to determine its presidential candidate.

Former President Mohamed Nasheed ran unopposed in the party’s election of its presidential candidate, however the party’s regulations require any candidate to receive at least 10 percent of the party’s vote to secure the nomination.

Following the final count of the 258 ballot boxes, Nasheed recorded 31,798 votes in favour to 269 against his being the party’s presidential candidate.

Chairperson candidate Moosa ‘Reeko’ Manik had 29,044 votes in favour to 2160 against, while Deputy Chairperson candidate Ali Shiyam had 563 in favour to 7 against.

The MDP has maintained calls for early elections following its ousting from power on February 7, with Nasheed resigning during a police and military mutiny under what he subsequently claimed was duress. The party has held regular demonstrations since that time calling for early elections.

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Cabinet approves 13 month extension for resorts under construction

The cabinet  has decided to extend the duration for development of tourist resorts, tourist hotels, training resorts, transit hotels, and city hotels, for an additional 13 months.

According to the President’s Office, the extension will only be granted to the parties who have requested for it and provided that they have completed 50 percent of the work on those facilities.

The decision was made  on Sunday following discussions on a paper submitted by the Ministry of Tourism, Arts and Culture.

Islands and facilities leased for development since 2000 will be eligible for the extension.

Discussions were also made on a paper presented by the Ministry of Economic Development, on amending the Foreign Investment Act.

Members made the decision, for the Ministry of Economic Development to carry out the amendment procedure for the Act currently being implemented in the Maldives. The cabinet also advised the President on constituting a Foreign Investment Advisory Board, to develop and strengthen further foreign investment in the country.

The cabinet also decided on forming a National Council for Environment.

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Interpol Red Notice issued for F-Tech fraud case suspect

Interpol has issued a red notice for Mohamed Abdullah, wanted by Maldives Police in connection to the charges of defrauding the health ministry out of Rf 11.8 million (US$761, 290).

The 41 year-old was identified as the Managing Director of F-Tech Solutions, the company which allegedly doctored invoices and delivery notes and forged signatures to collect payment on medical supplies that have not been received by the health ministry to this day.

According to the Interpol website, Abullah is wanted for “Fraud, Counterfeiting/forgery”.

Auditor General Ibrahim Niyaz requested police investigate the fraud charges on April 12, following a special audit into the medical supply procurement agreement signed with F-Tech solutions in 2010.

Under the agreement, F-Tech Solutions was supposed to supply medical consumables and laboratory equipment worth Rf 12.8 million (US$831,169) but the audit revealed that the company had only supplied Rf 930, 512 (US$60,033) worth of goods.

Meanwhile, auditors found that the company forged signatures on delivery notes and invoices claiming goods had been supplied to the health ministry. Even on the instances goods were delivered, the prices listed for goods were much higher than those pledged in the contract.

“This office notes that F- Tech Solutions forged signatures on some delivery notes and invoices. Furthermore, the health ministry, hospitals and health centres have not received any of the goods said to have been delivered on the delivery notes. While the health ministry’s supply department has received goods noted on one invoice, the prices noted on the invoice are extraordinarily higher than prices pledged in the contract document,” the report said.

According to the Auditor General, tender evaluation board awarded the contract to F- Tech Solutions even though the company had no prior experience in supplying medical equipment, had lied about previously supplying medical equipment to the health ministry in bidding documents, and had no import licenses or permits from the Maldives Food and Drug Authority to distribute medical supplies.

The contract was also signed against the  advice of Anti Corruption Commission’s (ACC), which at the time had raised concerns over F-Tech’s lack of necessary licenses and permits.

The tender evaluation board awarded the contract to F- Tech Solutions even though the company had no prior experience in supplying medical equipment, had lied about previously supplying medical equipment to the health ministry in bidding documents, and had no import licenses or permits from the Maldives Food and Drug Authority to distribute medical supplies, the report noted.

According to the report, the State Minister of Finance at the time opened a Local Letter of Credit facility (LC) worth the total contract amount for F-Tech Solutions at the State Bank of India (SBI). The Auditor General said the move contravened the Maldives Finance Act which states only 15 percent of total contract value can be paid out in advance.

Further, although the contract was made between F-Tech and the health ministry, the state minister for finance authorised finance ministry staff instead of health ministry staff to sign delivery notes, the report said.

Niyaz said the state minister’s decision to establish a LC facility “opened up the opportunity” for payments to be made for unsupplied goods and “weakened the state’s internal control mechanisms.”

A Deputy Director General at the Ministry of Finance and Treasury authorised payment to F-Tech without confirming receipt of goods with the health ministry, even though SBI had noted discrepancies between the invoices and delivery notes. Nine of the 21 invoices were issued a month before the date printed on delivery notes, the report said.

Moreover, the Health Ministry did not annul the contract with F- Tech Solutions as per the agreement even though the company had failed to supply medical equipment for the period October – December 2011.

Instead, the ministry had procured the consumables itself and told F- Tech the amount would be deducted from the total payment to the company. However, no such deduction took place.

Niyaz recommends filing fraud charges against F- Tech Solutions, and filing negligence charges against the Tender Evaluation Board, and relevant Health Ministry and Finance Ministry officials. The report does not name the accused.

However, according to local media, F–Tech has six directors: MD Mohamed Abdulla, Director of Operations Abdulla Rashid; Director of Administrations Abdulla Shafeeg; Director of Sales and Marketing Ahuyad Hisaan; Director of Logistics Rilwan Shareef and Director of Human Resources Fathimath Shiuna.

Of the six, Shareef and Shiuna are prominent activists of the former ruling Maldivian Democratic Party (MDP) activists.

Police Sub-Inpector Hassan Haneef today confirmed that an Interpol notice was issued for Abdullah after attempts made by local police to find him were unsuccessful.

When asked if any one has been arrested in relation to the case Haneef responded:  “We have questioned some people regarding this case. But no arrests have been made so far.”

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Parliament cancelled after MDP MPs protest non-inclusion of police brutality debate

Today’s sitting of parliament was cancelled after MPs of the Maldivian Democratic Party (MDP) vociferously protested the non-inclusion in the agenda of a motion without notice to debate police brutality.

Shortly after the sitting began, Deputy Speaker Ahmed Nazim – presiding in the absence of Speaker Abdulla Shahid – declared that the counselor-general had advised, in reference to section 140(c) of the parliamentary rules of procedure, that MDP’s motion “by its nature was not one that must be debated after setting aside the Majlis’ work.”

Under the rules of procedure, acceptance of a motion without notice opens the parliament floor for a one-hour debate.

Counselor-General Fathmath Filza later posted a message on Facebook explaining  that, “The primary object of an urgent motion is to draw the attention of the Majlis to a recent matter of public importance having serious consequences and in regard to which a motion with proper notice will be too late.

“The Standing Orders of the Majlis require the matter proposed to be of such a character that something very grave which affects the whole country and its security has happened, and the Majlis is required to pay its attention immediately by interrupting its normal business. It is therefore, an extraordinary procedure which, if admitted leads to setting aside the normal business of the House for discussing a definite matter of urgent public importance.”

Following Nazim’s announcement, MDP MPs raised consecutive points of order objecting to the non-inclusion in the agenda. Nazim however ruled that points of order could not be raised on the issue, causing an uproar and forcing the Deputy Speaker to adjourn the sitting until 11:00am.

In his point of order, MDP MP Mohamed Riyaz argued that the issues raised in the motion were of urgent concern, as police in uniform were entering private residences to rob expatriates, and police as well as the Human Rights Commission of Maldives (HRCM) had not investigated police brutality against MPs, councillors and civilians on February 7 and 8.

Soon after the sitting resumed, Nazim invoked his authority as the Majlis chair to evict MDP MPs Mohamed Rasheed and Ibrahim Rasheed from the chamber after both MPs continued angrily to raise clamorous points of order.

Nazim adjourned the sitting again at 12:00pm after the MDP MPs refused to leave the chamber.

The Deputy Speaker eventually announced the cancellation of today’s sitting at 1:00pm after only nine MPs were in attendance despite ringing the quorum bell for five minutes. Last week’s sittings were also adjourned numerous times over loss of quorum.

“I have to say with much regret that today’s sitting is over without getting any work done,” Nazim said, adding that “obstruction” of parliament sittings by one of the main parties was “very regrettable.”

Motion without notice

Following the second adjournment today, MDP MP Eva Abdulla tweeted: “Majlis refuses debate on MPS [Maldives Police Service] brutality but starts Freedom of Assembly Bill which ironically defines how much force police can use in a gathering.”

The motion without notice, submitted by MP Imthiyaz Fahmy ‘Inthi’, states that police brutality against civilians since the contentious transfer of power on February 7 had become “systematic.”

Moreover, the motion referred to two police officers in uniform along with a group of plain-clothed police and army officers “intimidating and robbing” expatriates on June 8.

The motion noted that police officers in uniform forcibly entered the premises of the expatriate workers to rob them of their cash and mobile phones, adding that a member of the police investigation team and a Special Operations (S.O) officer were implicated in the robbery.

Inthi’s motion also expressed concern with the arrest of senior police officers on charges of contributing to a report released by two prominent MDP members on the alleged “coup d’etat” that forced the resignation of President Mohamed Nasheed “under duress.”

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Accounting for natural wealth gains world traction: Businessweek

“Putting a price on a natural bounty long taken for granted as free may sound impossible, even ridiculous. But after three decades on the fringes of serious policymaking, the idea is gaining traction, from the vividly clear waters of the Maldives to the sober, suited reaches of the World Bank,” writes Katy Daigle for Businessweek.

“As traditional measures of economic progress like GDP are criticized for ignoring downsides including pollution or diminishment of resources such as fresh water or fossil fuels, there has been an increased urgency to arguments for a more balanced and accurate reckoning of costs.

That is particularly so as fast-developing nations such as India and China jostle with rich nations for access to those resources and insist on their own right to pollute on a path toward growth.

Proponents of so-called “green accounting” — who will gather in Rio de Janeiro this week for the Rio Earth Summit — hope that putting dollar values on resources will slam the brakes on unfettered development. A mentality of growth at any cost is already blamed for disasters like the chronic floods that hit deforested Haiti or the raging sand storms that have swept regions of China, worsening desertification.

Environmental economists argue that redefining nature in stark monetary terms would offer better information for making economic and development decisions.

That, they say, would make governments and corporations less likely to jeopardize future stocks of natural assets or environmental systems that mostly unseen make the planet habitable, from forests filtering water to the frogs keeping swarming insects in check.

If the value of an asset like a machine is reduced as it wears out, proponents say, the same accounting principle should apply to a dwindling natural resource.

‘Environmental arguments come from the heart. But in today’s world based on economics it’s hard for arguments of the heart to win,’ said Pavan Sukhdev, a former banker now leading an ongoing project that was proposed by the Group of Eight industrialized nations to study monetary values for the environment.

That study, started in 2007, has estimated the world economy suffers roughly $2.5 trillion to $4 trillion in losses every year due to environmental degradation. That’s up to 7 percent of global GDP.

‘We need to understand what we’re losing in order to save it,’ Sukhdev said. ‘You cannot manage what you do not measure.’

Using the same accounting principles, some countries are already changing policy.
The Maldives recently banned fishing gray reef sharks after working out that each was worth $3,300 a year in tourism revenue, versus $32 paid per catch. Ugandans spared a Kampala wetland from agricultural development after calculating it would cost $2 million a year to run a sewage treatment facility — the same job the swamp does for free.

But environmental accounting still faces many detractors and obstacles. Among them is resistance from governments who might lack the resources and expertise to publish a “greened” set of national accounts alongside those measuring economic growth.

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STO to purchase three resort islands to generate dollars

State Trading Organisation (STO) has announced it will venture into the Maldives tourism industry in order to increase its access to foreign currency.

The STO is the Maldives’ state-owned importer, and is the primary supplier of general goods, fuel and pharmaceuticals to the Maldives. It also supplies aviation fuel to Ibrahim Nasir International Airport (INIA).

STO Managing Director Shahid Ali said the company needed to purchase “at least three resorts and one hotel”, to meet its demand for foreign currency at a time the country was facing a ongoing dollar shortage, according to newspaper Haveeru.

The Maldives grapples with a foreign currency deficit due to a heavy import-export imbalance. Goods from overseas must be purchased with foreign currency, but the Maldives has little ability to earn this outside the resort industry.

The industry typically pays salaries in local currency, while most of the its banking is conducted outside the country in financial hubs such as Singapore. The properties also charge directly in US dollars bypassing the rufiya altogether, a practice which is technically against the country’s monetary legislation but is unenforced by the central bank. As a result, the wider Maldives economy sees little of the dollars that tourists bring into the country, and importers must rely on the fluctuating blackmarket for rufiya-dollar transactions.

“We are trying to a find a way to earn the foreign currency we need without relying on another party for it,” Shahid Ali told Haveeru. “Venturing into the tourism industry is the way to achieve that. We need to own at least three resorts for this,” he said.

The STO board is currently reviewing resort islands for purchase, and a decision is yet to be made on which islands will be bought.

STO Spokesperson Ismail Sadiq had not returned calls at time of press.

The company is currently building a 5-star hotel on  Hulhumale under a contract with USA-based multinational travel company, Carlson Group. The hotel project started in October 2011, although the contract was signed between STO and Carlson in 2008. Shahid said at the time that the delay was due to financial constraints.

The STO was initially formed in 1946 as a fully state-funded business, in the name of Athireemaafannu Trading Agency (ATA), with the task of purchasing and importing essential food items in bulk to be distributed nationally via local traders and their own retail outlets. It was later expanded and rebranded as the State Trading Organisation.

The STO is not the first government entity to venture into the tourism industry. In February 2010 the Maldives Tourism Development Corporation (MTDC) – another public company investing in the tourism industry – paid US$3.5 million to end a long-running court dispute with former management of Herathera, Yacht Tours, after the company stopped paying rent and claimed the MTDC had failed to fulfil a contractual obligation to build a channel between the resort and the adjoining island of Hulhudhoo.

MTDC agreed to pay Yacht Tours the money to end the dispute due to spiraling costs: at one stage, 600 staff had been employed to look after 28 guests.

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IFC delegation addresses government concerns over GMR airport deal

A delegation from the International Finance Corporation (IFC) – a member of the World Bank group and the largest global institution focused on private sector in developing countries – met with senior government officials last week to address concerns over the concession agreement with Indian infrastructure giant GMR to develop the Ibrahim Nasir International Airport (INIA).

Local daily Haveeru reported that the IFC delegation comprised of the country manager to the Maldives, the technical team of the airport development project evaluation committee and its legal team. The delegation reportedly provided information requested by the government regarding the evaluation of the agreement with GMR.

“The government’s main concern is the deduction of the fuel concession fee which includes airport development charge and insurance surcharge by GMR, payable to Maldives Airports Company Limited (MACL). In addition, the government also raises its concern over the restricted opportunities for Maldivians in the development plan of the airport,” the newspaper reported.

According to IFC, the key objectives of the institution in its role as lead advisor to the government in the structuring and awarding of the 25-year concession agreement were:

  • increase the airport’s capacity to handle long-term traffic growth while ensuring that the airport met international technical standards;
  • position the airport as a world-class facility catering to highend tourism;
  • improve operations and service quality standards in line with international best practices;
  • maximize the value of the project for the government in terms of proceeds and quality.
  • implement a successful public-private partnership which could serve as model for other infrastructure projects.

“The concession was awarded to a consortium of GMR Infrastructure Limited (GMR, India) and Malaysia Airports Holdings Berhad (MAHB, Malaysia). The consortium will pay $78 million in upfront fees and offered a percentage of shared revenues that represents over $1 billion in fiscal benefits for the government over the length of the concession, calculated on a net present value (NPV) basis. The proposed investment of $400 million represents nearly 40 percent of the country’s gross domestic product (GDP),” reads an IFC document on the airport deal.

“The advisory work was supported by AusAid (Australia), the Ministry of Foreign Affairs of the Netherlands, and DevCo. DevCo is a multi-donor program affiliated with the Private Infrastructure Development Group and funded by the UK’s Department for International Development, the Ministry of Foreign Affairs of the Netherlands, the Swedish International Development Agency, and the Austrian Development Agency.”

On the bidding process, which was organised by the IFC and “evaluated based on the payment of an upfront fee as well as annual concession fees as a percentage of gross revenues to the government”, the document explained that, “Each bidder was required to demonstrate that it had the requisite experience in developing, designing, constructing, operating, and financing airports of a similar size.

“The technical solutions proposed by the bidders were also expected to consider the specific conditions on Hulhulé Island,  including its physical and environmental constraints, and the coordination required between conventional aviation activities, seaplanes, and motor boats.

“The cornerstone of the project was the construction of a new passenger terminal expected to meet LEED silver criteria and to be carbonneutral—i.e., to minimize energy consumption and carbon emissions through the use of energy-efficiency and renewable-energy technologies, and minimize water consumption. The bidders were also asked to make specific, predefined improvements to the existing airport infrastructure, and to manage all core airport services, including the provision of fuel—a historically established role at Malé airport.”

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