Day: June 9, 2013

President Waheed ignored advice on GMR termination, PPM alleges

The Progressive Party of Maldives (PPM) has accused President Dr Mohamed Waheed of ignoring the advice of his coalition government by abruptly terminating the US$511 million airport development contract with Indian infrastructure group GMR last year.

PPM MP Ahmed Nihan said that while the PPM believed terminating the GMR contract had been the right decision, President Waheed had nonetheless personally taken an executive decision to cancel the agreement without listening to the party’s advice in seeking a compromise with the company and the Indian government.

However, the PPM’s coalition partners today accused the party of making “contradictory statements” regarding the decision to terminate GMR’s concession agreement, accusing its senior leadership of trying to terminate the deal at the time without discussion or following due process.

The allegations against President Waheed surfaced following the visit to India last week by former President and PPM founder, Maumoon Abdul Gayoom, who pledged his party would seek to restore relations with India damaged by the government’s summary eviction of the GMR.

While Gayoom ultimately blamed former President Mohamed Nasheed for not obtaining parliamentary approval and “consulting all political parties” before signing the deal with the GMR-Malaysian Airports consortium in 2010, he was also critical of the present administration’s handling of the termination.

“Had Nasheed consulted all political parties, the public would not have formed the impression that corruption had taken place. Then we told the next President Mr Waheed that he should hold discussions with the GMR Group and the Indian government to arrive at an acceptable solution, after which the government was free to act on its own,” he said. “Unfortunately, this was not done and suddenly there was this unhappy ending,” Gayoom was reported as saying in the Hindu.

“Better” handling

MP Nihan said following a press conference held by the PPM in Male’ today that the party continued to believe the decision to terminate GMR’s concession agreement was in the best interest of the country.

However, amidst concerns about the subsequent negative impacts on bilateral relations from cancelling the deal, he stressed that the president could have handled the matter “better” in order to protect the relationship between the Maldives and India.

“We believe that the room was there to correct any negative relations with India,” Nihan claimed.

“This could have been much easier and perhaps a new approach could have been found to cancel the GMR contract,” he added.

Nihan said that as well as the GMR contract, President Waheed had on a number of occasions sought to take advantage of his position by making executive decisions against the wishes of his government coalition, all while trying to shift blame away from himself.

“We have seen [President Waheed] try to spin all good developments as being the result of his work, while anything that has gone wrong [in the government] is the PPM’s fault,” he said.

Following a PPM press conference today, Nihan added that the media has been shown two different letters sent from the party’s council to the government prior to the termination of the agreement last November that called to find a solution through dialogue.

Nihan also reiterated Gayoom’s comments that the manner in which the contract was not a “happy ending” in terms of its impact on bilateral relations with India.

“We are of the view that the agreement was only to be cancelled through due process of the law,” he said.

Nihan claimed that the contract dispute had also further exacerbated concerns held by the Indian government about treatment of Indian nationals in the country. He said this had in turn created difficulties for Maldivians in obtaining visas to travel to India for medical treatment.

Considering former President Gayoom’s 30 years spent in office, Nihan praised his efforts to try and strengthen bilateral relations with India.

The government’s sudden eviction of the Indian investor did not appear on a list of 11 grievances handed to all senior Maldivian reporters by the Indian High Commission in January.  The list instead included concerns such as discrimination against Indian expatriates and the confiscation of passports by Maldivian employers.

Tension

The argument over responsibility for the GMR contract termination has comes amidst reports of increased tension within the present coalition government, with PPM presidential candidate Abdullah Yameen last month criticising President Waheed over his alleged use of state funds for campaigning.

The PPM has nonetheless pledged to continue supporting President Waheed’s government up until September’s election, despite concerns about the decision to dismiss former Home Minister Dr Mohamed Jameel Ahmed after he decided to stand as MP Yameen’s running mate.

DRP response

The PPM’s recent criticism of President Waheed’s handling of the GMR dispute was today slammed as being “contradictory” by government coalition partner the Dhivehi Rayyithunge Party (DRP).

The party added that its members had previously come under heavy criticism from the PPM for advocating at the time that any termination of the GMR airport deal should be made via the due process of the law.

DRP Parliamentary Group Leader Dr Abdulla Mausoom told Minivan News that it was in fact senior figures in the PPM that were  among the most vocal supporters for terminating the GMR agreement.

“It is ironic that we are hearing these statements from the PPM, whose leader has been witnessed supporting rallies demanding the cancellation of the [GMR] agreement,” he said.

Dr Mausoom alleged that he had also been informed from “a reliable political source” present during government consultations last year over whether to terminate the GMR agreement that it had been PPM presidential candidate Yameen who personally advocated cancelling the deal without a need for discussion.

“Either there is no harmony within the [PPM], or this is all political talk to try and gain an advantage. Either was it is very irresponsible,” he said of the PPM’s recent comments about terminating the GMR concession agreement.

Mausoom alleged that contrary to the PPM’s claims, it had been the DRP which had advocated finding a legal means of terminating the GMR agreement at at time when fellow government-aligned parties had taken to the streets holding rallies demanding the airport be “reclaimed”.

Despite appeals by GMR that it was acting as a caretaker for running and improving Ibrahim Nasir International Airport (INIA), which would remain Maldivian-owned, efforts to cancel the concession agreement – which was vetted by the World Bank’s International Finance Corporation (IFC) – intensified up to November.

On November 13, just ahead of the contract termination, a seaborne armada of about 15 dhonis carrying flags and banners circled the airport seeking to increase pressure on the government to “reclaim” the site from GMR.

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Cancelled agreement to develop IGMH cost US$150,000, reveals audit

The termination of an agreement between the Ministry of Health and Family with Indian company Apollo Hospitals Enterprises to manage and develop the Indira Gandhi Memorial Hospital (IGMH) cost the government US$150,000, the Ministry of Finance and Treasury’s audit report for 2010 has revealed.

The audit report (Dhivehi) made public on Thursday (June 6) flagged an advance payment of US$ 150,000 from the finance ministry’s special budget to Apollo Hospitals as 20 percent of a transition management fee under the “management and development agreement” (MDA) signed on January 23, 2010.

Auditor General Niyaz Ibrahim contended that the payment was made by the finance ministry in violation of budgetary rules and accounting principles, adding that expenses of another office or institution should not be included in the finance ministry’s financial statement.

Moreover, the privatisation of the government hospital was not overseen by the privatisation committee as stipulated in public finance regulations amended in late 2009, the audit report noted.

The secretariat of the privatisation committee, which functioned under the Ministry of Economic Development, informed auditors that interested parties were invited to submit detailed proposals for developing IGMH in a public-private partnership deal in January 2009.

However, none of the detailed bids met the criteria set by the health ministry and the privatisation project was scrapped.

Following a visit by then-President Mohamed Nasheed to India, Health Minister Dr Aminath Jameel told the press on January 25, 2010 that Apollo was awarded the project because none of the bidders fit the criteria.

Apollo was chosen following consultation with the Indian government and based on legal advice, she added.

However, in August 2010, the Male’ Health Services Corporation – which operated IGMH – advised the health ministry against proceeding with the privatisation deal as Apollo’s proposal was not financially feasible for the government-owned health corporation.

On September 30, 2010, the health ministry informed Apollo that the government has decided to scrap the project since the necessary financial capital had not been arranged.

The audit report also noted that a transition management agreement and an operation management agreement that was required under the MDA was not signed in the stipulated 180-day period.

“Therefore, the US$ 150,000 paid to Apollo Hospitals under the MoU [Memorandum of Understanding] signed with IGMH in 2010 was a waste of funds with no benefit to the state,” the audit report stated.

It added that the loss was incurred as a result of “inadequate planning” before hastily signing the MoU without obtaining legal advice, considering the financial burden on the state and determining a source of capital.

The Auditor General recommended asking the Anti-Corruption Commission (ACC) to determine whether any state official abused their authority in awarding the project to Apollo Hospitals without a bidding process.

Other cases

Among eight other cases highlighted in the report where expenses were made ostensibly in violation of public finance law, the audit revealed that in 2007 the government incurred a loss of MVR 30.8 million (US$1.9 million) after paying for 150,000 copies of the Quran Dhivehi translation with numerous errors.

The audit report noted that the project was awarded to Novelty Printers without a bidding process through the tender evaluation board.

Moreover, an advance payment of 85 percent of the contracted amount was made to Novelty Printers in violation of existing regulations, the audit discovered.

In June 2010, the Fiqh Academy decided to destroy the copies printed in 2007 as the errors could not be easily corrected. The decision was made following a year-long review by scholars of the academy.

The audit discovered that the errors in the final version were not present in the proofed copy approved by the President’s Office in 2007 – during the final years of former President Maumoon Abdul Gayoom’s reign – suggesting that Novelty was responsible for the errors.

Novelty Printers wrote to the President’s Office in November 2008 apologising for the printing errors, which they explained occurred due to a problem in the computer file used to make the printing plates.

The audit also discovered that Novelty was paid the remaining 15 percent of the contracted amount in May 2010 after a state minister at the finance ministry approved the payment.

The state minister sent a memo to the budget section falsely claiming that the government had received all 150,000 copies, the audit report noted.

The Auditor General recommended that the ACC should investigate the culpable official for alleged corruption and that the state should either recover the MVR 30 million paid to Novelty or demand 150,000 copies without errors.

The audit report also noted that the government was ordered by the Civil Court in January 2010 to pay US$119,616 as compensation for a former deputy general manager of the Maldives National Shipping Line (MNSL) for unlawful termination in 2002.

The Auditor General recommended legal action against the government officials responsible for incurring the financial loss by unlawfully sacking the MNSL deputy manager in 2002.

The audit further revealed that in 2009 and 2010 the finance ministry paid US$ 4 million to two American companies under a “settlement agreement” while arbitration proceedings were ongoing in Singapore.

In 2006, a consortium formed by the International Medical Group and Sirius International Insurance Corporation was awarded a contract to provide health insurance for government employees.

The companies sought arbitration in Singapore following a contract dispute with the now-defunct Ministry of Higher Education, Employment and Social Security. However, the US$4 million settlement was reached out of arbitration in May 2009 by the new government that took office in November 2008.

The settlement was paid out of the finance ministry’s special budget in 2009 and 2010.

The Auditor General recommended “a thorough investigation” to recover the financial loss incurred by the government as a result of the contract.

The audit report also contended that the finance ministry had not undertaken “adequate efforts” to recover MVR 51.4 million (US$3.3 million) owed to the government as loan repayments as of December 2010.

The loans worth a total of MVR 69.4 million (US$4.5 million) were provided to select individuals by the President’s Office from 1992 to 2006 under special privileges afforded to then-President Gayoom.

The loans were given with a six percent interest rate to be paid back within two to five years, the report found, noting that the repayment period would have lapsed in 2011 for the most recent loans.

However, in a letter sent to the finance ministry on November 6, 2008 – five days before Gayoom left office – the repayment period was extended to five years.

As the loans were given to senior officials of the outgoing government, the audit report contended that the decision to extend the repayment period amounted to corruption.

The Auditor General therefore asked for an investigation by the ACC into the extension and recommended that the finance ministry file court cases to recover the unpaid amounts.

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Health Trust Fund fundraising events raise over MVR 5.5 million (US$357,142)

Following a week of fundraising events the Health Ministry has raised over 5.5 million MVR (US$357,142) for the Health Trust Fund established in late April, falling short of the MVR 270 million (US$ 17,532,450) needed for health sector services.

The Health Trust Fund was established 20 November 2012 under Ministry of Finance and Treasury regulations and inaugurated on April 29, 2013.

The only way the Health Trust Fund can be maintained is through donations of sufficient assets and in this regard government and private sector contributions are very important, Minister of Health Dr Ahmed Jamsheed recently told local media.

He explained that the health sector requires an additional MVR 270 million (US$ 17,532,450), which requires public contributions and cooperation.

Previously health sector services were “covered by the people”, however following the start of the Aasandha universal health insurance scheme on 1 January 2012 the government of Maldives needed a “huge amount of finance” to cover expenses, said Jamsheed.

Therefore, the Health Ministry organised a series of fundraising events to “commence activities to raise funds, not to gather all the funds need to cover all health sector services,” he added.

“We want health services to be sustainable by putting an end to service disruptions due to machinery breakdowns as well as provide a systematic way for people to give in-kind donations,” Health Ministry Director and fundraising media team member Thasleema Usman told Minivan News yesterday (June 8).

“There has always been a budget shortfall at the Health Ministry, there has never been enough money,” Usman said.

“We wanted to try and do something for the Maldivian people, additionally there are also people who want to contribute [to the fund] for the benefit of the public,” she added.

Usman explained that the various fundraising events were organised as a start for the trust fund and to raise awareness among the public.

“We didn’t want this to be a ‘once off’ thing,” she said.

“Although the total amount of funds raised are still being tallied, as of this afternoon (June 9), the total reported was MVR 5.5 million (US$357,142), with over MVR 2 million (USD$129,870) in cash donations and more than MVR 3 million (US$194,805) from in kind contributions,” Maldives Food and Drug Authority (MFDA) Senior Scientific Officer and fundraising media team member Mariyam Shabeena told Minivan News today (June 9).

Budgetary needs

The health sector budgeted MVR 2.2 billion (US$142,857,000) for 2013, however around MVR 1.1 billion  US$71,428,500) or 50 percent of the total budget is allocated for the National Social Protection Agency (NSPA), according to Usman.

She said that over MVR 5 million is needed for social safety net subsidy programs, such as single parent’s allowance, foster parent’s allowance, disability registration and benefit and electricity subsidies, which fall under NSPA.

NSPA is also responsible for managing the national social health insurance scheme, a public-private partnership with Allied Insurance.

“Aasandha requires 1.13 billion MVR (US$73,376,550) to provide actual health care,” Usman said.

“An additional MVR 500 million (US$32,467,500) is required for Indira Gandhi Memorial Hospital (IGMH) operations and the Health Ministry budget also includes institutions, such as the Maldives Food and Drug Authority (MFDA), National Drug Agency (NDA), etc,” she continued.

Usman explained that the health trust fund will be transparent, with legal mechanisms to manage the money.

“The Health Ministry can only have a sustainable trust fund if funds are raised legally, by abiding with Finance Ministry regulations,” she said.

“The fund has a very well written policy that explains how the money will be used and what has been used,” Usman continued.

“A nine member committee chaired by the Health Minister will oversee the fund, which has a grading system to determine where funds are need most.”

Members of the public making contributions can earmark their donations for a particular island or association, but the trust fund committee needs to know what is being earmarked so contributions are not wasted, Usman added.

Events

“We have received a lot of support from the media, they have been a very, very big help,” said Usman.

A one hour telethon pre-show was broadcast nationwide from June 1 – 7 on four TV stations – MBC, VTV, DhiTV, Raajje TV – and three radio stations – MBC, VTV, DhiFM to raise awareness about the fundraising events.

“The broadcast reports showed where we are, the assistance required, and the grand realities of how the Health Ministry spends their budget,” Usman explained.

The actual telethon was held Saturday ( June 8 ) from 6:00am to midnight. It was kicked off with a sponsored walk along one of Male’s main thoroughfares.

Additionally, two charity football matches were held in Male’s National Stadium Friday (June 7), with Maldivian media presenters facing off against film stars.

The film star women’s team was victorious, winning 4 – 0 , while the men’s media team won 3-0 after dominating overtime penalty kicks.

Proceeds from ticket sales and t-shirt purchases also contributed to the Health Ministry fund.

Furthermore, a Children’s Evening fundraising event was also held at Male’s Children’s Park (Kudakudinge Bageecha).

Donation boxes were also placed at ferry terminals in Male’, as well as IGMH, regional and atoll hospitals.

“Ultimately these events were very successful because we were able to raise so much money,” said Usman.

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President Waheed pledges housing policy as part of election campaign

President Mohamed Waheed Hassan has pledged to establish a housing policy for the people of Male’ as part of his bid to secure election in the upcoming presidential elections.

President Waheed assumed power after the sudden resignation of his predecessor, former President Mohamed Nasheed on February 7, 2012, following a mutiny by police and the Maldives National Defense Force (MNDF).

Speaking during a rally held by his own party Gaumee Iththihaadh Party (GIP) on Saturday night, President Waheed claimed that it was his hope to provide separate housing for every Maldivian.

A website was also launched in collaboration with the GIP and a local NGO, Magey Male’ Foundation, to brief the public about congestion in Male’.

Social issues

President Waheed during the rally claimed that one of the major reasons contributing to increased criminal activities, drug abuse and divorce rates was the lack of housing available within the country to build a family.

Waheed noted that there were approximately 80,000 residents in Male’ including those who had migrated to the capital for various purposes, while population of the city stood at 150,000 – half of whom do not have their own housing.

“This is not something we can delay. Therefore, the government has planned to speed up the land reclamation from Hulhumale and I would like to inform on this occasion that the government has begun evaluating bids proposed by parties who expressed interests in carrying out the project. The result would mean Hulhumale’ will in the future be twice the size it is today,” President Waheed said.

Waheed also said that the capital Male’ belonged to all the people of the country and therefore services provided in the capital should have the capacity to provide these services all people.

He also said that projects seeking to provide fundamental needs of the people should not be fashioned around “the problems faced yesterday”, but rather address the issues that would be faced in the future.

“As these are the circumstances we are facing, I intend to form a committee consisting of technocrats and experts in the field to see how the problems faced by the capital Male’ can be addressed and resolved. At the same time, within our broad coalition, we will work on policies that would better the current situation of Male’,” he said.

Situation on the islands

Waheed highlighted that people from islands are still unable to get basic services and conceded that his government was unable to take adequate measures to develop these islands.

“[The lack of basic services] was significantly noticed during the 2004 tsunami crisis. The whole world has witnessed the difficulties endured by the people,” he said.

Furthermore, Waheed said that the ratification of the 2008 constitution meant that people who were in charge of the country were forced to address the issues faced by the people instead of consolidating power. It also forced the speeding up of infrastructure developments such as harbours, airports and sewerage systems, President Waheed said.

The solution to the problems, the President said, was to developing well populated islands throughout the country.

“Our hope is to build more housing facilities on such islands and provide basic services such as electricity, water and sewerage systems and let the population in those islands grow further.  I hope that land reclamation on such islands will begin soon,” he said.

“AT this critical time, political parties uniting with one another for the sake of the country is similar to that of two neighbours teaming up to address big issues. Therefore, unity and cooperation do not have a set time or a set venue to take place and neither do they belong to a separate system,” he added.

Waheed during his speech also claimed that he was a person who considered advice, rather than taking matters into his own hands, and said he would therefore only make important decisions after discussing them with necessary stakeholders.

Party reinforcements

During the rally, two members of parliament, former Progressive Party of Maldives (PPM) MP Ahmed Shareef and Independent MP Ahmed ‘Kurendhoo’ Moosa, officially announced they would be joining GIP.

Male City Council member and former Male Mayor ‘Sarangu’ Adam Manik also announced his defection from the MDP to GIP. Along with Manik, former PPM member and former MP Jaufar ‘Jausa Jaufar’ Easa Adam joined the party.

The GIP spokesperson’s phone was switched off at time of press.

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Eight new seats to be added to parliament for next general election: Elections Commission

Elections Commission (EC) President Fuad Thaufeeg has said parliament will be increased by an additional eight constituencies for the next election.

As a result, the country’s 18th parliament elected in 2014 will have 85 parliament members.

The Maldives currently has a unicameral parliament consisting of 77 members who were elected in May 2009, replacing the previous 50 member parliament following the ratification of the new constitution in August 2008.

In an interview given to local media outlet Sun Online, Thaufeeg said that based on population statisticss received by the commission, the capital Male’ and seven other atolls will have new seats in parliament.

He also said the commission is currently working on drawing up the new constituencies and completing necessary documents which will then be submitted to parliament for endorsement.

The new parliament composition will include an additional seat for Haa Dhaal Atoll, Noonu Atoll, Alif Dhaal atoll, Thaa Atoll, Gaaf Dhaal Atoll and Addu City, while Male’ City will have two new seats.

Thaufeeg stated that the current number of seats decided by the elections will not be changed, and the figure until the election will remain as 85.

The elections chief also said that the constituencies are currently complied based on geographic location and population density.

However, even though the total number of seats to be elected will remain at 85, Thaufeeg said that there may be alterations brought in as to how the commission would draw the constituencies.

“The commission will consult with leaders of political parties and people of the atolls. The decision will be final after the parliament endorses the changes,” Thaufeeg said.

The Elections Commission is meanwhile facilitating the presidential elections scheduled to take place on September 7.

The commission has previously said that approximately 240,302 will be eligible to cast their vote in the presidential elections – 31,008 more than the number of eligible voters in the 2008 presidential elections (209,294).

The commission will formally declare the start of campaign season in July. However all major political parties including the opposition Maldivian Democratic Party (MDP), and government-aligned parties such as the Progressive Party of Maldives (PPM), Jumhoree Party (JP), Dhivehi Rayyithunge Party (DRP) and current President Mohamed Waheed Hassan’s Gaumee Ithiaad Party (GIP) have already begun their presidential campaigns.

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Police find more beer cans near Villimale’

Residents of Villimale have alerted police after 52 cans of beer were found washed up on the island, following an operation to recover some 19,200 cans that fell into the sea from a dhoni travelling to Hulhule’ from Male’’s commercial port.

The police were called early on Friday morning by a group of people on Villimale’ after they found the cans near the boat yard on the island.

The Maldives Customs Department recently issued a statement claiming the beer cans found floating near Male’ were being transferred to a bonded warehouse in Hulhule’ from Male’, but said the dhoni carrying the beer cans lost balance and 800 cases fell into the sea.

Customs said the beer cans were a shipment imported to the Maldives for resort business and had cleared the customs examination procedure.

According to the statement, the customs officer who loaded the beer cases onto the dhoni counted the amount of cans that were loaded onto the boat, figured out the amount missing and informed the police immediately.

On Thursday Marine Police and Maldives National Defence Force (MNDF) officers conducted an operation to collect thousands of the cans found floating in the sea on the west side of Male’.

Possession and consumption of alcohol is illegal outside resort islands and licensed safari boats in the Maldives.

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Gan International Airport to commence reclamation work for runway expansion

Dredging equipment to reclaim land needed to expand the main runway at Gan International Airport in Addu City is expected to arrive at the site today to begin work, local media has reported.

A dredger brought to the country to begin the work was now in the process of being transported to the airport site in Gan despite previous “difficulties” in moving the equipment, according to Sun Online.

Shahid Ali, Managing Director of the Addu International Airport (AIA) company overseeing the project, told local media that contractors would bring the dredger in between Gan and Vilingili. He said the Environment Protection Agency (EPA) was expected to provide approval for the process today.

President Dr Mohamed Waheed is then expected to officially inaugurate the dredging work this evening, according to Sun Online.

AIA contracted Dubai-based Gulf Cobla to undertake the dredging and reclamation component of developing Gan International Airport earlier this year.

Meanwhile, a UK-based company called Lagan has previously won the main contract to develop the airport, with AIA outsourcing the additional dredging work required to be completed before the main runway expansion can begin.

AIA is itself a joint venture formed by the Gan Airport Company Ltd (GACL), Maldives Airports Company Ltd (MACL) and the STO.

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No intention to transfer assets to MIAL: MACL to Axis Bank

The Maldives Airports Company Limited (MACL) and its lawyers have denied any intention of dissipating the state-owned company’s assets by transferring them to a newly-created, state-owned entity called Male’ International Airport Limited (MIAL).

MACL and the government of the Maldives are currently party to arbitration proceedings in Singapore after one of the lenders to the terminated GMR-Malaysia Airports (GMR-MAHB) development – Mumbai-based Axis Bank – called in US$160 million worth of loans which had been guaranteed by the Ministry of Finance.

A copy of the agreement from November 24, 2010, in which the Ministry of Finance guarantees the loans to GMR-MAHB, is signed and stamped by both then-MACL Chairman Ibrahim Saleem and Finance Minister Ali Hashim on behalf of the government.

Eviction and arbitration

In December 2012, the GMR-MAHB consortium, which had signed a 25 year concession agreement with the former government to manage and upgrade Male’s airport, was given a seven day eviction notice by the new government after it declared the concession agreement void ab initio, or ‘invalid from the outset’.

That decision is currently subject to arbitration proceedings in Singapore, with GMR-MAHB’s compensation claim expected to reach upward of US$1 billion. Axis Bank is pursuing the US$160 million in separate proceedings.

President Waheed’s government on March 14 meanwhile declared in a one-line statement that it was establishing MIAL as a new 100 percent state-owned company, and several weeks later announced the appointment of a board of directors including tourism tycoon and Chairman of Universal Enterprises, Mohamed Umar Manik, and Island Aviation Chairman Bandhu Ibrahim Saleem as managing director.

Finance Minister Abdulla Jihad informed local media on May 21 that MIAL would take over the operation of the airport under a management contract by July.

The apparent move to transfer MACL’s management functions to MACL led to a flurry of letters from Axis Bank to both MACL and the government, with the bank expressing concern that “if MACL ceases to manage and operate Male’ airport, and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell.”

MACL’s denial

In a letter responding to Axis Bank’s CEO Bimal Bhattacharyya, dated April 24, 2013, and obtained by Minivan News, MACL’s Managing Director Ibrahim Mahfooz claims “your insinuation that MACL is attempting to dissipate assets to avoid and satisfaction of any judgement is insulting and without any basis.”

“For the record, we can confirm that MACL has no plans to transfer any of its assets to another company,” Mahfooz writes.

He accuses Axis Bank of making a case on “hearsay and speculation”, and asks whether its threat of legal action was “part of a concerted plan with any other parties”.

“You have tried to assert that your claim of US$163,596,347.78 remains unsatisfied. We had in our previous correspondence to you made it clear that you do not have a valid claim against MACL,” Mahfooz states.

“At best your alleged claim (at its highest) is purely a monetary claim against MACL and GOM. Please set out clearly the basis in which you think your claim will not be satisfied by MACL and GOM in the event Axis Bank is not successful,” he writes.

That letter triggered a further flurry of correspondence between Axis Bank’s legal representation Norton Rose and MACL’s Singapore-based firm Advocatus.

The latter firm, acting on behalf on MACL in December 2012, successfully overturned an injunction in the Singapore Supreme Court blocking MACL from taking over the airport, on the grounds that the arbitration court had no jurisdiction to prevent the Maldives as a sovereign state from expropriating the airport.

In the Singapore Supreme Court’s full verdict, a copy of which Minivan News has obtained, Financial Controller for the Ministry of Finance, Mohamed Ahmed, “affirmed in an affidavit that the Maldives government would honour any valid and legitimate claim against it. He also stressed that the Maldives government had never defaulted on any of its payments.”

Lawyer representing MACL, Christopher Anand Daniel, “also accepted that if the arbitration tribunal found that the Appellants were wrong in their asserted case that the Concession Agreement was void ab initio and/or had been frustrated, but the Appellants had by then already gone ahead with the taking over of the airport, they would at least be liable to compensate the respondent for having expropriated the airport” (emphasis retained).

Legal barrage

Stern letters exchanged throughout late April and most of May between the two sets of lawyers suggest brewing disagreement over whether MIAL’s assumption of management responsibilities for the airport can be construed as a transfer of assets and an attempt to dissipate its assets in preparation for a costly verdict.

“Almost all of MACL’s income comes from MACL’s management and/or operation of Male’ Airport,” notes Axis Bank.

“The stated purpose for the incorporation of MIAL is for MIAL to manage and operate Male Airport. This is a role presently performed by MACL. The natural consequence of the above facts is that if MACL ceases to manage and operate Male’ Airport and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell company,” Axis Bank’s lawyers noted, adding that the government had made no effort to deny this despite repeated invitations.

In response Advocatus, in a letter dated May 10 and obtained by Minivan News, declared “Your client [Axis Bank] has no evidence that MACL is dissipating assets to begin with. It is obvious that your client is attempting to see if it can create a case by correspondence when it has none.”

Following Finance Minister Abdulla Jihad’s pledge that the transfer of assets to MIAL would be completed by July 1, widely reported in local media, Norton Rose wrote another letter noting “[the Minister’s] statements are in direct contradiction to MACL’s position in its letter of April 24 stating that ‘For the record, we can confirm that MACL has no plans to transfer any of its assets to another company.’”

“These new developments, stated in the various news reports, lend credence to Axis Bank’s legitimate concerns that MACL is in fact attempting to dissipate its assets in favour of MIAL or any other third party and, consequently, there will not be sufficient assets to satisfy any arbitral award that may be rendered in favour of Axis Bank against MACL in the arbitration,” the lawyers wrote.

Advocatus responded on May 29, again accusing Axis Bank off “desperately trying to create a case where none exists.”

“The Minister, who had given the interview in Dhivehi, had been misquoted in the English version of news reports you mentioned,” MACL’s lawyers stated.

“When he gave the interview, the Minister had in fact said that ‘asset management is going to be officially handed over to MIAL’,” Advocatus contended.

Assets, management and the draft agreement

Meanwhile, a working draft of an ‘Operations and Management’ agreement between MACL and MIAL, dated May 21 and obtained by Minivan News, notes that MIAL “is a company established with the primary objectives of operating, maintaining and managing the airport.”

The agreement states that while the Finance Ministry has granted MACL the lease of the site and rights to operate and manage the airport, “MACL, in the interest of the better management of the airport, and/or overall public interest, is desirous of granting to MIAL the functions of operating, maintaining and managing the airport.”

The agreement includes provision for the transfer of employees from MACL to the new company, and the requirement that it obtain an aerodrome certificate from the Ministry of Civil Aviation – the core authority issued by the state for a company to operate an airport.

It also noted that “no proceedings against MIAL are pending or threatened, and no fact or circumstance exists which may give rise to such proceedings that would adversely affect the performance of its obligations under this agreement.”

MIAL would be paid management fees by MACL, although the extent of these are not included in the particular draft obtained by Minivan News. The agreement does however set out how “MIAL shall, on behalf of MACL, deposit all monies received from the operation of the airport into one or more bank accounts in the name of MACL.”

Board issues

Despite the Finance Minister’s comments on May 21, MIAL’s appointed CEO Bandhu Saleem has told Minivan News that “until the arbitration is complete, I think it will be very difficult to start a new company.”

Minivan News is seeking to establish the current status of the new company. However further obstacles appeared this week in the form of the government’s Attorney General Aishath Bisham, who informed local media that President Waheed lacked the authority to appoint the boards of government-owned companies following the ratification of January’s Privatisation Act.

Instead, she said, the privatisation board created under that act operated as “a separate legal entity, and has the sole authority to appoint board members.”

Besides MIAL, President Waheed also in February appointed the board of the Maldives Ports Authority Limited (MPL).

“The Privatisation Board should investigate those cases,” suggested the attorney general.

Former President Maumoon Abdul Gayoom, whose Progressive Party of the Maldives (PPM) was among the most strident opponents to GMR-MAHB’s development of the airport, meanwhile appeared to have adopted a conciliatory tone during a visit to India last week to smooth troubled relations.

“[The cancellation] was a very populist move at the time as the public had a perception that the contract was bad for the country. The way it was handled was not good,” Gayoom was reported as telling Indian newspaper The Hindu.

“I am sad that this has somehow affected our bilateral relations. We want to overcome that and restore our relationship with India to its former level,” Gayoom told the paper.

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