The Anti-Corruption Commission (ACC) has filed a case with the Prosecutor General’s (PG) Office today over the decision to allow infrastructure group GMR to deduct a court-blocked Airport Development Charge (ADC) from concession fees owed to the state.
The deducted concession fees were to have been paid to the state-owned Maldives Airports Company Limited (MACL).
As part of the filed case (Dhivehi), the ACC is seeking reimbursement of MVR 353.8 million (US$22.9 million) from former MACL Chair Ibrahim ‘Bandhu’ Saleem and former Finance Minister Mohamed Shihab over the alleged misuse of authority it claimed had led to significant financial loses for the state.
The ADC issue had been a key point of contention between GMR and the administration of President Dr Mohamed Waheed Hassan Manik before his government opted last month to void a sovereign agreement with the India-based infrastructure group to develop and manage Ibrahim Nasir International Airport (INIA).
When contacted by Minivan News today, a PG’s Office spokesperson confirmed that the ACC case had been received, but could not provide any further details on the matter while its investigations were taking place.
The spokesperson claimed that under normal procedure, whether a case was submitted from an institution like the ACC or the Maldives Police Service, the PG’s Office would review all details before deciding whether to move ahead with a prosecution.
According to the case filed by the ACC, former Finance Minister Shihab stands accused of misusing his ministerial authority to benefit a third party by allowing GMR to deduct the ADC and insurance charges from concession fees it owed MACL between October 2011 and September 2012.
Shihab was not responding to calls from Minivan News at time of press.
The ACC has also accused former MACL Head Saleem of allowing GMR to deduct the ADC through a consent letter signed in violation of the company’s rules. According to the ACC’s case, normal procedure for MACL would be to have the company’s Board of Directors pass a resolution allowing for consent to be given to deduct the ADC.
Airport Development Charge
In late 2011, the then-opposition Dhivehi Qaumee Party (DQP) filed a successful Civil Court case blocking GMR from charging an ADC – a US$25 charge for outgoing passengers stipulated in its concession agreement with the government – on the grounds that it was a tax not authorised by parliament.
Former President Mohamed Nasheed’s administration chose to honour the original contract, and instructed GMR to deduct the ADC revenues from the concession fees due to the government through state-owned MACL, while it sought to appeal the Civil Court ruling.
However, the Nasheed government fell a month later and the opposition inherited the result of its court victory, receiving a succession of bills from the airport developer throughout 2012, despite the government’s insistence that the January 5 letter from MACL outlining the arrangement was no longer valid.
In the first quarter of 2012, the government received US$525,355 of an expected US$8.7 million, after the deduction of the ADC. That was followed by a US$1.5 million bill for the second quarter, after the ADC payable eclipsed the revenue due to the government.
Combined with the third quarter payment, the government at the time of the GMR contract termination owed the airport developer US$3.7 million.
GMR attempted to compromise by offering to exempt Maldivian nationals from the ADC.
The offer was claimed to have had been personally mailed by GMR Chairman G M Rao to President Waheed. However, GMR later claimed to have received no response from the government on the matter.