An agreement was signed last night to sell 30 percent of the Addu International Airport Company Pvt Ltd (AIA) to tourism pioneer ‘Champa’ Hussain Afeef’s Kasa Holdings to raise finances to develop the Gan airport in Addu City.
AIA is a joint venture formed by the Gan Airport Company Ltd (GACL), Maldives Airports Company Ltd (MACL) and the State Trading Organisation (STO).
The airport infrastructure and facilities in the uninhabited Gan island of the southernmost Seenu atoll was leased to the government-controlled consortium for 50 years with a mandate to develop and operate the asset as an international airport.
The agreement to sell a 30 percent stake in AIA for MVR 60 million (US$3.9 million) was meanwhile signed on behalf of the company by Managing Director Shahid Ali – also Managing Director of STO – and ‘Champa’ Mohamed Moosa on behalf of Kasa Holding.
The agreement was signed in spite of a public threat by Jumhoree Party (JP) Leader and MP for Alif Dhaal Maamigili, Gasim Ibrahim, that Shahid Ali would be sacked from his post if the sale went through.
He also warned that the STO MD could “not live on this island” if the sale was finalised.
Shahid meanwhile reportedly said after the signing ceremony last night that the agreement was signed after the Finance Ministry and Public Enterprises Monitoring and Evaluation Board (PEMEB) gave clearance for the sale.
Shahid noted that Afeef’s stake in the seaplane operator Trans-Maldivian Airways (TMA) would be an advantage in the development of the Gan airport.
Following the signing ceremony, Shahid told private broadcaster Raajje TV that the sale was made after a decision by the AIA board of directors, a public tender, evaluation of shortlisted candidates and “authorisation from the Finance Ministry”.
Proceeds from the sale would finance “a major project to develop Gan airport,” he said, including expanding the runway and repairing damages in the airport as well as establishing a new drainage system and a seaplane base.
“The estimate of the consultants for all this is US$40 million. So even if we obtain loan finance or contractor finance for this US$40 million project, we would need an equity injection,” he explained. “Therefore, we need an investment to get this equity injection – a party that would give this money to the company as an equity injection.”
The AIA board in consultation with the government decided to invite proposals from Maldivian companies, Shahid said, adding that Kasa Holdings was the only local company to submit a bid.
Shahid stressed that Kasa Holdings was sold a stake in the management company AIA and not the Gan airport.
On the allegations of corruption by the government-aligned JP, Shahid insisted that the sale was made “through an open and transparent bidding process,” adding that AIA would “welcome” an investigation.
The Anti-Corruption Commission (ACC) revealed to local media today that it commenced an investigation into the sale of the AIA stake last month based on assertions in the press.
ACC Deputy Chair Muaviz Rasheed told newspaper Haveeru that the investigation would be completed this week.
Letter to the President
Speaking in parliament yesterday, JP MP Alhan Fahmy claimed that the “self-interest” of Dhivehi Qaumee Party (DQP) was behind the sale of the AIA stake, alleging that DQP senior officials Imad Solih and the party’s leader and Special Advisor to the President Dr Hassan Saeed were complicit in corrupt dealing.
“The government should not sign this agreement. This case should be investigated at a national level,” he said, claiming that the 30 percent stake “could be sold tomorrow to an Israeli party.”
“Addu Atoll Gan is a military strategic location the whole world is watching,” he claimed, calling on the government to reconsider the decision.
Alhan told Raajje TV last night that JP would submit the case to the ACC and parliamentary committees, repeating the corruption allegations and questioning the valuation of the 30 percent stake.
Alhan claimed that Dr Saeed had asked JP Leader Gasim not to oppose the deal at a meeting at the President’s Office yesterday.
In a letter to President Dr Mohamed Waheed Hassan Manik last week, Gasim contended that MVR60 million for 30 percent of AIA’s share was “a very small amount” as the value of the airport would exceed MVR 3 billion (US$200 million).
Moreover, while US$44 million had been estimated as the cost of developing the airport, the JP MP claimed that the project could be completed with US$24 million.
An “open tender just in China alone” for the project would suffice to prove his assertion, Gasim wrote in his letter to Dr Waheed.
Gasim warned that Kasa Holdings would be positioned to acquire 70 percent of AIA by moving to sell 40 percent to a buyer of its choice.
“If a member representing the government does not attend a board meeting held to sell this 40 percent, Kasa Holdings will have the power to sell 40 percent of shares to whoever it pleases at whatever price it wants,” Gasim wrote. “In light of my experience on how these [deals] are completed, I have to say that the ultimate result would be the remaining unsold 40 percent being sold to a buyer of Kasa’s choice and the opening up of the opportunity for Kasa Holdings to control 70 percent, and within this opportunity, for [Kasa] to sell 51 or more percent of AIA to another foreign party.”
Gasim further contended that the move would pose a risk to national security, as the government would have no legal powers over the company.
Cancelling the agreement would mean paying the foreign party a “huge amount in compensation,” he claimed.
Gasim insisted that the Gan aiport should be developed by MACL and offered in his letter to reclaim land for the project free of charge “using my own dredger, employees and machinery with the government only providing oil.”