Former Finance Minister, MACL Chairman facing corruption charges

The Anti-Corruption Commission (ACC) has asked the Prosecutor General’s (PG) office to press corruption charges against former Finance Minister Ahmed Inaz, former Maldives Airports Company Ltd (MACL) Chairman ‘Bandhu’ Ibrahim Saleem, and former members of the company’s board of directors.

The senior officials of the Maldivian Democratic Party (MDP) government are accused of incurring financial losses to the state by amending the concession agreement with Indian infrastructure giant GMR to develop and manage the Ibrahim Nasir International Airport (INIA), the ACC said in a statement today.

The agreement was changed upon request by the Finance Ministry to reduce the concession fee on jet fuel sales from 15 percent of revenue to one percent, resulting in a shortfall of MVR53.8 million (US$3.5 million).

The ACC investigation found that the finance ministry disregarded professional advice over changing the clauses.

In addition to two counts of corruption charges, the ACC also asked the PG office to seek damages from the former minister, chairman, and board members as the alteration was approved with unanimous consent of the MACL board.

Along with Inaz and Saleem, former board members Mohamed Ibrahim of H. Noomuthy, Mohamed Waheed of Ma. Fehiali, Ahmed Murad of Ma. Bluegrass, Mohamed Shaz Waleed, Mohamed Shafeeq Mahmood of G. Meadow, and Adam Rasheed Ahmed of G. Thalvaaruge are also facing prosecution.

Concession agreement

GMR, in a consortium with Malaysia Airports Holding Berhad (MAHB), narrowly won the International Finance Corporation (IFC)-managed bid for the airport in 2010, and signed a 25-year agreement with MACL under the government of former President Mohamed Nasheed.

The then-opposition, including the Progressive Party of the Maldives, Jumhooree Party, Dhivehi Rayyithunge Party and Adhaalath Party, opposed the agreement primarily on nationalistic grounds, and alleged corruption in the bidding process.

Following the controversial transfer of presidential power in February 2012, after which opposition parties assumed control of the government, the administration of President Dr Mohamed Waheed declared the concession agreement ‘void ab initio’ (invalid from the outset), and gave GMR seven days’ notice to leave the country.

Meanwhile, in December 2012, the ACC sought corruption charges against former Finance Minister Mohamed Shihab and the MACL chairman over the decision to allow GMR to deduct a US$25 Airport Development Charge (ADC), stipulated in the contract, from concession fees owed to the state.

A report by the Auditor General found that concession revenue due the government had plummeted fourfold as a result of a Civil Court ruling that blocked the developer’s charging of of the US$25 ADC, on the grounds it was a tax and therefore required parliamentary approval.

According to the report, net concession revenue to the government had fallen to just US$6,058,848 in 2012, compared to US$25,424,877 in 2011.

Rather than appeal the Civil Court verdict obstructing the ADC, “The new government took the view that it would not be proper for it to intervene in the legal process for the benefit of a private concern,” the report noted, and instead, on April 19, 2012, informed the developer it was “retracting the previous agreement [to offset the ADC] on the grounds that the then Chairman of MACL did not have the approval of the MACL board to make the agreement.”

The government received US$525,355 from the airport for the first quarter of 2012, compared to the US$8.7 million it was expecting.

In the second quarter GMR presented MACL with a bill for US$1.5 million, and in the third quarter, US$2.2 million.

The Auditor General’s report acknowledged allegations of corruption in the deal, but finding the evidence “not conclusive on this point”, deferred to the judgement of the ACC.

On June 17, 2013, the ACC released a 61-page investigative report that concluded that the bidding process was conducted fairly by the IFC, and that the GMR-MAHB consortium won the contract by proposing the highest net present value of the concession fee.

The ACC further concluded that the awarding of the contract did not contravene amendments brought to the Public Finance Act requiring parliamentary approval for such agreements.

Furthermore,  “Considering the situation (2008, 2009 and 2010) when the decision was made to privatise the Male’ International Airport,” the ACC’s calculations showed that MACL would make a profit of about US$254 million in 25 years if the airport was operated by the government-owned company.

In June 2013, GMR filed a claim for US$1.4 billion in compensation at a Singapore arbitration court for “wrongful termination” of the US$511 million concession agreement.

Upon his return from an official visit to India this month, President Abdulla Yameen said that the government was seeking an out of court settlement with GMR before the arbitration process begins.