The High Court has upheld Civil Court verdicts ordering Mahandhoo Investments and Kabalifaru Investments – two companies with ties to Dhivehi Rayyithunge Party (DRP) Leader Ahmed Thasmeen Ali – to repay millions of dollars worth of loans to the Bank of Maldives Plc Ltd (BML).
DRP MP Mohamed Nashiz, brother of the DRP leader and managing director of Kabaalifaru, and MP Ali Azim, a loan guarantor, were among the appellants at the High Court.
Both MPs had signed ‘joint and several guarantee and indemnity’ agreements for the loans issued in mid-2008.
In the verdicts delivered today, the High Court ruled that there were no legal grounds to overturn the lower court verdicts.
In the first case involving Mahandhoo Investments, BML had issued a US$23.5 million demand loan, a US$103,200 bank guarantee and US$30,090 letter of credit on July 10, 2008.
After BML sued Mahandhoo for non-payment, the Civil Court ruled on October 19, 2009 that the company was not paying the loans in compliance with the agreement and authorised the bank to sell mortgaged properties – including Reethi Beach Resort – to recover the outstanding debts along with incurred interest and fines.
The court ordered the company to settle the outstanding debt in a one year period. However the verdict was appealed at the High Court and remained stalled for almost two years.
The second case meanwhile involved a US$3.3 million loan issued to Kabaalifaru Investment and the appeal of a Civil Court verdict on September 30, 2009 ordering the company to settle the debt in the next 12 months.
Meanwhile a third case involving a Civil Court verdict in December 2009 ordering luxury yachting company Sultans of the Seas – with close ties to the DRP leader – to pay over US$50 million in unpaid loans and incurred interest and fines had also been appealed at the High Court.
In a BML audit report released in January 2009, Auditor General Ibrahim Naeem warned that defaults on bank loans issued to influential political players could jeopardise the entire financial system of the country.
Over 60 per cent of the US$633 million worth of loans issued in 2008 was granted to 12 parties, the report noted.
According to the report, US$45 million was granted to Sultans of the Seas and US$36 million to Fonnadhoo Tuna Products, two loans which comprised 13 per cent of the total loans issued in 2008.
The report noted that Fonaddhoo was owned by current DRP Leader Ahmed Thasmeen Ali – running mate of former President Maumoon Abdul Gayoom in the 2008 presidential election – while the owners of Sultans of the Seas were closely associated with the minority leader.
In September 2009, Maldives Customs filed a case at Civil Court to recover US$8.5 million from Sultans of the Seas in unpaid duties and fines for allegedly defrauding customs to import two luxury yachts.
In February 2010, the court ordered the company to pay Rf110 million (US$7 million) as fines and evaded import duties.