Assistance in changing the government is the biggest relief the Indian government could offer the Maldives regarding compensation owed to GMR for the premature termination of its airport deal, former President Mohamed Nasheed has said.
Speaking at a rally at the reopened Maldivian Democratic Party (MDP) haruge (meeting hall) last night, the main opposition party’s acting president said he had learned that GMR would inform the Indian government of the situation.
“In my view, that relief is for that [Indian] government to work together with us, the Maldivian people, to change the government of the Maldives,” Nasheed said.
After 18 months of arbitration proceedings, a Singapore tribunal ruled last week that the concession agreement signed by the MDP government with the GMR-led consortium in June 2010 to manage and develop the Ibrahim Nasir International Airport (INIA) was “valid and binding.”
Former Attorney General Azima Shukoor – incumbent at the time of the termination – has this week maintained that the agreement was invalid under Maldivian law.
Nasheed yesterday contended that parties in the ruling coalition had fanned anti-Indian sentiment and incited anger among the public towards the country in their efforts to topple the MDP government, which he claimed were orchestrated by former President Maumoon Abdul Gayoom.
He also referred to anti-Indian rhetoric by senior officials of the current administration in the weeks leading up to the eviction of GMR in December 2012.
Former President Gayoom exploited nationalism and Islam – which are “accorded the highest place in the hearts of the Maldivian people” – to mislead the public with “lies”, Nasheed argued.
The MDP has also announced its intention to sue former President Dr Mohamed Waheed for defamation and damages caused by his administration’s unilateral termination of the concession agreement.
Sovereign debt crisis
The Singapore tribunal concluded that the Maldivian government and the Maldives Airports Company Ltd (MACL) were “jointly and severally liable in damages to GMIAL for loss caused by wrongful repudiation of the agreement as per the concession agreement.”
The Bangalore-based company is seeking US$1.4 billion in compensation for “wrongful termination” of the contract – an amount that eclipses the Maldives’ annual state budget.
The compensation owed is due to be determined in the second phase of the arbitration process.
In the wake of the arbitration decision, Attorney General Mohamed Anil said that current administration would honour the verdict and expressed confidence that the government would not have to pay the US$1.4 billion sought by GMR.
“According to the agreement, [we] mostly have to compensate for the investments made. We said we do not have to pay the amount GMR has claimed,” Anil told reporters on Thursday (June 19).
President Yameen had predicted in April that GMR would only be owed US$300 million in compensation.
Nasheed, however, predicted last night that the compensation figure would not be “lower than US$800 million”, a fee which would plunge the Maldives into a sovereign debt crisis as the foreign currency reserves are currently below US$100 million.
Warning of an impending economic crisis, Nasheed called on the public to awake from its “slumber” and “consider what is happening to our country”.
Nasheed also accused former Attorney General Azima Shukoor – who had advised cancellation of the contract on the grounds that it was void ab initio (invalid from the outset) – of attempting to mislead the public concerning the arbitration ruling.
Shukoor has told newspaper Haveeru that the contract was illegal under Maldivian law.
“Even if the agreement is legit under Common Law, it does not necessarily concur that the agreement had also been made according to Maldivian laws.
“Nobody sitting as AG in Maldives can still pronounce the deal to have been done as per the Public Finance Act. No one can. That’s why I spoke against it even then,” she was quoted as saying.
She further argued that the termination of the agreement was justified as the domestic economy would have suffered “unimaginable losses”.
Nasheed however questioned the “literacy” of ministers in the “coup government,” noting that a legal process for terminating the contract through arbitration was laid down in the concession agreement.
Nasheed also defended the initial awarding of the contract – in a bidding process overseen by the World Bank’s International Finance Corporation (IFC).
As public debt was over 60 percent of GDP when the MDP government took office in November 2008, Nasheed said his administration believed loans should only be obtained for capital investments and infrastructure projects.
The government decided to privatise the airport in a public-private partnership as loans could be put to better use to “upgrade hospitals, improve schools and build water and sewerage systems,” he explained.
Referring to the Anti-Corruption Commission (ACC) ruling out corruption in the airport privatisation deal, Nasheed noted that the commission had concluded that the government would have received US$534 million from the consortium during the 25-year lease period.
Conversely, MACL would have made a profit of about US$254 million in the same period if the airport was operated by the government-owned company.
While MACL paid on average MVR96 million (US$6.2 million) a year to the government from 2005 to 2010, Nasheed noted that GMR paid MVR872 million (US$56.5 million) in 2011 as concession fees.