The Maldives government has terminated its agreement with Malaysian security firm Nexbis to install and operate a border control system, giving it 14 days to vacate.
Defence Minister Mohamed Nazim local media that the disputed contract – signed under the previous government of former President Mohamed Nasheed in 2010 – was terminated by the cabinet yesterday over fears it was causing unspecified “major losses” to the state.
The termination was announced as immigration officials today said replacement technology being provided by the US government was not presently functional, with implementation “on hold” pending a legal hearing into the matter.
Department of Immigration Spokesperson Ibrahim Ashraf told Minivan News this morning that he had not personally been made aware of any decision by the government to terminate the agreement.
However, Ashraf confirmed that replacement technology being provided free of charge by the US government was “not 100 percent functional” at present.
“Because of legal issues, the project has been on hold,” he explained.
Immigration officials last month confirmed that “testing” had been underway on the new US-donated system, while Nexbis’ border control technology remained in use to monitor the arrivals and departures of foreign nationals
Ashraf referred further questions on the Nexbis system to Immigration Controller Dr Mohamed Ali, who was not responding to calls at time of press.
Nexbis is the second high profile foreign investment to be suddenly evicted by the administration of President Dr Mohamed Waheed in the past 12 months.
The government last November announced it was terminating a 25-year concession agreement with India-based GMR to construct and operate a new terminal at Ibrahim Nasir International Airport (INIA) in Male, giving the company seven days to vacate the country.
GMR is currently seeking compensation totaling US$1.4 billion from the government as part of arbitration proceedings to be heard in a Singaporean court, damages eclipsing the annual state budget.
Speaking to local media today, Defence Minister Mohamed Nazim was quoted as saying that the government expected to assume control of the country’s borders at the end of the 14 day notice period given to Nexbis.
He claimed that the US system was also “ready to be operational”, although no decision had yet been made to use the technology.
Attorney General (AG) Azima Shukoor added that discussions were presently being held with Nexbis over reaching an out of court settlement for terminating the contract, although she declined to provide any more details to media today.
“We assure you that the burden on the state will be far less with the termination of the agreement rather than continuing with it. We will take this process forward in the best interest of the state,” she was quoted as saying by Haveeru.
Under the concession agreement signed with the Maldives government, Nexbis levied a fee of US$2 from passengers in exchange for installing, maintaining and upgrading the country’s immigration system. The company also agreed a fee of US$15 for every work permit card issued under the system.
Both AG Azima and Defence Minister Nazim were not responding to calls at time of press.
Nexbis last month invoiced the Department of Immigration and Emigration for US$2.8 million (MVR 43 million) for the installation and operation of its border control technology in line with a concession agreement signed in 2010 – requesting payment be settled within 30 days.
Nexbis’ lawyers argued that the company had expected the fee to be included in the taxes and surcharges applied to airline tickets in and out of the country, according to local media. However, lawyers argued these payments had not been made due to the government’s “neglect” in notifying the relevant international authorities.
Minivan News was awaiting a response from Suood, Anwar & Co – the company’s legal representatives in the Maldives – at time of press.
Parliament had voted unanimously to terminate the agreement on 25 December 2012, in line with a recommendation from the Finance Committee alleging foul play in the signing of the agreement with former Immigration Controller Illyas Hussain Ibrahim.
Presenting the Finance Committee report to the floor, Chair MP Ahmed Nazim explained at the time that the “main problem” flagged by the Anti-Corruption Commission (ACC) was that the tender had not been made in accordance with the documents by the National Planning Council authorising the project.
The Finance Committee also recommended terminating the agreement over concerns it contained clauses to waive taxes to the company, Nazim said.
He noted that imposing or waiving taxes was a prerogative of parliament under article 97(d) of the constitution.
Following parliament’s termination of the project in December, Nexbis sought a legal injunction to prevent any cancellation of the agreement while court hearings over the contract were still ongoing.
The company had sought to contest whether the ACC has the power to compulsorily request the government to cease all work in relation to the border control system agreement.
However, in April of this year, the High Court overturned a Civil Court ruling declaring the ACC could not terminate a border control system (BSC) agreement signed by the Department of Immigration with Malaysian mobile security firm Nexbis.
The High Court ruling (Dhivehi) cleared the way for the Civil Court to hear the case filed by the ACC should it be resubmitted.
Nexbis has emphatically denied allegations of corruption, previously speculating that “criminal elements supporting human trafficking” were seeking to sabotage the agreement.