Mobile security solutions vendor Nexbis has announced it will be taking legal action against parties in the Maldives, claiming that speculation over corruption was “politically motivated” in nature and had “wrought irreparable damage to Nexbis’ reputation and brand name.”
“Although we understand that the recent media frenzy and speculation of corruption are politically motivated in nature and not directly related to Nexbis, it has had an indirect impact on our reputation and brand name,” the company said in a statement provided to Minivan News.
“Nexbis’ shareholders own and manage multi-trillion dollar assets globally and will not jeopardise their reputation for an investment return,” the company stated.
The Malaysian-based technology firm signed a concessionaire contract with the Department of Immigration in October 2010, to install an advanced border control system that is had said would collect and store biometric data on expatriate workers and eliminate abuse of (easily forged) paper documentation.
The government has struggled to tackle the problem of foreign worker exploitation. There are believed to be 100,000 foreign workers in the country – almost a third of the country’s total population – but no data is available on how many are illegal.
International agencies have taken a dim view of the problem, most notably the US State Department, which last year placed the Maldives on its tier two watch-list for human trafficking. Minivan News reported in August 2010 that the exploitation of Bangladeshi workers alone was an industry was worth at least US$43.8 million a year, rivaling fishing as a source of foreign exchange.
Following the signing ceremony with Nexbis, the Anti-Corruption Commission (ACC) announced it had received “a serious complaint” regarding “technical details” of the bid, and issued an injunction pending an investigation into the agreement.
“On the very day we signed the contract, barely hours, maybe minutes later, the ACC had drafted a letter saying there were suspicions of corruption involved with the decision,” Minivan News was told by an Immigration Department source, who asked not to be identified.
Nexbis shares immediately dropped 6.3 percent on the back of the ACC’s announcement.
Last week, facing political pressure ahead of the local council elections, President Mohamed Nasheed upheld the ACC’s request that the roll-out of the technology be postponed.
The ‘stop-work’ order amounts to an indefinite hold on the project, with little optimism for a quick outcome. The ACC has not completed an investigation since 2008.
In its statement, Nexbis noted that the system and related technologies to be installed in the Maldives “have been implemented in over 100 locations worldwide including the Americas, Europe and Asia and comply with ICAO (International Civil Aviation Organisation) and other international standards.
“Nexbis is an international company with strict internal policies that conform to International Anti-Corruption laws and strictly enforce the policy. All Nexbis staff have strict government security clearance to carry out national security projects.”
The company stated that it was invited along with other Malaysian companies to invest in the Maldives during a government road show, and was shortlisted for the Immigration Border Control System (MIBCS) tender after making an expression of interest in February 2010, together with several other companies.
“Subsequent to that, Nexbis together with the other shortlisted companies were invited to respond to the RFP (request for proposal),” the company stated. “Nexbis followed the strict and transparent submission and evaluation process requirement of the government of Maldives and emerged as the successful bidder for the project in a public opening of the bid together with all the other bidders.”
Those bidders, Nexbis said, were informed that they would be subject to both a technical evaluation by the Immigration Department and an independent financial evaluation by both the Ministry of Finance and the Tender Board.
“The contract negotiations involved lawyers from the Attorney General’s office, Immigration, as well as the Ministry of Finance prior to a unanimous conclusion by all parties and final sign off by the Attorney General’s office of the Government of Maldives,” Nexbis stated.
On October 17, 2010, Nexbis signed a concession agreement with the Department of Immigration to implement an Immigration Border Control System (MIBCS) under a BOT (Build, Operate and Transfer) arrangement. This allowed the system to be installed at no upfront cost to the government, while Nexbis would levy a fee on work visas issued over the lifespan of the agreement.
The concessionaire contract, Nexbis noted, “is legally binding and Nexbis will exhaust all avenues to ensure that its interest is protected in this matter.”
“Nexbis’ international lawyers have been building a libel and defamation case since the media frenzy to enable legal proceedings against certain individuals and institutions that have wrought irreparable damage to Nexbis’ reputation and brand name,” the company stated.
“In addition, we will be suing for compensation for collateral and consequential damages that arise as a result of direct or indirect implied allegations by individuals or institutions. We have gathered significant and indisputable information to mount a successful case and will be taking action.”
Mohamed Zuhair, Press Secretary for President Mohamed Nasheed, said “I agree that this is a negative development, and that Nexbis should consider going to court seeking redress [for the] delays.”
“The ACC has only said that there were ‘instances and opportunities’ where corruption could have occurred, but said they were not sure if it did happen and issued an injunction.”
The President, Zuhair emphasised, had “simply stated that he will cooperate with the ACC”, and “has not insinuated that corruption is involved [in the Nexbis deal].”
He added that the country’s independent institutions – and its judiciary – had been formed during an opposition majority.
“For all the government’s good intentions, the independent institutions have yet to do anything to accelerate the government’s efforts to provide prosperity for the public,” he claimed.
Zuhair pressed for patience, noting that “it is difficult for the government at the timebeing, during local council elections. These are problems not unique to the Maldives, and foreign investors should take heart in the democratic process we have brought in. On a good day, the ACC is in favour of foreign investment.”
He acknowledged the scope of the problem that the agreement was intended to address.
“Expatriate workers get hit twice – they pay agents in the country of origin, then come and pay an agent here, or even the employer. It is illegal and it has been going on for 30 years – there is now an ingrained culture [in the Maldives] of taking advantage of the hiring of expatriate workers to make money from them.”
“I am confident justice will prevail,” he added.
Minister of Economic Development Mahmoud Razee acknowledged that the situation with Nexbis was “unwelcome”, but said the Ministry “believes investors conduct due diligence on political risks in an emerging democracy with a lot of fluidity.”
“The government of the Maldives will continue to promote democracy and stabilise the economy to attract investors,” he said.
Nexbis appeared less convinced, and warned of potential ramifications to foreign investment in the Maldives should investors become collateral damage in local politicking.
“The ultimate collateral damage will be to the Maldivian public in the long term as international investors will shy away from the country unless commitments made are honored,” the company said.
“A single default in the government’s commitment will have a long and lasting effect including a significant re-rating of the investment risk of the country.”
The Anti-Corruption Commission (ACC) was not returning calls despite numerous attempts over several days.