Government pays GMR US$ 4 million in arbitration fees

The Maldives Airports Company Ltd (MACL) has paid US$4 million to Indian infrastructure giant GMR as compensation for legal costs of arbitration proceedings in Singapore.

Following an 18-month arbitration process, a Singapore tribunal ruled last month that a concession agreement with the GMR-led consortium to manage and develop the Ibrahim Nasir International Airport (INIA) was “valid and binding” and held the government and MACL “jointly and severally liable in damages” for losses caused by the premature termination of the contract in December 2012.

The Singapore Court of Appeal ordered the Maldivian government and the 100 percent government-owned airports company to pay GMR US$4 million within 42 days for the cost of arbitration proceedings.

Finance Minister Abdulla Jihad told Sun Online last week that the US$4 million was paid out of the MACL’s revenues and not the state budget.

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India should assist Maldivian people in changing the government, says Nasheed

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.

Public-private partnership

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.

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MDP to sue former President Waheed for defamation, damages over GMR airport deal cancellation

The Maldivian Democratic Party (MDP) is preparing to sue former President Dr Mohamed Waheed for defamation and damages over his administration’s unilateral termination of the GMR airport development deal.

The main opposition party announced in a press statement on Thursday (June 19), following a Singapore arbitration tribunal ruling that the agreement was “valid and binding”, that it would pursue legal action against the former president and other responsible parties in both Maldivian and international courts.

“Dr Mohamed Waheed Hassan Manik and his coup partners had spread falsehoods concerning the GMR agreement, incited hostility and antagonism towards the MDP among the public, and attempted to defame this party,” the press statement read.

“And [they] plunged the nation into serious strife and discord, paved for the way for a coup, and toppled the first democratically elected government of the Maldives in a coup d’etat.”

The party contended that Dr Waheed’s administration was responsible for the compensation the Maldivian government would likely have to pay GMR – which would be “a financial burden the country cannot bear” – as well as loss of investor confidence, soured bilateral relations, and the damage to the Maldives’ international reputation.

The concession agreement signed with the GMR-led consortium in July 2010 to Ibrahim Nasir International Airport was beneficial to the Maldives, the statement continued, and its abrupt termination was unlawful.

“Void ab initio”

In November 2012, following a campaign spearheaded by Adhaalath Party President Sheikh Imran Abdulla calling for the nationalisation of the airport, Dr Waheed’s cabinet declared the concession agreement void ab initio – invalid from the outset – and gave the consortium a seven-day ultimatum to hand over the airport.

On December 7, the government took over the airport and evicted GMR, prompting the Indian infrastructure giant to seek US$1.4 billion in compensation for “wrongful termination” of the contract – an amount that eclipses the country’s annual state budget.

In a letter sent to the Bombay Stock Exchange last week, GMR explained that the arbitration tribunal concluded 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 determination of liability – the first of two phases of arbitration – will now be followed by the determining of compensation owed.

In the wake of the arbitration decision, Attorney General Mohamed Anil said that President Abdulla Yameen’s administration would honour the verdict while expressing 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. We always said we will have to pay compensation, and that this compensation has to come through the agreement,” Anil told reporters on Thursday.

President Yameen had predicted in April that GMR would only be owed US$300 million in compensation.

False pretext

Meanwhile, addressing supporters in Malé at an MDP maahefun (traditional celebratory feast ahead of Ramadan) Thursday night, former President Mohamed Nasheed argued that opposition parties misled the public to topple the MDP government in February 2012 with false allegations.

Opposition parties at the time had claimed that privatising the international airport posed a threat to Maldivian independence and sovereignty as well as Islam, Nasheed recalled.

The concession agreement with the GMR-led consortium was characterised as detrimental to the Maldives, he added, which was used as the pretext for the “coup” on February 7.

“Today it is becoming clear to us that the agreement was valid, and that it was terminated in violation of legal principles as well as international norms, in a way that causes serious damage to the Maldivian people,” Nasheed suggested.

Referring to AG Anil’s insistence that the compensation figure would not be too high, Nasheed accused President Yameen’s administration of continuing to mislead the public.

Nasheed stressed that the amount owed to GMR as compensation was not yet clear, noting however that the arbitration tribunal has ordered the government to pay US$4 million to the company to cover its legal expenses.

“The question we are asking now is, who will be paying those dollars? The dollars will be paid from our pockets. Legal action must be taken against those responsible for us having to pay these dollars,” he insisted.

“We have to seek compensation for the damage caused to our government. We know, we can see, that President Yameen’s government will not last. We know that President Yameen’s government does not have the support of the people. They cannot rule over all of the people in this country with the support of just 25 percent of the public.”

Changing the current government was “a duty and an obligation” for the MDP, the former president said, advising supporters not to despair.

“God willing, our courage will not flag. We will not be afraid and we will not back down either,” he said.

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Nasheed warns of “imminent sovereign debt crisis”

Former President Mohamed Nasheed has warned of a sovereign debt crisis if the Maldives is forced to pay US$1.4 billion in compensation to GMR over the abrupt termination of a concession agreement to develop Ibrahim Nasir International Airport (INIA).

Nasheed also reiterated calls for the government to reverse the decision to cancel the contract in December 2012.

“The Maldives is now known around the world as a country that doesn’t keep its promises or honour the contracts. The airport fiasco will hit each and every Maldivian because banks won’t lend money and companies won’t invest in our country without demanding much higher rates of interest,” Nasheed was quoted as saying in a press release issued yesterday.

“By now, Maldivians should have been looking forward to a world-class, new airport, to rival Kuala Lumpur, Singapore, and Hong Kong. Instead we have nothing but an abandoned building site. The actions of President [Abdulla] Yameen and [Dr Mohamed] Waheed have caused this crisis and Maldivians will be paying for their recklessness for decades to come” he added.

The press statement insisted that international best practices were followed in the bidding process – which was overseen by the World Bank’s International Finance Corporation (IFC) – while the Anti-Corruption Commission (ACC) has since ruled out corruption in the airport deal.

Nasheed’s remarks comes on the heels of the opposition Maldivian Democratic Party (MDP) – of which he was recently appointed acting president – threatening to terminate any new agreements concerning the airport should the party regain power.

Failure to reinstate the airport development contract would cause the Maldives to “suffer unforeseeable risk and irrevocable harm,” the party said in a statement yesterday.

Compensation owed “in any case”

Following President Abdulla Yameen publicly conceding that the Indian infrastructure company was owed compensation, GMR said it intends to stick to the US$1.4 billion compensation claim.

“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid,” the company said in a statement on Friday (April 26).

Asked by reporters a day earlier if he was confident the outcome of the arbitration would be favourable for the Maldives, President Yameen said: “The reality we have to accept is that a government with full sovereign powers made an agreement with a foreign party and leased [the airport]. This is a government, and what preceded this was a government as well. So believe we have to pay them some kind of financial compensation.”

If the judges on the arbitration panel accept the government’s arguments for nationalisation or expropriation, Yameen said the compensation owed to GMR could be smaller.

“We’re going to have to provide compensation in any case,” he conceded.

Yameen however contended later that GMR was owed US$300 million as compensation for its investment as well as upgrades to the airport.

Yameen had previously said that the out-of-court settlement sought by GMR was too high, and that he would await the outcome of the arbitration proceedings, which could take up to another two months.

“Sovereign debt”

The US$1.4 billion sought by GMR at the Singapore Court of Appeal for “wrongful termination” of the 25-year contract exceeds the annual state budget whilst the national debt is expected to rise to MVR31 billion (US$2 billion) this year.

Nasheed meanwhile warned that “the consequences of the outcome of the arbitration will drive the Maldivian economy to the brink, leading to major sovereign debt crisis.”

The statement noted that estimated GDP for 2014 was US$2.5 billion with an external debt of US$868 billion while the Maldives presently “receives less than US$30 million in grant aid.”

“Coupled by the budget deficit and domestic debt crisis, we are looking at a heavy burden on our children and grandchildren. It would mean by the end of 2014, debt will increase from 25 percent of GDP to 88 percent of GDP,” it added.

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GMR holds to US$1.4 billion compensation figure

GMR is sticking to the US$1.4 billion compensation claim for the abrupt termination by the Maldivian government in December 2012 of a concession agreement to develop the Ibrahim Nasir International Airport (INIA).

“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid. Thus, GMR’s claim is $1.4 billion,” Indian media reported the Bangalore-based infrastructure giant as saying in a statement on Friday (April 25).

GMR noted that the Maldivian government had acknowledged for the first time that the company was owed compensation.

Prior to departing for Singapore on Thursday, President Abdulla Yameen told the press that the government would have to pay compensation to GMR upon conclusion of the arbitration process currently underway.

Asked if he was confident the outcome of the arbitration would be favourable for the Maldives, Yameen said: “The reality we have to accept is that a government with full sovereign powers made an agreement with a foreign party and leased [the airport]. This is a government, and what preceded this was a government as well. So believe we have to pay them some kind of financial compensation. “

He added that the government’s objective in the arbitration hearings was to lower the compensation amount.

If the judges on the arbitration panel accept the government’s arguments for nationalisation or expropriation, Yameen said the compensation owed to GMR could be smaller.

“We’re going to have to provide compensation in any case,” he conceded.

The US$1.4 billion sought by GMR for “wrongful termination” exceeds the annual state budget whilst the national debt is expected to rise to MVR31 billion (US$2 billion) this year.

Earlier this month, Yameen had said that the out-of-court settlement sought by GMR was too high, and that he would now await the outcome of the arbitration proceedings, which could take up to another two months.

Despite the pending arbitration decision, expansion and development of INIA was among the five mega-projects for which the government was seeking investors at the Maldives Investment Forum held in Singapore’s Marina Bay Sands yesterday.

President Yameen also met officials of the Beijing Urban Construction Group yesterday, who “expressed their interest in engaging in the infrastructure development of the [INIA],” according to the President’s Office.

Void ab initio

In December 2012, the administration of former President Dr Mohamed Waheed voided the 25-year concession agreement with the GMR-led consortium.

The US$511 million contract awarded by his predecessor former President Mohamed Nasheed – following a bidding process overseen by the World Bank’s International Finance Corporation (IFC) – was the largest foreign direct investment in the country’s history.

Waheed’s government – of which President Yameen’s Progressive Party of Maldives was a coalition partner – declared the contract ‘void ab initio’ – invalid from the outset – and gave the company seven days to leave the country.

After GMR received a stay order for the eviction from the Singapore High Court, the government successfully appealed the injunction at the Singapore Supreme Court.

Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

At a press conference in the wake of the airport takeover, Finance Minister Abdulla Jihad – who retained his post under the new administration – said that the Maldives would pay whatever compensation was required “however difficult” while Attorney General Azima Shukoor expressed hope that the compensation would be lower than anticipated.

A special audit conducted by the Auditor General’s Office in early 2013 found that as of October 31, 2012, GMR Male’ International Airport (GMIAL) had completed 25 percent of the refurbishments and upgrades to INIA planned for the end of 2014, and had been invoiced by its contractor for US$69 million.

“Significant progress had been made in some areas – for example, 87 percent of the material for land reclamation had been dredged,” the report (English) stated.

“In the meantime, all work on the ground on the improvement to the airport has ceased. Sensitive elements of the new structures that had been planned by [GMR] are incomplete and exposed to the weather and at risk of damage – possibly closing off the option of re-using these elements to reduce the cost of any future development of the airport,” the report concluded.

After examining the bidding process, the audit report stated that evidence to back allegations of “improper interference” during technical bidding process “is not conclusive on this point”, and deferred the matter to the Anti-Corruption Commission (ACC), which ruled out corruption in June 2013.

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ACC defends report on airport privatisation deal as Sheikh Imran insinuates bribery from GMR

The Anti-Corruption Commission (ACC) has issued a press statement defending its investigative report of the airport privatisation deal signed by the previous government, harshly condemning “false and misleading” remarks by politicians of government-aligned parties.

On June 17, the ACC released a 61-page investigative report concluding that there was no corruption in the awarding of a concession agreement to a consortium of Indian infrastructure giant GMR and Malaysia Airports Holdings Berhad (MAHB) to develop and manage the Ibrahim Nasir International Airport (INIA).

The report was met with strong criticism and bribery allegations from parties in the government coalition.

Insisting that the government’s stand would not change as a result of the ACC findings, President’s Office Spokesperson Masood Imad told the Press Trust of India (PTI) that “if there is a reasonable cause of doubt, this report can be contested by some parties.’

“Many people say here that the ACC Board is not an unbiased organisation. They say it is politically motivated,” he was quoted as saying.

Religious conservative Adhaalath Party President Sheikh Imran meanwhile described the report as “a slap in the people’s face” while President Dr Mohamed Waheed’s Gaumee Inthihaad Party (GIP) Spokesperson Abbas Adil Riza accused ACC members of corruption.

In an appearance on pro-government private broadcaster DhiTV last night (June 23), Imran insinuated that ACC members accepted bribes from GMR offered through former Indian High Commissioner D M Mulay.

The ACC report was “a highly unprofessional, semi-technical and procedural review” that did not amount to either a proper investigation or an audit, Imran said, calling for “a full-fledged investigation.”

In November 2012, the current administration abruptly terminated the US$500 million contract with the GMR-led consortium, declared the concession agreement ‘void ab initio’ (invalid from the outset), and gave GMR seven days’ notice to leave the country.

The decision followed weeks of protest by a self-titled “National Movement” spearheaded by Sheikh Imran and senior government officials – born out of the unofficial December 23 coalition of eight political parties and an alliance of NGOs that rallied at a mass gathering to “defend Islam” in late 2011 – calling on the government to “reclaim” and nationalise the airport.

Last Friday, GMR filed a claim for US$1.4 billion in compensation from the Maldives at ongoing arbitration proceedings in Singapore over “wrongful termination” of the contract.

Meanwhile, former Attorney General Azima Shukoor, who headed the cabinet committee that advised termination of the contract, contended on DhiTV last week that the ACC report was “incomplete” as the commission had overlooked several key factors.

“Did they omit the factors deliberately or unknowingly or simply just overlooked them? But a lot of factors have been overlooked and omitted from the report. The state will suffer great losses because of it. Especially when the country is tied up in a judicial case,” she was quoted as saying by newspaper Haveeru.

ACC response

ACCIn its press release on Thursday (June 19), the ACC stated that its investigation was “not based on what politicians say at podiums and in the media.”

“Instead, the case was investigated based on relevant information collected for the investigation, documents and statements taken after questioning those involved in the case,” the ACC said, denying the allegations of undue influence on its members or staff.

The ACC statement added that the commission in concluding investigations adhered to article 25 of the Anti-Corruption Commission Act of 2008, and did not reach its conclusions “after considering the wishes of a particular politician.”

The commission noted that it had not responded to any political rhetoric targeting the ACC in the past, adding that all corruption investigations followed criminal justice procedures, the ACC Act and regulations under the law.

The statement explained that article 25(a)(2) of the Act required the commission to submit cases for prosecution if sufficient evidence to secure a conviction was gathered.

In the absence of evidence to prove corrupt dealings, article 25(a)(1) of the Act stipulates that the commission must declare that the case does not involve corruption.

The report made public last week contained information collected for the investigation, observations and the reasoning for reaching the conclusion “without any omissions or additions,” the ACC added.

“This is the first time that an investigative report of a case investigated by the commission has been made public like this,” the statement continued. “It was released that way to provide details of the case to the public as transparently as possible.”

The ACC further noted that in December 2012 the commission submitted a case to the Prosecutor General’s Office (PGO) requesting criminal prosecution over the previous government’s decision to deduct a court-blocked Airport Development Charge (ADC) from concession fees owed to the state.

The ACC asked the PGO to seek reimbursement of MVR 353.8 million (US$22.9 million) from former MACL Chair Ibrahim ‘Bandhu’ Saleem and former Finance Minister Mohamed Shihab over the alleged misuse of authority the commission contended had led to significant financial losses for the state.

Bribery allegations

Responding to remarks in local media last week by an unnamed ACC member alleging that Imran attempted to influence the outcome of the investigation, the Adhaalath Party President admitted on DhiTV last night that he met commission members while the “National Movement” protests were ongoing.

Imran said he met ACC members after learning of efforts by GMR to bribe politicians through the former Indian High Commissioner Mulay.

Mulay also requested meetings with Imran himself on numerous occasions “through some of our ministers and even by directly calling our office,” he claimed.

Upon hearing of meetings between Mulay and ACC members, Imran said the leaders of the “National Movement” met commission members to “advise against accepting bribes.”

“[ACC members] said, ‘how can we go near that? we have sworn an oath,'” Imran said.

He claimed the ACC members told him that “the roots go deep” in the GMR deal and that former President Nasheed “completed the deal in Singapore.”

ACC members informed Imran that bribes from GMR was deposited to bank accounts in countries near Singapore, he claimed, while the commission members provided assurances that “everything would be made clear” once the investigative report was made public.

Imran said he would reveal further details of the “National Movement’s” meeting with ACC members if the commission responded to the allegations.

“In any case, we were working to liberate the airport on behalf of religion and the nation,” he said, adding that the government eventually decided to terminate the agreement without waiting for the ACC report.

As a result of pressure from the protests, he continued, the government was convinced it was not in the national interest to persist with the contract.

Imran also insinuated that the ACC would receive a portion of the US$1.4 billion compensation figure claimed by GMR.

State Minister for Home Affairs Abdulla Mohamed, who was part of the protests against GMR, meanwhile argued that the ACC releasing its report a few days before an arbitration hearing could not be “a coincidence.”

“Do we really have to comply with a court order from a Singaporean court?” he asked.

He contended that the Maldivian government would not have to compensate GMR despite a decision in favour of the consortium at the ongoing arbitration proceedings.

“Also, we can appeal such a judgment in Maldivian courts, can’t we? That’s not prohibited by Maldivian law. There’s no obstacle to that. So this is not something that the public should be concerned about at all,” he said.

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No corruption in GMR airport deal, concludes ACC

The Anti-Corruption Commission (ACC) has ruled out corruption in the awarding of a concession agreement in June 2010 to a consortium of Indian infrastructure giant GMR and Malaysia Airports Holdings Berhard (MAHB) to develop and manage the Ibrahim Nasir International Airport (INIA).

In a 61-page investigative report (Dhivehi) made public yesterday (June 17), the ACC concluded that the bidding process was conducted fairly by the World Bank’s International Finance Corporation (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.

The amendments were published in the government gazette after the concession agreement was signed, the ACC noted.

The concession agreement was signed on June 28, 2010, while the amendments were gazetted on December 13, 2010, following a Supreme Court ruling. The amendments were voted through for a second time in August 2010 following a presidential veto.

On the previous administration’s decision to replace the board of directors at the 100 percent government-owned Maldives Airports Company Ltd (MACL) – after they refused to sign the concession agreement claiming insufficient information – the ACC observed that there was “no legal obstacle” for the move.

The ACC report also concluded that the government would benefit more from privatising the airport.

“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.

Conversely, the government would receive about US$534 million in the same period from the GMR consortium if the airport was privatised, the ACC found.

The privatisation of the airport by the ousted Maldivian Democratic Party (MDP) government in June 2010 was strongly condemned by opposition parties on nationalistic grounds.

The Dhivehi Rayyithunge Party (DRP), Peoples Alliance (PA), Dhivehi Qaumee Party (DQP) and Jumhooree Party (JP) signed an agreement to work against the privatisation process and launched a media offensive alleging “massive corruption” in the awarding of the contract.

The ACC report this week meanwhile followed a special audit conducted by the Auditor General’s Office with the assistance of a British consultant concerning the airport privatisation deal.

The AG’s report stated that evidence to back allegations of “improper interference” during the technical bidding process “is not conclusive on this point” and deferred the matter to the ACC.

The AG’s report also noted that the IFC’s terms of reference involved “securing the best deal for the government in terms of the concession fee paid to the government and MACL, and did not consider impacts on the Maldivian economy.”

Government stance

In November 2012, the current government – made up of a coalition of parties opposed to the MDP government’s privatisation policy – declared the concession agreement with the GMR-led consortium “void ab initio” (invalid from the outset) and abruptly terminated the contract.

In April this year, the Attorney General’s Office confirmed that arbitration proceedings resulting from the contract cancellation would begin by mid-2014.

Responding to the ACC’s findings yesterday, the government insisted that the report would have no impact on its legal position to declare the GMR concession agreement void, contending that President Dr Mohamed Waheed’s decision had nothing to do with corruption allegations levelled by “some people”.

President’s Office Media Secretary Masood Imad told Minivan News that the contract was declared void from the beginning due to the negative impact on state finances in 2012.

“Back before the government took back control of the airport from GMR, the reason we gave was that the deal was bleeding the country’s economy. We were paying GMR to keep them here,” he explained.

Masood said that despite “speculation from some people” concerning corruption by the former administration in signing the deal, the present government was not responsible for filing a case with the ACC.

He added that the government’s concerns over the deal had been in relation to the imposition of a US$25 Airport Development Charge (ADC) by GMR that was blocked by the Civil Court in 2011 after the then-opposition DQP filed a case on the matter.

The DQP, now part of President Waheed’s coalition government, attempted to block payment of the charge on the grounds that it was effectively a tax not approved by parliament.

In response, the MDP government agreed to deduct the ADC from the concession fees payable, while GMR later offered to exempt Maldives nationals from paying the ADC as it moved to appeal the verdict.

However, former President Mohamed Nasheed resigned under controversial circumstances on February 7, 2012 amidst a violent mutiny by elements of the police and military before the Civil Court verdict was appealed at the High Court.

Consequently, in the first quarter of 2012, Dr Waheed’s government received US$525,355 of an expected US$8.7 million, after the deduction of the ADC. That was followed by a US$1.5 million bill for the second quarter, after the ADC payable eclipsed the revenue due the government.

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President Waheed ignored advice on GMR termination, PPM alleges

The Progressive Party of Maldives (PPM) has accused President Dr Mohamed Waheed of ignoring the advice of his coalition government by abruptly terminating the US$511 million airport development contract with Indian infrastructure group GMR last year.

PPM MP Ahmed Nihan said that while the PPM believed terminating the GMR contract had been the right decision, President Waheed had nonetheless personally taken an executive decision to cancel the agreement without listening to the party’s advice in seeking a compromise with the company and the Indian government.

However, the PPM’s coalition partners today accused the party of making “contradictory statements” regarding the decision to terminate GMR’s concession agreement, accusing its senior leadership of trying to terminate the deal at the time without discussion or following due process.

The allegations against President Waheed surfaced following the visit to India last week by former President and PPM founder, Maumoon Abdul Gayoom, who pledged his party would seek to restore relations with India damaged by the government’s summary eviction of the GMR.

While Gayoom ultimately blamed former President Mohamed Nasheed for not obtaining parliamentary approval and “consulting all political parties” before signing the deal with the GMR-Malaysian Airports consortium in 2010, he was also critical of the present administration’s handling of the termination.

“Had Nasheed consulted all political parties, the public would not have formed the impression that corruption had taken place. Then we told the next President Mr Waheed that he should hold discussions with the GMR Group and the Indian government to arrive at an acceptable solution, after which the government was free to act on its own,” he said. “Unfortunately, this was not done and suddenly there was this unhappy ending,” Gayoom was reported as saying in the Hindu.

“Better” handling

MP Nihan said following a press conference held by the PPM in Male’ today that the party continued to believe the decision to terminate GMR’s concession agreement was in the best interest of the country.

However, amidst concerns about the subsequent negative impacts on bilateral relations from cancelling the deal, he stressed that the president could have handled the matter “better” in order to protect the relationship between the Maldives and India.

“We believe that the room was there to correct any negative relations with India,” Nihan claimed.

“This could have been much easier and perhaps a new approach could have been found to cancel the GMR contract,” he added.

Nihan said that as well as the GMR contract, President Waheed had on a number of occasions sought to take advantage of his position by making executive decisions against the wishes of his government coalition, all while trying to shift blame away from himself.

“We have seen [President Waheed] try to spin all good developments as being the result of his work, while anything that has gone wrong [in the government] is the PPM’s fault,” he said.

Following a PPM press conference today, Nihan added that the media has been shown two different letters sent from the party’s council to the government prior to the termination of the agreement last November that called to find a solution through dialogue.

Nihan also reiterated Gayoom’s comments that the manner in which the contract was not a “happy ending” in terms of its impact on bilateral relations with India.

“We are of the view that the agreement was only to be cancelled through due process of the law,” he said.

Nihan claimed that the contract dispute had also further exacerbated concerns held by the Indian government about treatment of Indian nationals in the country. He said this had in turn created difficulties for Maldivians in obtaining visas to travel to India for medical treatment.

Considering former President Gayoom’s 30 years spent in office, Nihan praised his efforts to try and strengthen bilateral relations with India.

The government’s sudden eviction of the Indian investor did not appear on a list of 11 grievances handed to all senior Maldivian reporters by the Indian High Commission in January.  The list instead included concerns such as discrimination against Indian expatriates and the confiscation of passports by Maldivian employers.

Tension

The argument over responsibility for the GMR contract termination has comes amidst reports of increased tension within the present coalition government, with PPM presidential candidate Abdullah Yameen last month criticising President Waheed over his alleged use of state funds for campaigning.

The PPM has nonetheless pledged to continue supporting President Waheed’s government up until September’s election, despite concerns about the decision to dismiss former Home Minister Dr Mohamed Jameel Ahmed after he decided to stand as MP Yameen’s running mate.

DRP response

The PPM’s recent criticism of President Waheed’s handling of the GMR dispute was today slammed as being “contradictory” by government coalition partner the Dhivehi Rayyithunge Party (DRP).

The party added that its members had previously come under heavy criticism from the PPM for advocating at the time that any termination of the GMR airport deal should be made via the due process of the law.

DRP Parliamentary Group Leader Dr Abdulla Mausoom told Minivan News that it was in fact senior figures in the PPM that were  among the most vocal supporters for terminating the GMR agreement.

“It is ironic that we are hearing these statements from the PPM, whose leader has been witnessed supporting rallies demanding the cancellation of the [GMR] agreement,” he said.

Dr Mausoom alleged that he had also been informed from “a reliable political source” present during government consultations last year over whether to terminate the GMR agreement that it had been PPM presidential candidate Yameen who personally advocated cancelling the deal without a need for discussion.

“Either there is no harmony within the [PPM], or this is all political talk to try and gain an advantage. Either was it is very irresponsible,” he said of the PPM’s recent comments about terminating the GMR concession agreement.

Mausoom alleged that contrary to the PPM’s claims, it had been the DRP which had advocated finding a legal means of terminating the GMR agreement at at time when fellow government-aligned parties had taken to the streets holding rallies demanding the airport be “reclaimed”.

Despite appeals by GMR that it was acting as a caretaker for running and improving Ibrahim Nasir International Airport (INIA), which would remain Maldivian-owned, efforts to cancel the concession agreement – which was vetted by the World Bank’s International Finance Corporation (IFC) – intensified up to November.

On November 13, just ahead of the contract termination, a seaborne armada of about 15 dhonis carrying flags and banners circled the airport seeking to increase pressure on the government to “reclaim” the site from GMR.

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Former attorney general to keep advising government on Nexbis, GMR matters

Former Attorney General (AG) Azima Shukoor will continue to advise the government on two high-profile legal cases she has previously been involved in, despite being transferred to the Gender Ministry earlier this month.

The two cases involve the future of an agreement to implement a border control system supplied by Malaysia-based Nexbis and arbitration hearings resulting from declaring “void” a US$511 million airport concession agreement with India-based GMR void.

Shukoor, who was appointed as Minister of Gender, Family and Human Rights on April 10, said yesterday (April 13) that she intended to continue to serve on a team of lawyers working for the state on the cases involving Nexbis and GMR, local newspaper Haveeru has reported.

President’s Office Media Secretary Masood Imad has previously told Minivan News that the government had decided to transfer Shukoor as part of commitments to help oversee proposed legal reforms that could potentially end the use of flogging as a punishment for sexual offences.

The government has previously criticised the practice, which it alleged serves to punish victims of rape and sexual abuse in some cases.

The state has come under further pressure to review the handling of sexual offence cases from petition site Azaaz.org, which has threatened otherwise to call for a tourism boycott over a flogging sentence handed to a 15 year-old girl for ‘fornication’.

Shukoor has claimed in local media to have personally requested the president appoint her to the Gender Ministry on condition she would continue to work on the cases relating to Nexbis’ agreement and the arbitration hearings with GMR.

GMR arbitration

In November 2012, President Dr Mohamed Waheed’s government declared void a concession agreement signed by the previous government with Indian firm GMR to manage and build a new terminal at Ibrahim Nasir International Airport (INIA).  It then ordered the company to leave the country within seven days.

GMR is seeking US$800 million in compensation for the sudden termination, while the Maldivian government is contending that it owes nothing as the contract was void ab initio – meaning the contract was invalid from the outset.

Nexbis

Nexbis signed a “legally binding” deal in 2010 to provide a customised border control system under a ‘build, operate and transfer’ agreement to Maldivian authorities that still remains in use as of this month.

The deal is presently the subject of legal wrangling over whether the Anti-Corruption Commission (ACC) has the power to demand termination of the contract. Parliament has also voted to cancel the system, but this is subject to a court injunction.

However, the US government late last month signed a Memorandum of Understanding (MOU) to provide a border control system to the Maldives. Representatives for Nexbis at the time said they had not been informed of the MOU signing or what it might mean for the company’s own agreement with the state.

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