Tag: contract

US “terrorist tracking system” will not replace comprehensive border control: Nexbis

Malaysian IT company Nexbis has released a statement rubbishing the Maldivian government’s reasons for terminating their agreement to build and operate a new border control system.

The company has also suggested that human traffickers, fearful of a more comprehensive system, were behind the decision.

“The US PISCES system that is meant to replace the MIBCS is not a border control system nor is it an immigration solution, rather it is a terrorist tracking system that simply captures information of travellers and Maldivians who transit in and out of the country,” read the press release.

In June the Maldives was placed on the US State Department’s Tier Two Watch List for Human Trafficking for the fourth consecutive year.

Whilst the United States and the Maldives signed a memorandum of understanding regarding the provision of the free PISCES (Personal Identification Secure Comparison and Evaluation System) system in March of this year, Department of Immigration Spokesperson Ibrahim Ashraf told Minivan News last week that this system was not yet fully operational.

The PISCES system, designed by US tech firm Booz Allen Hamilton, has already been implemented in numerous other countries around the world, including Pakistan, Afghanistan, Iraq and Thailand.

Booz Allen’s website describes PISCES as “a critical tool in the war on terrorism”, allowing countries to collect, compare and analyse data in order to secure their borders.

At the time of the March agreement Immigration Controller Dr Mohamed Ali told Minivan News it was too early to tell if the new border controls would be a direct replacement for the system provided by Nexbis.

Contradictory reasons for termination

Today’s statement also takes issue with the claims of Defence Minister Mohamed Nazim that the installation of the Nexbis system was causing “major losses” to the state. The quote was given to local media on August 6 as the Malaysian company was informed it had 14 days to vacate the country.

Nexbis contends that the official notice of the termination it received contradicts the statement given by the Defence Minister. The notice – received on August 5 – stated that the agreement was invalid from the outset (void ab initio), alleges Nexbis. This, it argues, would seemingly dispel the need for any further justification for the contract’s termination.

Regardless, the statement strongly refutes the government’s justification for the sudden termination. It argues that the installation and operation of the system was carried out free of charge, with all costs to be levied from foreign visitors and work permit applicants. The fact that these charges – to be added to airline ticket prices – were not obtained was due to the “oversight of certain officials in notifying the relevant international authorities,” says Nexbis.

The company also added that US$2.8million it had billed the government was therefore the amount due for the arrival and departure of foreigners as per its contract, and not for the installation and operation of the system.

Attorney General Azima Shukoor last week told local media that negotiations were being held with Nexbis over reaching an out of court settlement for terminating the contract, a statement also cited by Nexbis as in contradiction to the official notice given.

“The government’s admission and acknowledgement that the Nexbis agreement is till date, a legally valid and binding agreement that is further supported by the statement made by Azima… which suggests nothing less than an assertion that the Nexbis Agreement is legally valid,” said the Malaysian company.

The terms of the agreement are governed under Singapore law, as are those of the GMR airport contract – terminated in November last year. The cancellation of this deal, the largest foreign direct investment in the country’s history, has led the GMR to seek US$1.4billion in compensation.

The Nexbis deal has been dogged by allegations of corruption since it was agreed under former President Mohamed Nasheed in 2010. The failure of the Anti-Corruption Commission (ACC) to conclusively prove foul play in this respect exonerates Nexbis from such charges, it has claimed.

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 the agreement.

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Government to obtain medical supplies via UNOPS agreement

The United Nations Office for Project Services (UNOPS) will procure medical supplies for the Maldives government, local media has reported.

The government of Maldives will spend MVR 67 million (US$4,370,544) to obtain pharmaceuticals and other medical equipment for state-run hospitals and health centres through UNOPS, Health Ministry Director General Dr Sheeza Ali has said.

“Getting pharmaceuticals and equipment through a UN-agency like UNOPS will ensure quality, as they only buy high-quality, best-value goods from suppliers that meet their standards,” Sheeza was quoted by local newspaper Haveeru as saying.

“An analysis we did before signing the agreement showed that the cost of obtaining pharmaceuticals and other equipment would decrease by 20-30 percent,” she added.

UNOPS will procure the medical goods through its extensive network of suppliers in four phases. The two year contract, signed April 15, 2013, requires the Maldives’ government to pay the UN agency on a twice yearly basis.

The current project will help to build the government’s procurement capacity to obtain medical supplies, according to Ali.

Once the UNOPS contract expires, the Maldives’ government will independently acquire medical goods, she added. Previously the government secured pharmaceuticals through individual suppliers.

The decision to contract with UNOPS was made by the cabinet, while the attorney general and Finance Ministry approved the project, according to Ali.

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Decision on future of waste management project expected within a week: State Minister Matheen

A decision over whether to cancel a contract with India-based Tatva Global Renewable Energy for the provision of a waste management system in the Male’ area will be taken by the Environment Ministry this week, according to local media.

A final decision on the contract – which was last month in the process of renegotiation between the current government and Tatva Global Renewable Energy – is expected to be taken within the next five days, State Minister for Environment and Energy Abdul Matheen Mohamed has reportedly confirmed.

Matheen claimed Monday (December 25) that final discussions with the company were set to take place over whether the ministry would seek to scrap the contract, Local newspaper Haveeru has reported.

Former President Mohamed Nasheed’s administration signed the original waste management agreement with Tatva in May 2011 in a deal that was supposed to have generated power from recycling waste. The scheme was also said to be part of attempts to improve the overall standards of waste management in Male’ and the nearby “garbage island”, Thilafushi.

The deal, like the airport development agreement with India-based GMR declared void by the government last month, was been backed by International Finance Corporation (IFC), an affiliate organisation of the World Bank, according to the Inter Press Service news agency.

However, parts of the agreement were ordered halted by the country’s Anti-Corruption Commission (ACC) in August this year over alleged concerns about the contract approved by the former government.

The ACC received concerns that the project would lead to an anticipated loss of MVR 1 billion (US$64.8 million) in government finances over a 20 year operating period, according to local news reports at the time.

“Mutually beneficial”

Environment Minister Dr Mariyam Shakeela announced earlier this month that discussions were taking place as to whether the previous contract agreed with Tatva could be replaced with a more “mutually beneficial” agreement.

“Provided they perform within the time frame given, the contract will remain with Tatva,” she said in response to whether the company would retain its role on the waste management project.

However, Male’ City Council (MCC) has criticised the renegotiation attempts, accusing the state of trying to sabotage the agreement outright for political gain.

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“There was a legitimate contract signed. We are disappointed”: Malaysian Trade Minister

The Malaysian government has expressed “disappointment” at the scrapping of the Maldives’ “legitimate” contract with the GMR-Malaysia Airports Holdings Berhad consortium.

Indian media reported that Malaysian Prime Minister Najib Tun Razak was scheduled to visit New Delhi towards the end of the week and would likely be discussing the matter with Indian Prime Minister Manmohan Singh.

Malaysia’s Consul General in Chennai, Citra Devi Ramiyah, told reporters in Delhi that it was too early to speculate whether MAHB would seek compensation from the Maldivian government, which voided the GMR-MAHB concession agreement and ordered the company to leave by December 7.

The government had earlier dismissed a stay order for the eviction granted by the arbitrators – the Singapore High Court – as an affront to the country’s sovereignty. A day before the end of the seven day notice period, the injunction was dropped on appeal after Chief Justice Sundaresh Menon of the Supreme Court of Singapore declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

Ramiyah told reporters that the Maldivian government had shown its intention “to do the project on its own and [was] willing to compensate financially. So, it is very early for us to comment.”

Malaysian Minister of International Trade and Industry Seri Mustapa Mohamad was more concerned, according to the Economic Times, and expressed hope that the Maldives would reconsider its decision to evict the investors.

“In Male we have enjoyed very close ties with the previous government for many years. The Maldives is 100 per cent Muslim country. Of course, with the new government the lesson for us is we should be more careful, more due diligent,” Mohamad said.

“We want our investments to be protected. There was a legitimate contract signed. We are disappointed,” he added.

GMR meanwhile handed over the duty free stores today after being ordered to do so by the government.

“GMR has vacated the duty free shops at the airport. So since they’ve cleared their goods, no services will be provided from the shops,” Maldives Airports Company Limited (MACL) Rahmathullah Ashraf told local media.

Andrew Harrison, CEO of GMR Male International Airport – GMR’s side of the voided airport development – dismissed claims in local media that the company had “stripped” the duty free store ahead of the handover.

“We were asked to close duty free by the 17th. It is not true we have stripped duty free. We have destocked and in some cases returned goods to suppliers, or found buyers through appropriate customs procedures,” Harrison said.

GMR had sought a smooth transition after being ordered to handover the airport “as we did not want passengers or carriers to suffer,” he said. “The only area left where we [were] active was duty free.”

GMR staff had begun returning to India, particularly those involved in the construction of the new terminal after the cancellation of the contracts to build it, he said.

The government has not yet declared what it intends to do with the foundations of the abandoned terminal project, built on 60 hectares of reclaimed land on the other side of the airport island.

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Cabinet voids US$511 million GMR contract, gives airport developer seven day ultimatum to leave

Additional reporting by Neil Merrett and Mohamed Naahii.

The Maldivian cabinet has declared the agreement with Indian infrastructure giant GMR to develop Ibrahim Nasir International Airport (INIA) void, and has given the company a seven day ultimatum to leave the country.

“The government has given a seven day notice to GMR to leave the airport. The agreement states that GMR should be given a 30 day notice but the government believes that since the contract is void, it need not be followed,” said Attorney General (AG) Azima Shukoor.

During a press conference on Tuesday evening, Shukoor stated that the government reached the decision after considering “technical, financial and economic” issues surrounding the agreement.

The attorney general claimed the government had obtained legal advice from “lawyers in both the UK and Singapore as well as prominent local lawyers – all who are in favour of the government’s legal grounds to terminate the contract.”

“We also got advice from both local and international lawyers in the Maldives Airports Company Limited (MACL),” she added.

Shukoor said the government had two legal grounds to terminate the contract: one in which the government believed the contract was ‘void ab initio’ – meaning to be treated as invalid from the outset; and the second being ‘frustration’, an English contract law doctrine which acts as a device to set aside contracts where an unforeseen event either renders contractual obligations impossible, or radically changes the party’s principal purpose for entering into the contract.

“The contract is governed by the English contract law. The government believes that the agreement is void ab initio meaning the contract was void from the beginning or the contract is frustrated,” she said.

She added the termination of the agreement was a “purely legal decision” and did not have any connection with the recent series of anti-GMR protests headed by the religious Adhaalath Party (AP).

The decision was, Shukoor insisted, made “professionally” and after “thorough research”.

Shukoor also claimed the government was going to initiate the arbitration process in Singaporean Courts and had already informed its decision to both GMR and MACL.

Asked how the government planned fund the estimated US$700 million in compensation for terminating the contract, Shukoor declined to speak of the sum of money but expressed “full confidence” in winning a court battle.

“We were advised by very professional lawyers including Queen’s Counsels (QC). We have full confidence in winning the case,” she said.

“We do not intend to share all our legal arguments in this press conference. Please do respect that decision,” she added.

“Completely irrational”: GMR

GMR has slammed cabinet’s decision as “unilateral and completely irrational”.

“This unlawful and premature notice on the pretext that the concession agreement is ‘void’ is completely devoid of any locus standi and is therefore being challenged by the company before the competent forums. The company disputes that the concession agreement is ‘void’,” GMR said in a statement.

“The company would further like to state that it has taken all measures to continue operations at the Ibrahim Nasir International Airport thereby ensuring that this vital gateway to Maldives is kept open.

“We would also like to inform all that this action by the government of the Maldives is in complete disregard of and has been done during the pendency of arbitration proceedings in the designated tribunal in Singapore. We are therefore taking all measures to ensure the safety of our employees and safeguard our assets. We are confident that the stand of the company will be vindicated in every way.”

Speaking to Minivan News, GMR Executive Vice President & Group Head of Corporate Communications, Arun Bhaghat, said the only reason for the decision as stated in the government’s letter was that the airport development charge had been ruled unleviable by the Civil Court, and therefore the entire contract was void.

In late 2011 the then-opposition Dhivehi Qaumee Party (DQP) filed a successful Civil Court case blocking GMR from charging an Airport Development Charge (ADC) – a US$25 charge for outgoing passengers stipulated in the concession agreement – on the grounds that it was a tax not authorised by parliament.

Nasheed’s administration chose to honour the original contract, and instructed GMR to deduct the ADC revenues from the concession fees due the government, while it sought to appeal the Civil Court ruling.

However, the Nasheed government fell a month later and the opposition inherited the result of its court victory, receiving a succession of bills from the airport developer throughout 2012, despite the government’s insistence that the January 5 letter from MACL outlining the arrangement was no longer valid.

In the first quarter of 2012 the 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.

Combined with the third quarter payment due, the government now owes the airport developer US$3.7 million.

“The net result of this is that the Maldivian government now has to pay GMR for running the airport. On this basis it is likely that the Maldivian government will end up paying about MVR 8 billion (US$519 million) to GMR for the duration of the contract,” wrote Dr Hassan Saeed, DQP Leader and President Mohamed Waheed’s Special Advisor, in a recent appeal to Indian Prime Minister Manmohan Singh calling on him to cancel the Maldives’ agreement with GMR and warning the Indian PM of “rising extremism” as a result of the GMR deal and anti-Indian sentiment.

GMR attempted to compromise by offering to exempt Maldivian nationals from the ADC, with GMR Chairman G M Rao personally mailing Waheed with the offer, but claimed to have received no response from the government.

“This is by far the single largest foreign investment in the Maldives at US$511 million – in today’s figures, 40-50 percent of the Maldives’ GDP,” observed Bhaghat, adding that the company was supremely confident of defending its legal position.

“We have no plans to go. We have 23 more years here,” he said, vowing that the cabinet’s decision would have “no effect” on the operation of the airport.

“The defence force in this wonderful country is well geared to ensure smooth operation of the airport,” Bhaghat told Minivan News.

India backs GMR: “All necessary measures”

The government of India “proposes to monitor the situation in Maldives closely and is prepared to take all necessary measures to ensure the safety and security of its interests and its nationals in the Maldives,” India’s Ministry of External Affairs has meanwhile said in a statement.

“We have noted the decision by the Government of Maldives to terminate the agreement with the GMR Group to manage the Male International Airport. It would be recalled that the consortium consisting of GMR and MAHB (Malaysian Airport Authority) had been awarded the contract to manage the Male’ International Airport concession through a global tender conducted by the International Finance Corporation (IFC), Washington, a member of the World Bank.

“As the Advisor to the Government of Maldives, the IFC has stated that it has complied with Maldivian laws and regulations and followed international best practices at each step of the bidding process to ensure the highest degree of competitiveness, transparency and credibility of the process,” the statement read.

“The investment by GMR represents the single largest foreign direct investment in the history of Maldives. The decision to terminate the contract with GMR without due consultation with the company or efforts at arbitration provided for under the agreement sends a very negative signal to foreign investors and the international community. The Government of India would continue to remain engaged with the Government of Maldives on this issue, and would expect that the Government of Maldives would fulfil all legal processes and requirements in accordance with the relevant contracts and agreement it has concluded with GMR in this regard.”

“Destabilising the country”: MDP

The Maldivian Democratic Party (MDP) has meanwhile accused cabinet of destabilising the country by attacking foreign investment and supporting “extremist” rhetoric.

“This decision is bad for tourism, bad for the economy and bad for the Maldivian people,” said former President Mohamed Nasheed.

“Waheed’s government has cynically used xenophobia, nationalism and religious extremism to attack GMR, the country’s largest foreign investor. This will put off potential investors for decades. Waheed is leading the Maldives down the path to economic ruin,” he stated.

MDP MP and Spokesperson Hamid Abdul Ghafoor told Minivan News that disputed contracts could be unravelled through a legal process, but said the executive’s decision to void the contract and evict the country’s single largest foreign investor was not backed by any law.

“If cabinet has now decided to revoke the contract, who is going to execute the order? The contract is bound under international law. The case is still being heard by a court of arbitration in Singapore,” Ghafoor said.

“Will police be executing this order to reclaim the airport, or will it be Islamist elements? This is an executive decision that is being taken without any legal or political backing.”

Maldives National Defence Force (MNDF) Spokesperson Colonel Abdul Raheem said the military was “not involved” in the airport issue: “We will however, continue to take care of security [at the site] and look after it,” he said.

Police Spokesperson Sub-Inspector Hassan Haneef told Minivan News that any decision to enforce the decision would have to be directed by the President’s Office.

Decision prompted by “extremists”

Ghafoor claimed that threats of direct attacks on foreign investors reflected what he was the growing role of extremist Islamic thinking within the most senior decision making of the present government.

Raising concerns over the legality of voiding the GMR contract, Ghafoor pointed to recent comments in local media by the government-aligned religious Adaalath party, whose president Sheikh Imran Abdulla was yesterday quoted as threatening to “invade the runway” should the government not renege on the airport agreement.

“The deal was done very transparently, and [the government] have never been able to prove any wrongdoing,” Ghafoor claimed. “Yet, what is most worrying is that we have the cabinet of what we believe is an illegitimate government that is being influenced by extremist influences.”

Ghafoor alleged that the government’s decision over the GMR issue was being driven by former President Maumoon Abdul Gayoom’s Progressive Party of Maldives (PPM), Adhalaath Party President Sheikh Imran and fellow party member and Minister of Islamic Affairs, Sheikh Mohamed Shaheem Ali Saeed.

“We are now seeing the government partnering with and backing the rhetoric of a movement led by an Islamist group, it is very apparent what is going on here,” he said.

MP Ghafoor further claimed that parliament had, as of this evening, received no information on the decision to renege on the GMR agreement, adding that several no-confidence motions against senior government figures including President Waheed were scheduled.

“What is going on right now is a shift in parliament,” he said.

Ghafoor also claimed that beyond the potential legal and economic ramifications of reneging on the sovereign agreement with GMR, rumours of a Chinese intermediary stepping in to cover possible financial consequences could significantly affect the Maldives internationally.

“In terms of geopolitics, we are hearing about a Chinese connection to the [airport issue] that does not put the country in a comfortable position,” Ghafoor claimed. “Ideologically and culturally we have much closer ties to India than China.”

Returning from a visit to China back in September, President Dr Mohamed Waheed Hassan told reporters that Chinese aid to the Maldives would not be limited to a US$500million (MVR7.7billion) loan finalised earlier this year.

Waheed revealed at the time that the Chinese government had pledged to make all necessary aid available to the Maldives, including assistance with road and shipping development, local media reported at the time.

Regarding China’s view on Maldivian politics, Waheed noted that the Chinese were amongst the first nations to recognise his unity government.

“The Chinese Prime Minister personally told me that he had full confidence and support for the Maldivian government,” Waheed was reported as saying.

However, the Maldives government this evening dismissed suggestions that China would be taking a role in any future airport development.

“On this matter, China is as far away from the airport development as is physically possible,” said Presidents Office Media Secretary Masood Imad.

Troubled airport agreement

The agreement with the GMR-Malaysia Airports Holdings Berhad consortium was signed on June 28, 2010 with the Nasheed administration, following a bidding process conducted by the World Bank’s International Finance Corporation (IFC).

The GMR-MAHB consortium narrowly beat Turkish-French consortium TAV Holdings-Aéroports de Paris Management (ADPM), scoring a final Net Present Value (NPV) score of 495.18 to the runner up’s 454.04 at conclusion of the bid.

GMR’s win was based on playing to the government’s highest-scoring factors – fuel share revenue and upfront payment – at the expense of non-fuel related airport revenue.

As part of its successful bid, GMR paid the government US$78 million and 1 percent of non-fuel revenue and 15 percent of fuel revenue for 2011-2014, increased to 10 percent and 27 percent respectively for 2015-2025. The developer at the time anticipated that additional services and duty free development for the country’s well-heeled clientele, as well as the Maldives’ tourism growth potential, would offset the risks of the higher fuel share.

Opposition parties at the time the agreement was signed – and are now in government following February 7’s controversial transfer of power – first opposed GMR’s development of the airport on nationalistic grounds, and then levelled numerous allegations against the company ranging from corruption to concerns that the deal would allow Israeli bombers to refuel en route to bombing Arab countries.

Further protests occurred in December 2011 after GMR ceased renewing lease agreements of several existing airport duty free operators, notably duty-free liquor store Alpha-MVKB.

The High Court upheld at the time that since GMR had given notice on March 1, 2011 and, as per the agreement, the contract had been terminated on March 31. The court concluded that MVK had no right to remain at the airport without approval from GMR, and began packing up the store’s contents on December 4. Following the eviction, MVK CEO Ibrahim Shafeeq accused GMR of breaking into his shop and stealing his stock, and then launched a ‘Go Home GMR’ protest.

As tension with the developer increased, President Waheed’s cabinet attacked the IFC as “irresponsible” and “negligent” in conducting the bidding process.

The IFC denied the accusations, stating that its advice was geared towards achieving the “objective of upgrading the airport and ensuring compliance with applicable international regulations” and providing the Maldives government “with the maximum possible revenue”.

The stand-off escalated in early August 2012 following a stop work order on the new terminal development, after the government alleged certain planning permissions had not been obtained from the Civil Aviation Authority.

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