Finance Committee approves reallocating southern flats to Hulhumalé

Parliament’s finance committee has approved President Abdulla Yameen’s proposal to relocate 704 out of 1,500 housing units, planned for the southern four atolls, to Hulhumalé.

The 1,500 housing units were originally planned to be constructed in Gaaf Alif, Gaaf Dhaal, Fuvahmulah, and Addu City with a MVR2.5 billion (US$162 million) loan secured from the Chinese EXIM bank under President Mohamed Nasheed’s administration.

The request to move 704 units to Hulhumalé was first made by President Dr Mohamed Waheed in December 2012, but denied by parliament at the time.

President Yameen, who has pledged to develop a ‘youth cityin Hulhumalé with a population of 50,000, recently requested the same change, stating there is “no need at present” to build more than 796 housing units in the southern atolls under the project.

Yameen’s request, which was approved on Monday by the finance committee, has now been sent to the Majlis floor for approval.

At Monday’s committee meeting, the proposition to approve the request was made by ruling Progressive Party of Maldives (PPM) MP Riyaz Rasheed who said it was not feasible to develop all the units in the southern atolls.

He proposed to accept the president’s request and to pass a report compiled by the previous Majlis’ finance committee, in response to President Waheed’s request in 2012.

The report states that the committee approves the decision to relocate housing units from four southern atolls to Malé because the Ministry of Housing has said in a letter that this decision was made after a ‘housing needs assessment’ in those atolls.

The 13 member committee has six members from the ruling PPM, two from the Jumhooree Party (JP) and one member from the ruling coalition party the Maldives Development Alliance (MDA).

However, the decision was met with fierce opposition from the opposition Maldivian Democratic Party (MDP) who have four MPs in the committee.

Addu city’s Maradhoo MP Ibrahim ‘Mavota’ Shareef from the MDP proposed to seek further information on the issue by summoning Minister of Housing and Minister of Housing to the committee, but the motion received just three votes in favor.

Shareef accused the government of trying to isolate islands other than Malé and described the decision to relocate housing units as a betrayal of Addu people.

He said the initial plan to develop all 1,500 units in the southern atolls was also based on a feasibility study and a proposal by the MDP administration and was focused on relieving congestion in Male’ area.

Responding to Shareef’s comments, PPM’s Addu Feydhoo MP Ibrahim Didi said the government is not acting against Addu people and he has no objection to the government decision as Feydhoo does not have space for the construction of those housing units.

MDP parliamentary group leader Ibrahim Solih said the party has no issue with the government changing projects to fit their policies, but the concern is over not knowing the details of the justification for such a change.

The issue of regional disparities in development were highlighted in the UNDP’s Human Development Index report which argued that regional inequalities remained a “major challenge” towards human development.


Malé City Council ordered to suspend projects

The Finance Committee of the People’s Majlis has ordered Malé City Council to suspend all projects except for basic service delivery, pending an investigation into the council’s conduct in leasing land.

“The Finance Committee has received reports the Malé City Council is acting in the interest of certain individuals in renting out land and awarding contracts for development of land,” the Finance Committee said in a statement today.

The decision passed with the unanimous support of the five members present and voting.

Meanwhile, the Anti- Corruption Commission (ACC) announced today that it has recommended charges be filed against two of the nine Malé City councilors and three council staff for conferring undue advantage in the awarding of a contract in the Vilimalé Safe Beach Project.

The two councilors are Deputy Mayor Ahmed Samah Rasheed and Ibrahim Sujau. The staff are Assistant Directors Mizhath Naeem, Aishath Jumana Mohamed Rasheed, and Abdulla Rameez.

The Vilimalé Safe Beach Project had sought a contractor to keep the Vilimalé beach area, jetty, and lagoon clean and promised to provide adequate workspace.

The winning bidder had asked for two beachfront blocks to build administrative offices and establish a business at the site in order to sustain the project.

However, the ACC said it does not believe the Malé City Council’s promise of workspace allows for land to be granted to carry out for-profit activities.

The commission notes that all bidders except the winning bidder believed the workspace simply meant land on which to store equipment.

The bid evaluation committee justified their decision by arguing that the winning bidder had proposed a much lower price. However, the commission said that if other bidders had known the promised workspace could be rented out or used for profit, then it is possible that they may have proposed lower prices as well.

Hence, “other bidders did not receive opportunity to compete fairly,” the ACC said.

The ACC recommends the Prosecutor General pursue criminal charges for conferring undue advantage under Article 12 (a) in the Prevention and Prohibition of Corruption Act of 2000.

A study conducted by advocacy NGO Transparency Maldives has found 83 percent of people surveyed felt corruption had increased or stayed the same during the past two years in the Maldives.

According to the survey, the most common area in which bribes were paid was said to be land services, with the most frequent reason for giving bribes being ‘to speed things up’.

Earlier in December the ACC alleged corruption in the award of apartments to individuals as part of the Veshifahi Malé housing programme, ordering the invalidation of 139 of the 448 successful applications.

Elections for the Malé City Council are to be held on January 18.


Parliament’s Finance Committee revises pay scheme for senior state officials

Parliament today passed revisions to the pay scheme approved by the Finance Committee for senior officials in the executive, judiciary and independent institutions.

The revisions included a MVR 5,000 (US$324) pay raise for board members of the Maldives Inland Revenue Authority (MIRA).

Article 102 of the constitution states, “The President, Vice President, members of the Cabinet, members of the People’s Majlis, including the Speaker and Deputy Speaker, members of the Judiciary, and members of the Independent Commissions and Independent Offices shall be paid such salary and allowances as determined by the People’s Majlis.”

The task of determining salaries and allowances is entrusted to the Finance Committee under section 100(a) of the parliamentary rules of procedures.

Among the changes brought by the committee to the pay structure passed on December 28, 2010 was a monthly phone allowance of MVR 1,000 (US$65) for MPs, ministers, judges of the High Court and Supreme Court, members of independent commissions, the Prosecutor General, the Attorney General and the Governor of the Maldives Monetary Authority.

If the phone bill exceeds MVR 1000, the officials would be allowed to claim compensation for the cost of phone calls made for official purposes.

The Finance Committee also decided to discontinue monthly salaries for drivers of cabinet minister’s cars (MVR 7,500) as well as an allowance for petrol cost (MVR 1,000). Ministers would be instructed to settle the expenses out of their salaries from April 2013 onward.

However, the committee did not terminate similar expenses for other officials provided state cars.

The committee meanwhile approved raising monthly salaries of Maldives Inland Revenue Authority (MIRA) board members by MVR 5,000 (US$324) and the health insurance premium for judges and their parents from MVR 4,500 (US$292) to MVR 7,000 (US$454).

MIRA board members would now receive a monthly pay of MVR 15,500 (US$1,005).

Followings its review of the pay scheme and consideration of requests, the Finance Committee however decided not to increase the salaries of Maldives Broadcasting Corporation (MBC) board members.

The committee also decided against making any changes to the remuneration of MPs.

Moreover, requests by the Judicial Service Commission (JSC) for a committee allowance as well as an additional allowance for Criminal Court judges ruling on extension of detention for criminal suspects were denied.

The revised pay scheme was passed with 38 votes in favour, two against and five abstentions.

Presenting the Finance Committee report (Dhivehi) to the floor, MP Mohamed ‘Colonel’ Nasheed said the change to phone allowance was made in light of issues raised by the Auditor General’s Office in various audit reports regarding the waste of public funds and phone credit transfers.

The decision was made to impose one rule and limit for all institutions and reduce costs, the Maldivian Democratic Party (MDP) MP for Nolhivaram said.

As a recommendation to reduce state expenditure, the Finance Committee also decided to advise the government to merge the Customs Integrity Commission and the Police Integrity Commission to form a “National Integrity Commission” with oversight over all state institutions, Nasheed said.

Nasheed added that eliminating salary for minister’s drivers and fuel allowance would save 89 percent from the budget item.

Meanwhile, on December 23, the Finance Ministry issued a circular instructing government offices to arrange a medical insurance scheme for ministers, their spouses and children under 18 years of age to receive medical treatment in the Maldives as well as overseas in SAARC and ASEAN nations.

The offices were asked to make arrangements from their budgets for the health insurance scheme from the Allied Insurance Company with an annual premium of MVR 12,500 (US$810).


ACC to investigate alleged violations of public finance law by Prosecutor General’s Office

Parliament today approved a decision by the Finance Committee to instruct the Anti-Corruption Commission (ACC) to investigate alleged violations of public finance law by the Prosecutor General’s Office (PGO).

The decision was made in a report (Dhivehi) forwarded by the Finance Committee after studying violations of the Public Finance Act and regulations under the law flagged in the PGO audit report for 2010.

Reviewing audit reports and recommending measures to be taken by the relevant authorities is part of the mandate of the public accounts oversight committee.

The Finance Committee decision was approved with 51 votes in favour and two abstentions.

The audit report found that the PG office spent a total of MVR 145,596 (US$9,706) in violation of the Public Finance Act.

Among the cases uncovered in the audit that the ACC was asked to investigate, the PGO was found to have spent MVR 40,745 (US$2640) in additional expenses for interior design after moving to its new offices, without an agreement on price and quality of the work as required by section 8.21 of the public finance regulations.

Moreover, the PGO spent MVR 45,938 (US$3000) on an official dinner to participants of an e-crime conference participants in June 2010 without a publicly-announced bidding process.

The Finance Committee decided to send both cases to the ACC for investigation and inform the PGO to take measures to remedy the matters identified in the audit report.

The committee also decided that the Prosecutor General had breached article 17 and 20 of the constitution on non-discrimination and equality before the law as the office has prosecuted cases where the public finance regulations were similarly violated.

After the committee report was passed at today’s sitting, some MPs contended that Prosecutor General Ahmed Muizz would have to be removed from his post due to the decision.

However, Deputy Speaker Ahmed Nazim – also chair of the Finance Committee – said that Muizz would not be dismissed as the process specified in the constitution had to be followed to remove appointed officials at independent institutions.

Meanwhile, in a press release last week, the PGO said it would “always welcome” investigations by other state institutions into alleged violations of the constitution and laws by the office.

The PGO’s statement also assured that the office would provide “full cooperation” for the investigation.


Government agreed to waive taxes for Nexbis, reveals Parliament’s Finance Committee

The Maldivian government agreed to waive taxes for Nexbis as part of the controversial border control agreement signed with the Malaysia-based mobile security provider, parliament’s Finance Committee has revealed.

The People’s Majlis secretariat explained in a statement yesterday (December 11) that the committee has sent a letter to President Dr Mohamed Waheed Hassan Manik noting the findings of an inquiry to determine the possible financial burden on the state due to the Nexbis deal.

“The Finance Committee told the President that the ties and cooperation between state institutions necessary for the border control system was non-existent,” the Majlis press release read.

The Finance Ministry meanwhile informed the public accounts oversight committee on November 13 that it has yet to receive a copy of the border control agreement.

The committee observed that the government had “not considered” that tax exemption was within the legislative powers of parliament.

Moreover, the committee noted that “no government department has to date” initiated any effort to approve waiving taxes for the Malaysian company.

The Finance Committee also informed the President that the relevant government authorities lacked “authentic and valid information” of the border control project.

The committee further noted that the relevant authorities did not offer “adequate cooperation” in providing information for the inquiry.

In a letter to the Finance Committee on November 1, the Immigration Department explained that the border control system agreement was signed before the Business Profit Tax (BPT) came into effect.

However, the government agreed to exempt Nexbis from the tax with a final decision to be made by the Finance Ministry, the Immigration Department said.

Nexbis deal

Speaking at a rally last month, parliament’s Minority Leader MP Abdulla Yameen called on the government to “immediately” terminate the agreement with Nexbis and contended that the project was detrimental to the state.

The parliamentary group leader of the government-aligned Progressive Party of Maldives (PPM) also criticised the government’s “hesitancy” to cancel the agreement despite the Anti-Corruption Commission’s (ACC’s) findings of alleged corruption in the deal.

Local media meanwhile reported that the Finance Committee had decided during a closed-door session last month to instruct the executive to halt the project.

The decision would however have to be approved through a vote on the Majlis floor following consideration of a report by the committee.

In September, the ACC informed the committee that the deal would cost the Maldives MVR 2.5 billion (US$162 million) in potential lost revenue over the lifetime of the contract.

Following its investigation into alleged corruption in awarding of the contract to Nexbis, the ACC requested the Prosecutor General’s Office (PGO) press criminal charges against former Controller of Immigration Ilyas Hussain, brother-in-law of President Waheed.

Almost a year after the case was forwarded to the PGO however, no charges have been pressed against the former immigration chief to date.

The ACC alleged that Ilyas Hussain had abused his authority for undue financial gain.

Ilyas – a senior member of Dr Waheed’s Gaumee Ihtihad Party (GIP) – was transferred from the post under former President Mohamed Nasheed when the corruption allegations first surfaced.

His successor Abdulla Shahid expressed concern with both the cost and necessity of the project, calculating that with continued growth in tourist numbers, Nexbis would be earning US$200 million in revenue over the 20-year lifespan of the agreement.

Following Dr Waheed’s swearing-in as president on February 7, Ilyas was reappointed controller of immigration. He was however replaced in May with Dr Mohamed Ali and appointed State Minister for Defence.

Former President Nasheed meanwhile alleged in a rally last month that Dr Waheed’s GIP’s Deputy Leader Mohamed ‘Nazaki’ Zaki was complicit in any alleged corrupt dealings in his role as Ambassador to Malaysia.

“Before the [border control] system was established, before there was even a contract in effect, I later heard that equipment was kept in some warehouses in Male’,” he said, claiming that the warehouses were owned by Nazaki Zaki.

Nasheed added that he “agreed completely with Yameen” that the allegations should be investigated.

The border control system is now up and running at Ibrahim Nasir International Airport (INIA), after a Supreme Court ruling in September in favour of Nexbis ended almost two years of efforts by the ACC to block the project.

Under the ‘build operate and transfer’ (BOT) agreement with Nexbis, the government is obliged to pay the security firm US$2 for every foreign passenger processed and US$15 for every work permit for the 20 year lifespan of the contract. Nexbis remains responsible for the upgrading, servicing and administration of the system.

Nexbis has continued to dismiss accusations of corruption within its deal with the Maldives government. The mobile security solutions vendor last year threatened to take legal action against any party in the Maldives alleging that the company was involved in corruption. Nexbis claimed at the time that the speculation over corruption in the deal was “politically motivated” and had “wrought irreparable damage to its reputation and brand name.”


Parliament approves MVR 57.8 million budget for Auditor General’s Office

Parliament yesterday (November 21) approved 59-2 a MVR 57.8 million (US$3.7 million) budget for the Auditor General’s Office for 2013, MVR14 million (US$907,911) higher than its budget for 2012.

Presenting a Finance Committee report (Dhivehi) on the Auditor General’s Office’s budget, Chair MP Ahmed Nazim explained that parliament was mandated by the audit law to approve an annual budget for the office prior to the submission of the state budget by the Finance Ministry.

A request to increase the Audit Office budget was scrutinised by a sub-committee and approved after a thorough assessment, Nazim said.

Auditor General Niyaz Ibrahim told the committee that the additional funds would be used to hire 43 new staff. The Audit Office presently has 99 staff, including the Auditor General.

As part of its mandate, Niyaz noted that the Audit Office had to audit financial statements from members of the cabinet in addition carrying out annual audits of government offices and other state institutions.

Due to the geographic dispersion of the Maldives, the Audit Office needed to audit over 1,000 offices across the country, Nazim said.

During the debate on the Finance Committee report, most MPs spoke in favour of increasing the Audit Office’s budget and praised the “sincere” and “competent” work of Auditor General Niyaz.


Fisheries Ministry asks Majlis committee to determine if fuel subsidy is fundamental right

Parliament’s Finance Committee has decided to summon officials from the Ministry of Fisheries and Agriculture to a meeting on Wednesday over issuing MVR 100 million (US$6.4 million) allocated as fuel subsidies for fishermen in the 2012 budget, after the ministry asked the committee to determine if the subsidy could be considered a fundamental right.

The Finance Committee on October 17 approved guidelines for providing the fuel subsidy directly to boat owners and informed the Fisheries Ministry of the decision.

However, Auditor General Niyaz Ibrahim questioned the legality of issuing the subsidy, suggesting that it could be in violation of the Public Finance Act.

Under amendments brought to the Public Finance Act in 2010, “any relief, benefit or subsidy by the state” must be given in accordance with laws passed by the People’s Majlis.

The ruling coalition has sought to reverse the changes voted through while in opposition.

Fisheries Minister Ahmed Shafeeu told local media last week that the subsidies could not be released until the legal issue was resolved but expressed hope that it could be done before Thursday (November 15), leaving one and a half months for the ministry to release funds to 1,053 vessels registered for the subsidy.

Following legal advice from the Attorney General, the Fisheries Ministry asked the Finance Committee to determine if the fuel subsidy could be considered a fundamental or basic right.

Attorney General Azima Shukoor had advised the ministry that the subsidy could be issued without specific enabling legislation if the financial assistance to fishermen was considered a fundamental right.

Azima told newspaper Haveeru that in accordance with a Supreme Court ruling, the subsidy could be issued without a specific law if it is deemed a fundamental right.

At today’s meeting of the Finance Committee, Parliamentary Group Leader of the Progressive Party of Maldives (PPM), MP Abdulla Yameen, reportedly insisted that a law would be needed to issue the subsidy.

Dhivehi Rayyithung Party (DRP) MP Visam Ali meanwhile suggested that the Fisheries Ministry should consult with the Attorney General’s Office to determine if the fuel subsidy was a fundamental right.


IMF urges parliament to expedite fiscal responsibility legislation

A delegation from the International Monetary Fund (IMF) has urged MPs to expedite legislation on fiscal responsibility, at a meeting with parliament’s Finance Committee and Economic Affairs Committee on Wednesday.

According to the parliament secretariat, the IMF team told MPs that passage of the fiscal responsibility bill currently being reviewed by the Economic Affairs Committee was the most important measure the People’s Majlis could take to improve the country’s economic outlook.

A fiscal responsibility bill to impose limits on government spending and ensure public debt sustainability was submitted to parliament in 2011 by the administration of former President Mohamed Nasheed as part of an economic reform package.

Presenting the bill in August 2011, MP Ahmed Easa of the formerly ruling Maldivian Democratic Party (MDP) said a lot of effort was needed to “change the inherited, outdated and indebted economic system.”

As measures to legally mandate fiscal responsibility, the legislation proposed setting limits on government spending and public debt based on proportion of GDP (Gross Domestic Product).

Borrowing from the central bank or Maldives Monetary Authority (MMA) should not exceed seven percent of the projected revenue for the year, according to the bill, while such loans would have to be paid back in a six-month period.

Moreover, the bill proposed that a statement outlining the government’s mid-term fiscal policy must be submitted annually to parliament at the end of the financial year in July.

Meanwhile, according to parliament, members of the IMF mission currently in the Maldives are Overall Coordinator Dr Koshy Mathai, Dr Fazurin Jamaludin, Nicholas Million, Dr Nandaka Molagoda, and Jules Tapsoba.

Ahmed Munawwar, Manager of the Monetary Policy Section of the MMA also attended yesterday’s meeting.

According to the latest figures from the Finance Ministry the fiscal deficit as of November 4 stands at MVR 2.4 billion (US$155.6 million), with government spending of MVR 10.4 billion (US$674.4 million) outstripping revenues of MVR 8 billion (US$518.8 million) so far this year.

Of the MVR 10 billion in expenditure, MVR 7.6 billion (US$492.8 million) was on recurrent expenditure – salaries and allowances for government employees and administrative costs – while MVR 1.5 billion (US$103.7 million) was spent on repaying loans and interest payments.

Fiscal imbalance

In April 2012, Jonathan Dunn, chief of the IMF mission to the Maldives, told Minivan News that the country’s fiscal deficit was “substantially understated.”

The remarks followed the IMF warning of dire consequences if expenditure was not curbed to rein in the ballooning budget deficit.

Speaking in parliament on behalf of the former government in August 2011, MP Easa meanwhile noted that according to the World Bank, a 66 percent increase in salaries and allowances for government employees between 2006 and 2008 was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

“We are seeing the bitter consequences today of spending out of the budget without any control or limit,” MP Easa had said.

Dunn had meanwhile emphasised in April 2012 that “fiscal imbalances in the Maldives have been present for many years” and that “fiscal adjustment remains necessary”.

Faced with increasing pressure from the IMF to lower expenditure after failed attempts in 2010 to keep in place unpopular pay cuts for civil servants – a maneuver blocked by the Civil Services Commission (CSC) and backed the then opposition – former President Nasheed’s administration insisted that increased revenue from the new taxes would match expenditure, and boasted that the 2012 budget was the first in many years to balance income and expenditure.

Following the police mutiny and controversial transfer of presidential power, spending by President Dr Mohamed Waheed’s administration had escalated as it sought to shore up support in a fractious political environment.

Moreover, in September 2012, a pair of government-aligned MPs blamed President Waheed’s lack of solid policies for the increase in state expenditure.

Newly-announced expenditure in first few months of the Waheed administration included:


Resolution on fuel subsidies for fishermen sent to committee

A resolution (Dhivehi) submitted by Maldivian Democratic Party (MDP) MP Mohamed Rasheed ‘Kubey’ calling on the government to issue without delay MVR 100 million (US$6.4 million) allocated for fuel subsidies to fishermen from the 2012 state budget was sent to committee at yesterday’s sitting of parliament.

The resolution was accepted and sent to the Economic Affairs Committee for further review with 42 votes in favour and five abstentions.

On October 17, parliament’s Finance Committee approved guidelines for the Fisheries Ministry to issue the subsidy directly to fishing boat owners.

However, Auditor General Niyaz Ibrahim then questioned the legality of issuing the subsidy, suggesting that it could be in violation of the Public Finance Act.

Fisheries Minister Ahmed Shafeeu told Sun Online yesterday that legal issues remained to be resolved before releasing the funds.

“We requested the AG [Attorney General] for advice, because subsidies cannot be provided without a [specific] law. The AG said that if it’s identified as a basic right, it can be provided based on the former Supreme Court’s ruling. But it involves legal problems. We are prepared to provide subsidies, we just have to follow the legal procedures,” he was quoted as saying.

Shafeeu said that the subsidies could not be released until the legal issue was resolved but expressed hope that it could be done before November 15, leaving one and a half months for the ministry to release funds to 1,053 vessels registered for the subsidy.