Thilafushi Corporation Limited incurs MVR 650 million loss from reclamation project

Thilafushi Corporation Limited (TCL) has incurred MVR 650 million (US$ 42 million) worth of losses over the Thilafushi reclamation project, local media reports.

Speaking at a Parliament Public Accounts Sub-Committee, attorney representing TCL Mazlan Rasheed was quoted as saying that if the project had been completed, the company would have earned US$400 million.

The loss was incurred due to the Heavy Load company not reclaiming the agreed 152 hectares of land within the granted six month period, Sun Online reported.

According to Rasheed, Heavy Load had only reclaimed 32 hectares and that a further US$1 million needs to spent on levelling the reclaimed ground.

The Thilafushi reclamation project was awarded to Heavy Load for a sum of US$21 million (MVR 323 million).


Heavy Load’s Thilafushi project one fifth completed in double the allotted time

Delays in the Thilafushi reclamation project have resulted in only 20 percent of the work being completed, says Managing Director of the government owned Thilafushi Corporation (TCL), Mohamed Latheef.

The Rf323 million ($US21 million) project was awarded to the Heavy Load Maldives company in September 2010, with work beginning in February 2011. The scheme was to involve the reclamation of 157 hectares of land over six months as part of the continued development of an international port for the Thilafalhu Industrial Zone (TIZ). Thilafalhu is the name of the lagoon around which Thilafushi lies.

The TIZ is intended to promote industrial growth in the greater Male’ area by providing facilities on Thilafushi that will attract medium to heavy industries. This will also include plots for large industrial facilities, warehouse facilities, and a roll-on roll-off ferry service.

As well as fostering economic growth it is hoped that this plan can reduce congestion, and thereby increase the quality of life, for the  people of Male’, where the nation’s major port is currently situated.

Male’ is one of the most densely populated cities in the world with over 100,000 people per square kilometre.

Latheef stated that only 32 hectares had been reclaimed on Thilafushi by Heavy Load.

“The project is on hold due to issues which we are working with contractors to resolve,” said Latheef. “We hope to resolve these issues in the next one two weeks.”

Latheef said that these problems were both technical and financial.

“The dredger is not currently on site. It has been taken to Sri Lanka for maintenance,” he added.

The project ran into legal difficulties within days of work having started. The Anti Corruption Commission (ACC) alleged corrupt practices in the project’s tendering process. The TCL then filed a case against the ACC in the Civil Court arguing that it did not have the authority to order that the work be suspended.

Maldivian Democratic Party (MDP) Interim Chairman Moosa ‘Reeko’ Manik, whose family runs the Heavy Load Maldives company, alleged at the time that the ACC’s charges were a “political trick”, suggesting that elements of the ACC were influenced by opposition politicians.

Representatives of Heavy Load, including Moosa himself, were unavailable for comment at the time of press.

In a similar case, the ACC has attempted, seemingly without success, to halt the work on a new border security system provided by the Malaysian company Nexbis. President of the ACC Hassan Luthfee told Minvan News last week that the ACC has appealed to the Supreme Court to “delineate” the role of the ACC.

Luthfee today said that the Civil Court case was due to be heard in the second week of June whilst the ACC’s original case alleging corrupt bidding practices remains with the Prosecutor General (PG).

Sun Online this week reported that the PG’s office had filed cases against three former TCL board members in relation to the award of the reclamation project to Heavy Load.

Sun also reported last month that the guarantee cheque from Heavy Load, worth 5 percent of the deal’s value, Rf16.1 million (US$1 million), had expired. A spokesman from the Finance Ministry said that a new cheque was required but had not at that time been received, although the company had assured it would be done.

Thilafushi has become infamous internationally in recent months as the ‘ugly face’ of the Maldives owing to the waste management services that the island provides. Both the BBC and France’s Le Monde have covered the topic in recent weeks.

Reclamation of land around the lagoon began in 1992 in order to solve the waste management problems from waste generated in Malé. Since then an increasing number  of  industrial firms have relocated to plots leased on the island.


ACC cannot terminate Nexbis agreement, court rules

The Civil Court has ruled that the Anti-Corruption Commission (ACC) does not have the legal authority to order the Department of Immigration and Emigration to terminate the border control system contracted to Malaysia’s Nexbis Limited in November 2010.

ACC filed a court case against the Rf500 million (US$39 million) Nexbis system in November 2011, two days after cabinet decided to resume the project.

The cabinet’s decision contradicted ACC’s earlier command to terminate the existing agreement with Nexbis and re-tender the project with the cabinet’s consent.

In December, the ACC forwarded a corruption cases against former Immigraiton Controller Ilyas Hussain Ibrahim and Director General of Finance Ministry, Saamee Ageel to the Prosecutor General’s Office (PG), claiming the pair had abused their authority for undue financial gain in awarding the Nexbis project.

However, in Sunday’s hearing Judge Ali Rasheed ruled that the ACC Act clearly allows the commission to investigate corruption cases, but does not give ACC legal authority to issue an order which can annul a formal agreement signed between one or more parties.

He asserted that it is “unfair” to the contractors if ACC can annul an agreement without the contractors’ say, adding that such a decision violates the protection granted to the contractors under the Maldives Law of Contract.

Following the court’s ruling, Immigration Controller Abdulla Shahid told Minivan News that the ruling is subjected to the ACC and it does not directly relate to the department.

He noted that it is too soon to say how the department will proceed with the project.

“We have not even received the documents. We will look into the matter legally,” Shahid said, adding that the court’s decision does not does indicate whether the agreement with Nexbis is “good”.

The 20-year Build, Operate and Transfer (BOT) agreement with the Malaysian-based mobile security solutions provider was to upgrade border security in the Maldives with new technology including facial recognition and fingerprint identification, facilitating the identification and tracking of expatriate workers and eliminating the opportunity to people to enter the country with forged paper documents.

The Maldives currently receives three times its population of 350,000 in tourist arrivals each year. It has lately begun addressing a rise in human trafficking.

The day after the October 2010 signing of the concessionaire contract, ACC announced it had received “a serious complaint” regarding “technical details” of the bid, and issued an injunction pending an investigation into the agreement citing “instances and opportunities” where corruption may have occurred.

After the investigation, the commission deemed the procedure of awarding the project to Nexbis was corrupt, and ordered the Immigration department to terminate the project.

Nexbis shares immediately plunged 6.3 percent on the back of the ACC’s announcement. The company subsequently issued a statement claiming that speculation over corruption was “politically motivated” and had “wrought irreparable damage to Nexbis’ reputation and brand name.”

“Nexbis’ shareholders own and manage multi-trillion dollar assets globally and will not jeopardise their reputation for an investment return,” the company said at the time.

Claiming financial loss Nexbis subsequently threatened legal action over the stalled border agreement, prompting the cabinet to resume the project after reviewing the existing agreement with Nexbis to address the concerns raised by the department.

In earlier interviews with Minivan News, Shahid had expressed concern over both the cost and necessity of the project, calculating that as tourist arrivals continue to grow Nexbis would earn US$200 million in revenue over the project’s 20-year lifespan.

Comparatively, at five percent royalties to the government would come to US$10 million, Shahid said, when there was little reason for the government not be earning the revenue itself by operating a system given by a donor country.

“Border control is not something we are unable to comprehend – it is a normal thing all over the world,” Shahid told Minivan News at the time.“There is no stated cost of the equipment Nexbis is installing – we don’t know how much it is costing to install, only how much we have to pay. We need to get everything out in the open.”

The agreement allows Nexbis to levy a fee of Rf30 (US$2) from arriving and departing passengers in exchange for installing, maintaining and upgrading its immigration system. The company would also charge a Rf231 (US$15) for every work permit card.

Shahid estimates that maintaining a free system given by a donor country would cost at most several hundred thousand dollars a year, and said he was unsure as to why such an agreement had ever been signed.

However, Nexbis said in a statement that neither the government nor the Maldivian public have to pay in exchange for a state-of-the-art border security protection and suggested that “reasonable persons will likely realise that once the hidden costs after are taken into account and adjusted for inflation, the benefits and efficiencies of the Nexbis system will far outweigh the risk, inadequacies and uncertainties of any such alleged cheaper system.”

Nexbis also said it had agreed to review the government’s additional requirements, “and have expressed our willingness to accommodate any such changes within commercially viable terms.”

“While this requires some changes to the solution we ultimately provide, it is within the scope of our agreement to accommodate these changes,” the company said.

Meanwhile, yesterday’s court’s ruling set a precedent on the question raised by some legal experts on whether ACC has the authority to halt or terminate a government project agreement.

Civil court is hearing a similar case against the ACC by Thilafushi Corporation Limited (TCL), which contested the legality of ACC’s decision to halt the US$21 million reclamation project awarded to Heavy Load Maldives, owned by MDP Chairperson Reeko Moosa Manik, on suspicion of corruption.


Court ends hearing on Thilafushi reclamation case

The Civil Court has concluded hearings over the Thilafushi development project, which was awarded to Heavy Load Maldives by Thilafushi Corporation Limited (TCL).

Heavy Load is owned by ruling Maldivian Democratic Party (MDP) MP Moosa ‘Reeko’ Manik.

The ACC had previously noted the US$21 million project was not awarded with the advice of the TCL board and was in violation of the government-owned company’s operating procedures.

TCL’s lawyer Mazlan Rasheed claimed that the ACC had ordered TCL to stop the project without carrying out any investigation, Haveeru reports.

Rasheed further claimed that the ACC violated legal requirements by not issuing a formal report.

ACC’s lawyer and the former attorney general Aishath Azima Shakoor countered that TCL disobeyed the ACC’s order and continued with the project.

Shakoor added that the ACC had issued its order after finding evidence that TCL had violated the law in 10 separate counts when awarding the project to Heavy Load, therefore the ACC had been within its rights to issue the order.

Judge Abdulla Ali presided over the case. The final verdict will be released during the next court session, reports Haveeru.


Auditor General report claims Heavy Load project violated state finance regulation

The Auditor General has published an audit report on the Kumundhoo Harbor Project that was contracted to Maldivian Democratic Party (MDP) Chairperson ‘Reeko’ Moosa Manik’s Heavy Load company by the Housing Ministry.

The Auditor General in his report noted that the work was assigned to Heavy Load in violation of article 8.25 of the State Finance Regulation.

‘’Article 8.25 of the Finance Regulation states that any work that costs more than Rf1.5 million (US$100,000) should be assigned to a party by the Tender Evaluation Board in an open bid, and that the interested parties should submit details of the work,’’ Auditor General said in the report. ‘’But the Kumundhoo Harbor Project was not assigned to the party accordingly.’’

According to the report, the project that was supposed to be finished in six months was finished in 31 months, and the government had to pay Rf 22.2 Million for a project originally budgeted at Rf 10.3 million project.

The project was assigned to Heavy Load on 21 November 2007, but the physical work of the project was started on 10 March 2008, according to the audit report.

While the project was going on, Heavy Load reported to the government that there were hard areas that excavators could not dig and the work came to a halt. The ministry then inspected the area and found that the area required explosives to continue the project.

‘’It is to be noted that hard areas can be identified with a diving inspection and that this type of inspection was not done before the work started,’’ the Auditor General said in the report.

The Auditor General’s report said that Rf 4.7 million (US$307,000) was paid to Heavy Load for the days they had to wait without work in return for keeping their equipment and staff on the island, adding that all the days that the party was paid for ‘Idle Time’ could not be considered as such because there was other work the contractor could have been completing.

Heavy Load was paid different rates for the time the company had to wait without work, the Auditor General’s report said. The ministry’s determined rate was Rf23845.77 based on the total amount of the project.

‘’But for the 49 days the contractor had to wait without work from 12 June 2008 to 30 July 2008, Heavy Load was paid Rf27,197.80 per day and for the days between 19 September 2008 and 18 October 2008 the contractor was paid Rf24,299.33,’’ the Audit Report said, adding that the contractor received extra Rf 177,856.17 in total.

The Auditor General also noted that the contractor was given an extra 195 days to complete the project after failing to complete it by the original due date, but after the 195 days only 45 percent of the work was completed.

According to the ‘Appendix to Tender’ agreement made between the ministry and contractor, if the contractor failed to complete the project in the time allocated, the contractor was to be fined 0.1 percent of the total cost of the project for each day.

‘’But after the contractor failed to finish the project, it was given extra five months without any fines,’’ the Audit Report noted. ‘’While the government had paid the contractor Rf 4.7 Million to recover any losses contractor might suffer for idle time, the contractor was not fined for the days the project was delayed due to the contractor’s negligence. The government had not cited the loss for the government and islanders of Kumundhoo, and all the benefit was given to the contractor.’’

The Auditor General also noted that an advance payment was paid to the contractor in violation to the Finance Regulation.

‘’The Finance Regulation article 8.23 states that the highest amount that can be paid in advance is 15 percent of the total cost of the project, but the contractor was paid Rf 5 Million which is 38 percent of the total cost of the project,’’ the Audit Report noted.

The Auditor General’s report said that the Auditor General’s Office did not receive the ‘Defects Liabilities Inspection Report’ done by the ministry.

The contractor was told many times to correct issues and not to continue work without correcting them, but the contractor had not acted as instructed and finished the harbor and handed it to the ministry, and the ministry had fully paid the contractor, the Auditor General noted.

The report also noted that the harbor was completed with a lot of faults, and that huge damages had been caused to some boats that had entered the harbor.

Minivan News attempted to contact Reeko Moosa for comment, but his phone was switched off at time of press.


ACC forwards cases against senior officials of Thilafushi Corporation for prosecution

The Anti-Corruption Commission (ACC) has concluded its investigation into alleged corruption committed by the Thilafushi Corporation Ltd (TCL) in awarding a land reclamation project to Heavy Load Maldives – a family business of ruling Maldivian Democratic Party (MDP) Chairman ‘Reeko’ Moosa Manik – and sent cases against three senior TCL officials for prosecution.

The three members of the bid evaluation committee facing corruption charges are Managing Director Mohamed Wafir, Director Mohamed Adhil Rasheed and former Acting Manager Ibrahim Riyaz.

A statement put out by the ACC yesterday noted that the US$21 million project was not awarded with the advice of the TCL board and in violation of the government-owned company’s operating procedures.

The ACC investigation found that TCL provided US$3 million to Heavy Load as a mobilisation payment without the approval of either the engineer or the board’s majority.

Moreover, TCL accepted three vessels worth US$1.8 million as advance payment security without a valuation of the vessels. The security document was signed by a director of Heavy Load Maldives while a board resolution from the company authorising the director to sell or mortgage assets was not submitted.

Based on its finding, the ACC concluded that the three evaluation committee members tried to “illegally benefit a particular party” in the awarding of the project.

In addition, the ACC found that TCL was in the process of revising the project and replacing its engineer, Abdulla Ziyad, as the contractor appeared unlikely to complete the project on time.

The dredging was part of TCL’s development of a new port catering to 15,000 ton cargo ships and container terminal, on 3.8 million square foot of land. The industrial zone development project is partly intended to free up land currently occupied by the port in Male’, one of the most densely populated cities in the world at over 100,000 people per square kilometre.

Meanwhile, in a second statement put out today, the ACC revealed that it had also requested the Prosecutor General’s Office (PGO) to prosecute TCL’s Corporate and Legal Affairs Manager Mohamed Latheef as he had failed to provide a copy of a board resolution approving the decision to sue the ACC after it ordered the project to be halted.

Latheef had assured the ACC on August 21 that he would send a copy to the commission, the statement noted.

TCL sued the ACC on April 21 claiming the commission’s order to stop work on the US$21 million Thilafushi reclamation project was not legally justifiable.

In April, TCL lawyer Mazlan Rasheed argued at the Civil Court that the ACC did not have legal authority to order the government corporation to scrap the project, which was was both “irresponsible” and “unlawful” as the order was made before the commission completed its investigation process.

TCL therefore requested that the Civil Court declare the ACC order unlawful, he said.

ACC lawyer Areef Ahmed Naseer however denied the claims, insisting that the commission acted within legal bounds.

Heavy Load Maldives was awarded the US$21 million project on September 30 last year, and inaugurated the project on February 4, 2011.

MP Moosa Manik told Minivan News in February this year that the commission’s order was politically motivated, claiming that “there is a part of the ACC that is not free and fair.”

“PA’s Deputy Leader [Ahmed] Nazim is very close with one of the commission members, [Abdulla] Hilmy, which needs closer investigation,” Moosa claimed. “I am a strong part of this government and I think this is a political trick. I haven’t even been into the Heavy Load office in one and a half months because of my campaigning [in the local council elections]. It is run by my family, my children.”

In an audio clip of a leaked phone call between Nazim and MP Abdulla Yameen that emerged in July 2010, the Deputy Speaker is heard to say that he has “given warnings” to ACC members to issue a press release, presumably regarding dismissed Auditor General Ibrahim Naeem.


Heavy Load wins land reclamation contract

Heavy Load Maldives has been awarded the land reclamation contract at Hulhumalé following disputes yesterday with GMR, reports Sun Online. A new terminal will be constructed on this site for GMR Ibrahim Nasir International Airport.

GMR declined to reveal the contract value, but confirmed that Heavy Load had received the contract. The project was allegedly delegated to GMR Airport Development Limited, a subsidiary of GMR, before it was awarded to Heavy Load.

The project budget was set at US$20 million, reports Sun.

The first phase of the project is said to reclaim 50 percent of the designated land area. In this phase, one million cubic metres of land area would be carved out of the ocean.

GMR reportedly said that harbour construction has not yet been delegated to any company.

Heavy Load Maldives is a company owned by Moosa ‘Reeko’ Manik, the Interim Chairperson of the ruling Maldivian Democratic Party (MDP).


GMR challenges Heavy Load for airport turf

GMR has challenged Heavy Load Maldives over land designated for a new terminal at the Ibrahim Nasir International Airport, Haveeru reports.

GADL International Limited, a subsidiary company of GMR, had allegedly been assigned to reclaim the land and build the new terminal.

However, reports state that Heavy Load was awarded the first phase of the reclamation project at Ibrahim Nasir International Airport, which includes 50 percent of the reclamation.

GMR has said that Heavy Load would not be given the project to construct the breakwater.

Heavy Load was recently asked to stop work at the Enboodhoo Lagoon by the Anti-Corruption Commission (ACC). The company had been awarded the project by Thilafushi Corporation Limited on September 30, 2010. Heavy Load re-submitted its proposal in August 2011, after the bidding was re-opened.

The ruling Maldivian Democratic Party’s (MDP) interim Chairperson, ‘Reeko’ Moosa Manik, holds shares in Heavy Load.


ACC’s stop work order on Heavy Load politically motivated, alleges Reeko Moosa

The Anti-Corruption Commission (ACC) has ordered Thilafushi Corporation Limited (TCL) to halt the dredging of Thilafushi lagoon, because of issues that “could lead” to corruption in its contract with Heavy Load Maldives.

ACC Commissioner Hassan Luthfee told newspaper Haveeru that details of an investigation into TCL’s selection of Heavy Load for the 130 hectare dredging project would be released tomorrow.

Heavy Load was awarded the US$21 million project on September 30 last year, and inaugurated the project on February 4.

The Environmental Protection Agency (EPA) also expressed concern over the project, which it claimed had “started work” prior to being issued an Environmental Impact Assessment (EIA).

The EPA’s Director of Environmental Protection and Research, Ibrahim Naeem, confirmed to Minivan News that a license was granted to Heavy Load on Feburary 10, while work started on the Feburary 4th.

He could not clarify if this meant the company had begun actually dredging prior to being issued the license.

“Dredging has a large impact on the environment, which is why licenses are issued to ensure mitigation measures are in place,” he explained.

Heavy Load is a family business interest of ‘Reeko’ Moosa Manik, the ruling Maldivian Democratic Party (MDP)’s parliamentary group leader.

Speaking from Colombo, Moosa told Minivan News that Heavy Load had spent 2-3 months mobilising resources for the project. The February 4 inugration attended by President Mohamed Nasheed was symbolic, and did not necessarily mean the company had started dredging work, he said.

As for the ACC’s allegations it was, he said, “not a coincidence” that the announcement had been made a day after allegations broke in the Indian press that People’s Alliance (PA) leader Abdulla Yameen – also former President Maumoon Abdul Gayoom’s half-brother – sold blackmarket oil to the Burmese miliary junta.

“There is a part of the ACC that is not free and fair,” Moosa said, alleging that the commission was subject to misuse for political purposes.

“PA’s Deputy Leader [Ahmed] Nazim is very close with one of the commission members, [Abdulla] Hilmy, which needs closer investigation,” Moosa said.

“I am a strong part of this government and I think this is a political trick. I haven’t even been into the Heavy Load office in one and a half months because of my campaigning [in the local council elections]. It is run by my family, my children.

“I had shipping company in 1981 when [former President] Maumoon Abdul Gayoom and his brother-in-law took me to prison and destroyed my business and my life. I spent four years in prison and they have not answered for this,” Moosa contended, questioning why the ACC was not investigating audit reports concerning prominent ministers in the former administration.

Moosa further claimed that Heavy Load had already deployed dredger for the work and was unlikely to halt on the ACC’s orders – “they have to go to the court and provide evidence of corruption,” he said.

In late January the ACC ordered a halt on another government contract, between the Department of Immigration and Malaysian mobile security firm Nexbis, claiming that there were instances where corruption may have occurred.

Facing political pressure ahead of the local council elections, President Mohamed Nasheed upheld the ACC’s request that the roll-out of the technology be postponed.

Nexbis responded that it would be taking legal action against parties in the Maldives, claiming that speculation over corruption was “politically motivated” in nature and had “wrought irreparable damage to Nexbis’ reputation and brand name.”

Moosa told Minivan News that it was unlikely the Heavy Load project would be similarly held: “We are not a foreign company,” he said.

The dredging is part of TCL’s development of a new port catering to 15,000 ton cargo ships and container terminal, on 3.8 million square foot of land. The project is partly intended to free up land currently occupied by the port in Male’, one of the most densely populated cities in the world at over 100,000 people per square kilometre.