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.