Tag: india

Morning Star crew told to sell ship or be stranded “forever”: Mallinks Managing Director

The owner of a Maldivian ship detained in the Indian Port City of Kochi for the last five months has told the crew they must sell the vessel or they be stranded in India “forever”.

Crew members aboard the MV Morning Star have been left stranded in the country after the ship they were towing from the Maldives – MV Sea Angel – sank in Indian waters.

Following the sinking of the vessel, the Indian Environmental Authority launched a probe into the incident and detained the MV Morning Star, local media reported.

According to the Transport Authority, the crew have also gone without pay for the last five months and are relying on a local union in India to provide them with food.

MV Morning Star’s owner, Managing Director of Mallinks Pvt Ltd Ibrahim Rasheed, told Minivan News that the crew and captain of the MV Morning Star would not be allowed to sail out of the port until the sunken vessel is salvaged, in accordance to a ruling by the Indian Judiciary.

“There is nothing I can do now. It is up to the insurance company to salvage the sunken ship, but they are saying they will not do that. I don’t have the money to do it myself, I am not the World Bank.

“I have told the captain to sell the ship as it is the only option now. With the money they can pay the crew salary and return to the Maldives. If they don’t they will be stuck in India for 3 years or five years or forever because I cannot afford to pay their return,” Rasheed said.

Despite Rasheed’s proposal, Transport Authority Chairman Abdul Rasheed Nafiz claimed that to “simply sell the ship” was not an easy procedure as there are regulations that have to be adhered to with Indian and Maldivian maritime authorities.

“This is a very sad story for the crew. I have spoken to their families and they are relying on them [the crew] to provide money for children’s books, rent and bills. However, [the crew] have not received any payment,” Nafiz told Minivan News.

“[The Transport Authority] are working with our legal team to determine what type of action can be taken against the owners of the ship. These people are blaming the insurance company, then the insurance company are blaming the owners; it goes around in a circle.

Both of the vessels owned by Mallinks Pvt Ltd are insured by Allied Insurance, according to Rasheed.

Under the insurance policy, Rasheed claimed that Allied Insurance was required to salvage the sunken vessel, and that it was their failure to do so that has kept the crew unpaid in India for so long.

“We had fully insured both ships. The insurance company gave us a wage policy and in the policy they have written, ‘within 40 days we have to sail the vessels’, which we did.

“The insurance company needs to take responsibility, but they are saying no, so I will file a case at court,” Rasheed alleged.

MV Morning Star had been towing MV Sea Angel to a port in India for it to be scrapped, however just eight miles from Kochi, the 26 metre vessel began to sink.

According the ship’s captain, Hussain Ali, the crew were becoming “more and more depressed” with the situation and are yet to receive any help from the Maldivian government.

Rasheed said he had paid the crew two out of the five months they had been in India, claiming that he did not have the money to pay the full amount.

He further claimed it had been Ali’s fault that the MV Sea Angel had sunk, and that Indian courts had declared the sinking was due to Ali acting with “negligence” and “harassment of navigation”.

“At the end of all of this, this is my loss. my ship will be lost because of the captain. It was his fault the MV Sea Angel sank,” Rasheed claimed.

“The captain has already filed a case against me with the International Transport Workers Federation,” Rasheed added.

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Is President Waheed in control, asks Eurasia Review

Looking at the developments in the Maldives, one gets the feeling that President (by accident as some prefer to call him) Waheed does not appear to be in control of the events, writes Dr. S Chandrasekharan for the Eurasia Review.

In a moment of frustration he is said to have remarked that “Everybody runs the State as they please”, and this has been widely reported in the press.

He is aware of the remarks of his own adviser Dr. Hassan Saeed who said that President Waheed is “politically the weakest person in the country” and yet Saeed is merrily carrying on and some suspect that he may even join hands with Waheed to contest the next presidential elections in 2013.

President Waheed’s own official spokesperson Abbas Adil Raza broke all diplomatic protocol and openly called the Indian High Commissioner as a “traitor and enemy of the Maldives and the Maldivian people” over the controversy surrounding the GMR agreement. Though he tried to distance himself away, it took a while for him to remove Raza from the post of official spokesperson, only to be given a ministerial post later.

Relations with India appear to be reaching rock bottom. Following the cancellation of the GMR agreement, the Indian Foreign Secretary summoned the Maldivian High Commissioner in Delhi and expressed India’s deep regret at that the unilateral move and had also warned that the decision will have a negative impact on bilateral relations.

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Maldives legal system “inaccessible” to migrant workers: Transparency Maldives

Migrant workers suffering poor treatment from their employers are giving up on taking their cases to court due to the “inaccessibility” of the Maldives legal system, an official from Transparency Maldives’ Advocacy and Legal Advice Centre (ALAC) has claimed.

ALAC Communications and Advocacy Manager Aiman Rasheed told Minivan News today that a large number of human rights abuse cases in the Maldives are “potentially” going unreported due to foreign workers not taking their disputes to court.

Rasheed claimed that both defects within government bodies and corruption were to blame for the human rights abuses affecting migrant workers.

“We are finding that a lot of the issues raised at our ALAC mobile camps involve employees not receiving their wages, having their passports confiscated by employers or are living in sub-standard living conditions,” Rasheed said.

Because of the perceived inaccessibility to the legal system in the country, Rasheed claimed that a lot of injustices involving migrant workers were not being taken to court.

“Getting involved in a legal case is a very costly process. It is very hard for a normal person to afford the services and the process can take a very long time.

“The problem is that we [ALAC] appear to be the only agency providing free legal advice to migrant workers, despite authorities recognising there is a need for free advice,” Rasheed claimed.

Since being launched back in 2012, ALAC has been providing free legal advice and training to victims and witnesses of corruption through mobile camps in Vaavu Atoll and Addu City.

So far, ALAC has assisted with 64 ongoing legal cases related to migrant rights abuses in just six months, whilst further providing advice and training to over 3,000 individuals, Rasheed claimed.

“While we cannot provide financial support to these individuals, we can offer guidance through our lawyers making the entire legal process a lot easier to navigate,” he said.

“We are wanting to further strengthen our partnership with state departments, because this is a national problem.”

While state departments have begun to introduce initiatives targeted at raising awareness of human rights abuse, in particular the ongoing issue of human trafficking, Rasheed claims that there has been no “serious action” taken to address the problem.

“There is a good reason as to why we are on the US State Department’s Tier Two watch list for human trafficking for [three] years in a row,” he added.

Blue Ribbon Campaign Against Human Trafficking

The Ministry of Foreign Affairs Yesterday (January 9) inaugurated an initiative targeted at raising awareness of the human trafficking issue in the Maldives.

The strategy, entitled ‘Blue Ribbon Campaign Against Human Trafficking’ is expected to include activities to try and raise awareness among students and the business community.

The tourism industry, which employs the largest number of foreign staff in the country, was identified as another key focus of the initiative.

The Foreign Ministry announced that it had signed a memorandum of understanding (MOU) with multiple local media outlets in the country as part of the campaign’s aim to raising awareness of human trafficking and other related issues.

India’s concerns

Last month, Indian authorities raised concerns about the treatment of migrant workers in Maldives, stating that the tightened restrictions over providing medical visas to Maldivians was a “signal” for the Maldivian government to address the their concerns.

The commission spokesperson added that the introduction of the tighter regulations was imposed as a clear “signal” from Indian authorities that the concerns it had over practices in the Maldives such as the confiscation of passports of migrant workers, needed to be brought to an end.

On November 26, 2o12, a public notice had been issued by the Maldives Immigration Department requesting no employer in the country should be holding passports of expatriate workers.

Back in October, a senior Indian diplomatic official in the Maldives had expressed concern over the ongoing practice of confiscating passports of migrant workers arriving to the country from across South Asia – likening the practice to slavery.

The high commission also claimed this year that skilled expatriate workers from India, employed in the Maldives education sector, had continued to be “penalised” due to both government and private sector employers failing to fulfil their responsibilities.

Individuals wishing for free legal advice from Transparency Maldives’ Advocacy and Legal Advice Centre can contact the organisation for free on (800) 3003567

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Maldivian ship’s captain threatened with drowning over unpaid salaries: crew member

Indian crew members aboard a Maldivian cargo vessel docked in Dubai have threatened to drown the ship’s captain over unpaid salaries, fellow workers have alleged in local media.

Six of the Maldivian crew aboard the Waadhee Progress vessel, currently docked at a harbour in Dubai, claim to have been continuously threatened by Indian crew members for the past three months.

A crew member told the Sun Online news agency yesterday (January 4) that the foreign nationals working on the ship were unhappy with the situation as they had not been paid for an entire year.

The crew member further alleged that the foreign crew had threatened to drown the ship’s captain if the alleged issue of outstanding salaries were not paid by the end of today (January 5).

Police Spokesperson Sub-Inspector Hassan Haneef told Minivan News that authorities were looking into the matter, but had received little information on the vessel’s situation at present.

A crew member working aboard the Waadhee Progress has told local media that due to the vessel’s current location, it was hard to clarify the exact situation on-board.

He further alleged that an assault between the foreign crew on a previous occasion had left a fellow employee with stab wounds.

“We also haven’t received our salaries for as long as [the foreign crew]. They are threatening us. They carry knives and iron bars. The last thing they said was that the captain will be drowned if the salaries are not paid by the end of tomorrow,” the Maldivian crew member claimed.

“We are scared, haven’t even been sleeping. The company has said that they have contacted the coast guard and the police and they are looking into it. But we are still in the same situation. We have, sort of, been hijacked.”

Maldives National Defence Force (MNDF) Spokesperson Colonel Abdul Raheem said that the country’s coastguard had received no information regarding the incident at present.

“This matter will probably be taken up by the respective foreign ministries in Dubai and Maldives. I should imagine the Transport Ministry will also be looking into the matter,” Raheem told Minivan News.

The Dubai Maritime City Authority (DMCA) was not responding to calls from Minivan News at the time of press.

State Transport Minister Mohamed Ibrahim said that he was still involved in “airport matters” when contacted today, and was unable to comment on the issue, forwarding Minivan News to other sources in the ministry.

Meanwhile, an official from Waadhee Shipping and Trading – the company who own Waadhee Progress – told local media that the company had been informed of the situation and were looking into it.

Minivan News was awaiting a response from the company at time of press.

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Proposed anti-piracy bill outlines legal framework for punishing suspects

The Government has proposed an anti-Piracy bill in an effort to curb rising concerns over the issue of security within its territorial waters and the wider Indian Ocean.

The bill has been presented to parliament by government-aligned Jumhoree Party (JP) Leader and business tycoon Gasim Ibrahim. The stated purpose of the bill is to establish a legal framework to deal with piracy within the territorial waters of the Maldives amidst concerns at the growing risk  of maritime crime in the Indian Ocean over the last few years.

With the Maldives located at a strategic intersection of sea trade routes, a significant amount of global maritime traffic passes through or near the country’s northern atolls.

The bill also seeks to outline legal procedures to deal with individuals suspected of committing acts of piracy within Maldivian territorial waters.  such procedures do not presently exist in the country’s legal system.  The acts outlined in the proposed bill would be considered as criminal offences.

According to the bill, a person who is found guilty of an act of piracy would face a 25 year jail sentence.   Meanwhile, if a suspect was found guilty of killing a person during a suspected pirate attack, they would be punished under Islamic Sharia to an additional 30 year custodial sentence.

For any damage to property incurred through piracy, a punishment of 15 year imprisonment is prescribed.

Those found guilty of conspiring to commit or assist in acts of piracy in the Maldives would face a punishment of 10 years imprisonment, according to the bill.

The bill specifically describes armed robbery as a separate offence, whereby if found guilty, a person would receive a 30-year prison sentence.  In a case where someone was killed during a suspected armed robbery, the suspect would face imprisonment along with additional punishment outlined in Islamic Sharia.

According to article 4 of the bill, the state authorities are vested with the power to apprehend offenders in its territorial sea, the contiguous zone, the exclusive economic zone and International waters.

The United Nations Convention on the Law of the Sea defines a state’s territorial waters as extending up to 12 nautical miles from its baseline.  The contiguous zone is a band of water extending from the outer edge of the territorial sea to up to 24 nautical miles (44 kilometres) from the baseline, within which a state can exert limited control.

An Exclusive Economic Zone (EEZ) of a state extends from the outer limit of the territorial sea to a maximum of 200 nautical miles (370.4 kilometres) from the territorial sea baseline including the contiguous zone, according to the same conventions.

Other offences noted in the bill includes the hijacking of vessels.  The punishment outlined for such a crime is 10 years imprisonment and a fine between MVR 100,000 to MVR 1 million.

Meanwhile, the punishment for obstruction of a safe passage is imprisonment for a period of no more than 15 years.

Courts in the country would also be allowed to extend the detention period of arrested individuals through means of audio and video phone in cases where it proved difficult to bring a suspect to a hearing, under provisions in the bill.

The power to arrest would also be vested to both the Maldives National Defence Force (MNDF) and the Maldives Police Services in the case of suspected acts of piracy. However, hearings of all offences committed under the bill would be tried at the Criminal Court in Male’.

Speaking to Minivan News, Foreign Ministry Spokesperson Ibrahm Muaz Ali said that the government had continued to raise concerns over security in the Indian Ocean for some times and had built strong relations with neighbouring countries like India to combat potential pirate attacks.

According to Muaz, the anti-piracy bill was perceived by the government as being a necessity in order to establish a framework capable of dealing with the issue. He added that the government was getting support from all regional countries on the matter.

Back in April last year in an interview given to the India-based Daily News and Analysis publication, Minister of Defence Mohamed Nazim highlighted the government’s concerns regarding the potential for pirate attacks.

Nazim at the time warned that “these threats have now come to our close proximity. We live by selling dreams of tranquillity and even a small incident in our territory could have devastating implications for the region.”

The comments were made at the same time that the first ever tri-lateral naval exercises between Sri Lanka, India, and the Maldives were held. Nazim told the paper that he believed a united approach was the best way to combat the problems of piracy in the Indian Ocean.

Nazim also praised the Indian Military for its assistance in equipping and training the Maldivian National Defence Force (MNDF).

First case of piracy within Maldivian waters

The Maldives experienced the first confirmed case of piracy within its waters back in March 2012, when a Bolivian-flagged vessel headed for Iran was hijacked by Somali pirates.  The vessel was released a few days later.

MNDF Spokesperson Colonel Abdul Raheem at the time confirmed that the vessel was hijacked about 190 nautical miles Northwest of Hoarafushi island in Haa Alif Atoll.

The vessel was identified on Somalia Report as the Iranian-owned MV EGLANTINE, with 23 crew members on board. The vessel, which has previously been named the Bluebell and the Iran Gilan, is owned by Darya Hafiz Shipping.

The Maldives’ government first expressed concern over the growing piracy threat in 2010 after small vessels containing Somali nationals began washing up on local islands. The castaways were given medical treatment and incarcerated while the government negotiated their repatriation.

Somali Pirates

In March 2012, 40 Somali castaways in the custody of Maldives authorities refused to return home despite arrangements that were made for their safe repatriation.

The government had at the time identified and obtained passports for the detainees and arranged a charter flight for their return to Somalia, confirmed a senior government official who worked on the case.  However, the source claimed that the government was unable to deport the foreign nationals against their will.

Refugees cannot be repatriated without consent under international conventions to which the Maldives is signatory, leaving the Maldives no legal recourse but to sign international conventions on the rights of refugees and migrant workers and their families and accept the Somali nationals as refugees.

In a special report on piracy in December 2010, Minivan News cited a European piracy expert who noted that increased policing of waters at a high risk of piracy was forcing pirates deeper and deeper into the Indian Ocean.

“We believe that this trend is due to the fact that the pirates are following the vessels – as merchant ships increase their distance from Somalia in order to feel ‘safer’, the pirates follow them resulting in attacks much farther east than ever before,” the expert said at the time.

An American luxury passenger line en route to the Seychelles in January was stranded in the Maldivian waters due to an alleged “piracy risk”, while the passengers departed to the Seychelles through airline flights.

Secretary General of Maldives Association of Yacht Agents (MAYA), Mohamed Ali, told Minivan News at the time that the passenger line had arrived on December 29 and was scheduled to leave the same day after a brief stop near Male’.

However, he said the cruise captain had decided not to leave with the passengers on board due to “security reasons”, as there have been several attacks by pirates near the Seychelles.

According to the government, the proposed bill if passed would pave way to deal with the matter easily and efficiently.

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“No choice” but to wait, Maldivians facing overnight queue for India medical visas

Maldivian citizens queuing outside the Indian High Commission in Male’ to obtain visas to travel for medical treatment in India have allegedly been told they must now wait until December 26 before any further paperwork can be processed.

This morning (December 24) individuals waiting outside the Indian High Commission building told Minivan News that they have “no choice” but continue to wait, after it was allegedly announced that no visas will be processed on December 25.

Earlier this month, the High Commission of India forewarned Maldivians that it would now take one week to process visas required to travel to India.

At 2:00am this morning (December 24),  Minivan News witnessed at least 30 Maldivians queued in the rain, waiting for the Indian High Commission building to open.

Male’ inhabitant Ihusaan Jaufar claimed he had been waiting for three days to pick up a medical visa so that an ill family member could receive treatment in India.

“We have been doing shifts so that we do not lose our place in the queue. Before we would make trips to India maybe ten times per year and it was easy, now it has become very difficult.

“They allow 53 passports to be processed each day, but some people are carrying four passports including their own, so rather than 53 people who have queued getting their visas, instead maybe only 10 or 12 are receiving their visas,” Jaufar said.

Maldivian nationals do not require a visa to enter India and stay for 90 days, however they are prohibited from revisiting the country within two months. Patients who need to return to India for health reasons then have to apply for a medical visa.

The Ministry of Foreign Affairs has advised Maldivians to try to obtain the relevant visas prior to their travel, after the Indian High Commission announced that visa-free travel facilities to India are valid for tourism purposes only.

Travel for medical, business or official reasons will require a relevant visa for those purposes, the Indian High Commission has stated.

At 10:30am today (December 24) the 30-strong queue still remained, however some within the queue had alleged they has been told by Indian High Commissioner D M Mulay that they would now have to wait until December 26 for their visas.  The high commission has denied any such claims were made.

Ahmed Didi, a Maldivian waiting in the queue today spoke of his frustration and concern for his family currently living in India.

“I have been waiting to get home for over a week and i’ve been in this queue for the last three days. I’m going to have to ask my friends if we can do shifts in queue so that we do not lose our place. It’s [the queue] going to be huge after 48 hours.

“It is frustrating as I need to get home. My wife is currently looking after my 74-year-old father who is paralysed and my son. She is struggling to cope without me there to help,” Didi said.

According to Didi, the High Commission is issuing tokens to people who can then have their visas processed. Didi claimed that for the last three days only 40 tokens have been issued per day, however this has now been increased to 53.

“The problem is that some people in the queue are holding multiple passports for friends and family. Fortunately the [Indian High] Commission has limited the number of passports per person to just three,” he said.

Didi claimed that earlier in the morning, Mulay had announced to the queue that he was working to resolve the issue and that it came down to a lack of cooperation from the Maldives government.

A source from within the Indian High Commission denied these claims, adding that “no such comment had been made”.

Foreign Ministry Spokesman Ibrahim Muaz Ali also denied allegations of conflict between the government and the Indian High Commission, stating that the foreign ministry was doing its best to help those waiting for a visa.

“There is no lack of cooperation between the Indian High Commission and the Foreign Ministry, we are having regular meetings to discuss the [visa] issue.

“We have a separate desk within the Indian High Commission building that is helping to deal with Maldivian citizens looking to obtain visas,” Muaz said. “We are trying to prioritise based on medical needs. For example, yesterday we had a man come through who needed urgent treatment for cancer and we were able to speak with the Commission to have his medical visa processed quicker.”

Despite the claims, Former President Mohamed Nasheed has alleged in local media today that the current approvals required for medical travel to India were a direct response to the Maldives government’s decision to terminate a sovereign agreement to develop Irahim Nasir International Airport (INIA).

India-based infrastructure group GMR had signed an agreement with Nasheed’s government back in 2010 to develop and manage INIA over a 25-year period. The government of Dr Mohamed Waheed Hassan Manik opted late last month to declare the agreement void and gave the developer seven days to leave the country.

Visitor numbers

Times of India (TOI) reported that a total of 54,956 Maldivians visited the country in 2008, 55,159 in 2009 and 58,152 in 2010.

S Premkumar, Chief Exective Officer of  (CEO) Apollo Hospitals – a major hospital chain based in Chennai –  was quoted in the TOI as claiming that  some 300 Maldivian nationals were treated in Chennai hospitals each year. “They usually come for neurosurgery, and orthopaedic, cardiology and robotic gyneacology procedures,” he told the publication.

On December 20, First Secretary of the High Comission S C Agarwal, told local media that the change in procedure was not new, adding that there had only been a change in the “interpretation” of the agreement signed between India and Maldives in 1979.

“The agreement that grants 90 days free visa for Indians and Maldivians came into effect in 1979. But we have been really flexible in the interpretation of the agreement.

“We have not been questioning the purpose of travel of Maldivians to India. But unfortunately the reverse is not true. The Maldivian authorities have enforced the agreement in the strictest of terms. Nearly 50 Indians are denied entry, detained and deported every year,” Agarwal was quoted as saying in newspaper Haveeru.

Agarwal told local media that India has now “agreed” with the interpretation of the 1979 agreement in accordance to that of the Maldives government.

“We have been flexible in implementing the agreement since 1979. Such flexibility has not been reciprocated by Maldives,” he added.

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State guarantee for GMR to obtain bank loans had no limits: Attorney General

Attorney General (AG) Azima Shukoor has claimed that a loan guarantee provided by the former government to infrastructure group GMR would have allowed the company to obtain finance without limitation.

According to local media, the attorney general has alleged that such a loan agreement would have contravened the country’s financial regulations unless approved by parliament at the time.

However, her claims have been dismissed by former Attorney General Ahmed Ali Sawad, who claimed that the agreement was conducted within state laws.  Sawad helped oversee the agreement between GMR and former President Mohamed Nasheed’s government back in 2010.

GMR’s concession agreement was terminated by the Maldives government  late last month after it decided – citing legal advice – that the sovereign contract was invalid from the outset.

Speaking to Parliament’s Public Accounts Committee yesterday (December 19), Shukoor revealed that the Maldivian state had agreed under the cancelled contract to act as a guarantor for all loans obtained by GMR under its agreement to develop Ibrahim Nasir International Airport (INIA).

According to the attorney general, this provision had been approved despite not being part of any senior finance agreement.

Shukoor added that under the primary agreement between the state-owned Maldives Airports Company Limited (MACL) and GMR, should MACL fail to make any repayments, the Maldivian state would have to cover any resulting costs.

“[The state] is not part of the senior agreement, thus to act as guarantor for loans obtained by another group – whether this was done with approval or not – would be to give a ‘blanket’ guarantee. I don’t think this can be permitted. I don’t believe that even the Public Accounts Committee would do that,” local media reported Shukoor as saying.

The agreement, which states that the Maldivian government is responsible for all loans obtained by GMR, was made with the approval of former Attorney General Sawad, Shukoor said.

According to Shukoor, Sawad had permitted the agreement in writing, concluding at the time that the deal would not result in any legal problems.

She also claimed that approving the agreement without parliament’s approval was in violation of the Finance Act.

“Financial guarantees given by the state should have limits. We are signing an agreement allowing future groups to obtain as much money as they want under our guarantee – I don’t believe that this is a valid legal concept,” Shukoor was reported to have said.

Responding to Shukoor’s comments, Sawad today told Minivan News that he “did not believe” there had been a violation of any law whilst he held the position of attorney general.

“I deny her claims, although I’m not actually sure what her claim is. I don’t think she knows what her claim is,” he said.

“She [Shukoor] needs to figure out if it was a guarantee or not a guarantee, because in the meeting she said that it ‘was a guarantee’ and then said that it was like a guarantee’.  Regardless of whether or not it was a guarantee, the whole thing is irrelevant as she has stated the GMR contract is void ab initio (invalid from the outset),” Sawad claimed.

GMR’s tender agreement to develop INIA was overseen at the time by legal and financial experts including the International Finance Corporation (IFC) – a World Bank entity.  The deal also obtained the certified approval of former Attorney General Sawad.

Attorney General Shukoor was not responding to calls from Minivan News at time of press.

Speaking to the committee yesterday, local media reported Shukoor as stating that Singapore’s Axis bank had permitted GMR to obtain loans worth $386 million, of which GMR had taken $165 million. Shukoor highlighted that should GMR fail to repay this loan, then the government would have been required to meet any resulting costs.

She stated that if the government found itself unable to pay back these loans, the image of the state will be damaged, leading to potential implications for securing future finance.

“When we think about taking legal action in relation to this matter, we see that the head state prosecutor has advised that signing that agreement should not cause any legal problems. So it becomes something the state has to honour,” she added.

Despite the former Attorney General approving the agreement, Shukoor stated that government has a strong legal argument over the loan issue, whereby under the Public Finance Act, the government cannot act as a guarantor without the parliament’s approval, which was allegedly not obtained.

“The State is acting as the guarantor to the loans taken based on the transactions between GMR and Axis Bank. I believe that is not something permitted under the Finance Act. It is like a blanket sovereign guarantee. We may not be able to classify it as a sovereign guarantee. But we are seeing an assurance given by the State,” Shukoor was quoted as saying by local newspaper Haveeru.

GMR bid qualification

Meanwhile, Chief Financial Officer (CFO) of GMR Airports Sidharath Kapur today rejected comments made by President’s Office Spokesperson Masood Imad in Indian media alleging that the company did not originally qualify as a bidder to develop INIA in a technical evaluation process.

Masood was quoted in the Business Today publication as claiming that the technical evaluation committee during the bidding process acted under pressure from former President Mohamed Nasheed, who then qualified the GMR Group for the project.

In response, Kapur said that the company had won the project in an “open and transparent” bidding process, stating that GMR had qualified in the technical, financial and legal evaluations.

Kapur noted that the bidding process was supervised by the International Finance Corporation (IFC), and that the IFC had successfully handled such public-private partnerships in the airport sector in many countries.

“While other bidders opted for the ‘earn and pay’ route, the GMR consortium adopted a ‘pay and earn’ strategy, and hence paid $78 million up front to the Government of Maldives,” he added.

Kapur also attacked the present government’s handling of the GMR issue, alleging that the resulting arbitration case to decide on compensation owed to the company from the contract cancellation could have serious financial ramifications for the nation.

“Compensation believed owed to GMR due to the illegitimate cancellation of the contract by the government of Maldives may put a significant and avoidable financial burden on the people of Maldives,” he stressed to Business Today.

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Government considering seeking compensation from GMR: Attorney General Azima Shukoor

Attorney General (AG) Azima Shukoor has said the Maldives government could opt to seek compensation from infrastructure group GMR after it decided to void the India-based company’s concession agreement to develop Ibrahim Nasir International Airport (INIA), according to local media.

GMR last week confirmed that it was seeking an estimated US$800 million in compensation in order to recover what it has claimed are investment and earnings after the government “wrongfully” terminated its contract.

In a press conference held yesterday (December 17), the attorney general maintained the government’s belief that the agreement with GMR to develop INIA was illegal.  She added that the government therefore intended to seek compensation for damages it “might” have incurred during the process of entering into the contract with GMR, local newspaper Haveeru reported.  The contract was signed during the administration of former President Mohamed Nasheed.

Highlighting the pending arbitration process in Singapore Court between the government and GMR, Shukoor said that efforts were being made to appoint arbitrators for the hearings. She added that the government and Maldives Airports Company Limited (MACL) had appointed a “member” of Singapore National University as their arbitrator.

Similarly, GMR will also be given a 30-day period to appoint an arbitrator on its behalf.

Shukoor suggested during the yesterday’s press conference that it may take a period of one year until the due procedures were completed before a decision was made in the courts.

“It will take about two months time to appoint the panel to overhear the arbitration case. After that, parties will exchange documents and affidavits and respond to it and only after that a proper hearing on the matter will be held and might take up a period of one year,” she suggested.

Indian media reported last week that GMR had sent a letter to the Finance Ministry stating that it would seek compensation worth US$800 million.  Shukoor denied such a communication had been sent, adding that she did not believe such a demand could even be made.

“We terminated the agreement on the grounds of void ab initio (void from the outset) , therefore we will begin the negotiation on the position that the government of Maldives do not require to pay back anything,” Shukoor explained.

However, she admitted that owing to the size of GMR’s investment, there remained a possibility that government might have to pay some amount that would be determined through the arbitration process.

“Even if we do require paying back as compensation, it would be based on the decisions reached during the arbitration process. If it is settled out of court, then it would be based on legal arguments raised by the parties to the contract,” she added.

Shukoor has also claimed that even before INIA was handed over to GMR, no asset valuation was carried out – a decision expected to cause problems for the government. She also said that it has not been yet decided how the asset valuation would be carried out or how the amount that the government might seek in compensation from GMR would be calculated.

Even with the arbitration process now proceeding, Shukoor told local media that if the government believed additional compensation was required, it would seek the additional amount through the same courts.

“A lot of work is being carried at the moment. However, we have not yet calculated the amount we might have to pay or the amount that had been invested and even the amount we expect to seek,” she explained.

GMR demands US$800 million in compensation

GMR is seeking US$800 million in compensation following the termination of its US$511 million concession agreement signed under the former government back in 2010.

The Indian infrastructure giant has said that the proposed US$800 million claim was based on its “provisional estimates” and that the company had also taken into account the Maldives’ ability to cover such payments if compensation was awarded by the Singaporean courts overseeing arbitration.

GMR’s chief Financial Officer (CFO) Sidharath Kapur previously told Minivan News that the sum was a “preliminary estimate” based on a number of factors including investments made by the company, debt equity and loss of profits as a result of the contract termination.

He also added that on last Tuesday (December 11) the company had communicated with Maldives Ministry of Finance by sending an official letter outlining its concerns that the contract had been “wrongfully” terminated without respect for the agreed procedures.

Meanwhile according to Finance Minister Abdulla Jihad, no mechanism is currently budgeted should the Maldives face a multi-million US dollar bill for evicting GMR, but stressed it was not for the company to decide on any eventual payment.

He also played down fears that any potential fine could prove perilous for the country’s economy, as well as attempts to reduce the spiralling budget deficit, stating that any possible fines would be set by the Singaporean arbitration court hearing the dispute.

“We will deal with the matter when we know the amount of compensation to be paid,” he said at the time. “GMR cannot decide, it will be down to the court [hearing the arbitration].”

The INIA concession agreement

In 2010, the government of Maldives through its Finance Ministry, MACL and GMR-MAHB entered into a concession agreement with INIA whereby the Malaysian-Indian consortium were to develop and operate the airport for a period of 25 years.

According to the concession agreement a “project company” under the name GMR International Airport Limited (GMIAL) was to carry out the development project.

However, a lengthy dispute between the new government of President Dr  Mohamed Waheed Hassan and the GMR Group led to the eviction of the agreement.

On November 27, President Mohamed Waheed’s cabinet declared the agreement void, and gave the company a seven day ultimatum to leave the country.

Shukoor at the time stated the government reached the decision after considering “technical, financial and economic” issues surrounding the agreement.

She also 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.”

The INIA was handed over to the government on December 8, in an invitation-only press conference; Finance Minister Jihad presented the official handover documents to MACL Managing Director Mohamed Ibrahim, and said that the Maldives would pay whatever compensation was required “however difficult”.

With arbitration proceedings underway in Singapore over the contested airport development charge (ADC), GMR received a stay order on its eviction and appeared confident of its legal position even as the government declared that it would disregard the ruling and proceed with the eviction as planned.

On December 6, a day prior to its eviction, the government successfully appealed the injunction in the Supreme Court of Singapore. Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

That verdict, effectively legalising the sovereign eviction of foreign investors regardless of contractual termination clauses or pending arbitration proceedings, was “completely unexpected”, according to one GMR insider – “the lawyers are still in shock”, he said at the time.

A last ditch request for a review of the decision was rejected, as was a second attempt at an injunction filed by Axis Bank, GMR’s lender to the value of US$350 million.

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No plans to privatise airport, “might sublease”: Tourism Minister Ahmed Adheeb

Minister of Tourism Ahmed Adheeb has said the government is not planning to hand over full control of operations at Ibrahim Nasir International Airport (INIA), but might sublease specific development projects to international parties through a “transparent” bidding process.

Minister Adheeb told Minivan News that privatising the only international airport allowed it to become a monopoly which was not in the best interests of the country.

“What we saw was that handing over operation of the only international airport in the country meant it was monopolised. What we are saying is that if the airport is given like that without any competition, it is not in the best interest of the country,” he said.

Adheeb admitted that INIA needed further development and refurbishment, including the addition of an extra runway, and said such projects would be subleased to developers through a transparent bidding process. He also maintained that “operation and control” of the airport would not be given away as he alleged the former government had done with GMR’s concession agreement.

President Mohamed Waheed Hassan also highlighted in an interview to India’s Business Standard that MACL would “open tenders for major development projects”.

“I think it’s too early to talk about the rebidding but, yes, MACL will open tenders for major development projects in connection with the airport modernisation program. GMR is eligible to participate. I don’t see any reason why Chinese companies should be barred from participating in the bidding process,” he told the Business Standard.

However, when contacted by Minivan News, MACL Managing Director Mohamed Ibrahim denied any knowledge of such bidding processes and said he did not wish to further comment on the matter.

Minister Adheeb said 75 percent of the tourists coming into the country were from Europe and following the “European [economic] crisis, the Maldives government should have provided an incentive to those tourists arriving to the country, but because of INIA being operated by GMR, several airport fees were raised.”

“Flight operators operate as a business. They will not consider us if we give no incentives in such a time of crisis and when the airport handling charges are too high. We have to understand that INIA is a tourist airport, it is not a shopping airport or a transit airport,” he explained.

Therefore, the Minister said that the country needed an efficient airport where tourists can go through quickly, with an efficient check-in system.

Earlier on February 2, Qatar Airways CEO Akbar Al Baker warned the airline will re-consider flying to the Maldives if the airport operator maintained its plan to raise airport handling fees at INIA by 51 percent.

Reuters at the time reported that the airline was “‘dismayed’” over what it understood to be GMR’s plan to increase the handling fee at a future date, and suggested such a move would “threaten Qatar Airways’ continued presence in the Maldives.”

However, the GMR Group at the time denied the allegations stating that it had had received no official communication from the airline about its concerns.

GMR spokesman Amir Ali responded at the time saying that the fee hike had already been made by MACL shortly before GMR assumed control of the airport, adding that while there were no plans for a further increase at present, prices were dependent on factors such as fuel costs.

Adheeb also alleged that the former government intended to rush the development process of the airport rather than a “well contemplated phase by phase development plan”.

“Why do we really need to develop the airport to cater to four million people? We could have done that through proper planning in a phase by phase development process,” he said.

The INIA concession agreement

In 2010, the government of Maldives through its Finance Ministry, Maldives Airports Company Limited (MACL) and GMR-MAHB entered into a concession agreement withINIA whereby the Malaysian-Indian consortium were to develop and operate the airport for a period of 25 years.

According to the concession agreement a “project company” under the name GMR International Airport Limited (GMIAL) was to carry out the development project.

However, a lengthy dispute between the new government of President Mohamed Waheed Hassan and the GMR Group led to the eviction of the agreement.

On November 27, President Mohamed Waheed’s cabinet declared the agreement void, and gave the company a seven day ultimatum to leave the country.

Attorney General (AG) Azima Shukoor stated the government reached the decision after considering “technical, financial and economic” issues surrounding the agreement.

She also 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 favor of the government’s legal grounds to terminate the contract.”

The INIA was handed over to the government on December 8, in an invitation-only press conference; Finance Minister Abdulla Jihad presented the official handover documents to MACL Managing Director Mohamed Ibrahim, and said that the Maldives would pay whatever compensation was required “however difficult”.

With arbitration proceedings underway in Singapore over the contested airport development charge (ADC), GMR received a stay order on its eviction and appeared confident of its legal position even as the government declared that it would disregard the ruling and proceed with the eviction as planned.

On December 6, a day prior to its eviction, the government successfully appealed the injunction in the Supreme Court of Singapore. Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

That verdict, effectively legalising the sovereign eviction of foreign investors regardless of contractual termination clauses or pending arbitration proceedings, was “completely unexpected”, according to one GMR insider – “the lawyers are still in shock”, he said at the time.

A last ditch request for a review of the decision was rejected, as was a second attempt at an injunction filed by Axis Bank, GMR’s lender to the value of US$350 million.

Scott Wilson Plan

Minister Adheeb said the Scott Wilson master plan produced during former President Maumoon Abdul Gayoom’s administration would have been “a better master plan to develop the airport.”

“Sir Scott Wilson’s master plan to development of INIA was a good master plan. We actually did not require a plan to be implemented immediately. The plan was to develop the airport in a phase by phase development process. Some of the development projects had already been completed at the time the airport was given to GMR for development,” he explained.

Following the signing of the concession agreement of INIA with India’s GMR group, the Scott Wilson master plan was abandoned for a new master plan produced by the International Finance Corporation (IFC) through another foreign consultancy firm – Halcrow – which the current government claimed was more costly.

“Scott Wilson’s phase one cost us US$390 million, and all the three phases summed up came to a figure around US$590 million. The IFC did not provide this information to the government. We are talking about a development of 30 years,” former Civil Aviation and Communications Minister Dr Ahmed Shamheed said previously.

The current government criticised the IFC for abandoning the Scott Wilson plan for a more “costly master-plan”  and alleged that the World Bank affiliated group had been “irresponsible” and “negligent” in advising the former government of President Mohamed Nasheed in the concession of INIA by Indian infrastructure giant GMR.

However the IFC denied the allegations, 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”.

“A competitive tender was organised with the objective of selecting a world-class, experienced airport operator, who would rehabilitate, develop, operate and maintain the airport,” said an IFC spokesperson at the time.

Airport Development Charge

Highlighting the Airport Development Charge (ADC) that the former government intended to charge – prompting criticism from the opposition parties who are now currently in government of President Waheed – Adheeb said that the former administration proceeded to taking ADC without legislation.

“The way they intended to charge ADC was not a mechanism established in anywhere in the world. ADC is taken through a proper legislation and should be flexible and adjustable in parallel with the inflation rate,” he contended.

On November last year, former President Mohamed Nasheed’s government’s Transport Minister Adil Saleem announced that GMR will begin charging international passengers a US$25 (MVR 385.5) ADC at the departure check-in counters of INIA for all flights scheduled after 12:00am on January 1, 2012.

Saleem stated at the time that the fee had been previously approved by the government as part of its contract with GMR.

The matter was soon taken to Civil Court by then opposition Dhivehi Qaumee Party (DQP) – led by current Special Advisor of President Waheed, Dr Hassan Saeed. The DQP claimed that a pre-existing Airport Service Charge (ASC) of US$18 (MVR 277.56) invalidated the ADC.

The Civil Court in December 2011 invalidated the ADC charge, ruling that the clause in the concession agreement with GMR violated the Airport Service Charges Act of 1978, which was amended in 2009 to raise the charge to US$18 for foreign passengers and US$12 for Maldivians above two years of age.

The current government, after ascension to power, claimed in a “cabinet-committee report” that it was “not in the best interest of the country” to appeal the Civil Court decision to High Court, and thereby ignored the decision.

The former government had honoured the concession agreement following the civil court ruling, and,  under instruction from a letter sent by MACL, had been deducting ADC revenue from concession fees due the government.

Following the ousting of the Maldivian Democratic Party (MDP)-led government on February 7, the new government – which included the DQP – inherited the crippled concession revenues, under which it was effectively obliged to pay GMR to develop the airport.

The new government received a succession of bills from the airport developer throughout 2012. 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 owed the airport developer US$3.7 million (MVR 57.05 million).

On May 8, GMR offered to exempt Maldivian nationals from paying the contentious ADC in a bid to end a legal and contractual stalemate that had given rise to MACL going bankrupt and the deprivation of the majority of all airport revenue that the government was to generate through the agreement.

However, despite attempts to renegotiate the issue, the government decided to terminate the agreement at risk of compensation. The ADC case is still pending in the Singapore Arbitration Court.

Adheeb stressed that such major projects that is pivotal to the country’s economy should not be taken without thorough research and proper consultation and analysis. The current government, he said, would address these issues “with patience and with a proper plan.”

He also added that the current government of President Waheed would seek towards a “balanced economic and foreign policy” that would be in the best interest of the country.

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