The Civil Court has ruled the Maldives Airports Company (MACL) can sue its former chairman for allowing the disputed Airport Development Charge (ADC) to be deducted from Indian infrastructure giant GMR’s concession payments during it’s ill-fated agreement.
MACL alleges ‘Kuda Bandhey’ Ibrahim Saleem’s decision to be an act of ‘Ultra Vires’ – meaning that Saleem had acted beyond his permitted authority.
The ruling came following a procedural issue taken by Saleem said he was being wrongfully charged claiming the lawsuit was filed in violation to Article 18 (c) of the Contract Act and Article 74 Company Act.
The Contract Act states a clause requiring a party to refer to arbitration any dispute arising from the contract shall be valid, while the Company Act says the court has a right to issue orders holding personally liable the directors of the company to commit an offense in the name of the company.
But the Civil Court ruling stated that the Company Act does not prohibit the company chairman from being sued personally.
The airports company sued Saleem after he signed a letter sent to GMR on January 5 2012 stating that the ADC and the insurance surcharge fee had been deducted from GMR’s concession payments.
In late 2011, the then-opposition Dhivehi Qaumee Party (DQP) had filed a successful Civil Court case blocking GMR from charging US$25 charge for outgoing passengers – stipulated in its agreement with the government – on the grounds that it was a tax not authorised by parliament.
Former President Mohamed Nasheed’s administration subsequently chose to honour the original contract, instructing GMR to deduct the ADC revenues from the concession fees due to the state-owned MACL while it sought to appeal the Civil Court ruling.
However, with the Nasheed’s controversial resignation coming just one month later, the opposition soon inherited the contractual problem.
Dr Mohamed Waheed’s government then received a succession of bills from the airport developer throughout 2012, despite its insistence that the January 5 letter from MACL outlining the new arrangement was no longer valid.
In December 2012, the Anti-Corruption Commission (ACC) filed a case with the Prosecutor General’s Office over Saleem’s decision to allow GMR to deduct the ADC from concession fees owed to the state.
As part of the filed case (Dhivehi), the ACC was seeking reimbursement of MVR 353.8 million (US$22.9 million) from Saleem and former Finance Minister Mohamed Shihab over the alleged misuse of authority it claimed had led to significant financial loses for the state.
These losses were used as justification for the contract’s eventual termination in December 2012, for which GMR is currently seeking compensation via a Singapore court of arbitration.
According to the case filed by the ACC, former Finance Minister Shihab stands accused of misusing his ministerial authority to benefit a third party by allowing GMR to deduct the charges between October 2011 and September 2012.
The ACC has also accused Saleem violating the company’s rules. According to the ACC’s case, normal procedure for MACL would be to have the company’s board of directors pass a resolution allowing for consent to be given to deduct the ADC.
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