Jumhooree Party leader Gasim Ibrahim’s Villa Group has warned of negative repercussions for the Maldivian economy if the tax authority freezes the company’s bank accounts next week.
A 20-day final notice seeking US$90.4 million allegedly owed as unpaid rent, fines and interest expires on Saturday (April 18), while the civil court last week refused to grant stay orders halting enforcement of the notice.
The enforcement policy for defaulting taxpayers involves freezing bank accounts to recover the unpaid amounts and ceasing to provide services from any state institution.
Villa – which won the tax authority’s “Ran Laari” award last year as one of five companies that paid the highest amount to the state – insists it does not owe any money to the state.
“It is not only Villa’s shareholders’ and the company’s rights that are lost [if bank accounts are frozen]. The rights of a lot of employees who work at the company, small and medium-sized businesses dependent on this company, guests who have made bookings at our resorts, tour operators, and many other people, would also be lost,” said Villa Group executive director Shimad Ibrahim at a press conference last night.
Banks that have issued loans to Villa will also be affected, he added.
“In sum, we are having to face something on Sunday that will send shockwaves through the whole economy,” he said.
The holding company Villa Shipping and Trading Pvt Ltd conglomerate operates businesses in shipping, import and export, retail, tourism, fishing, media, communications, transport, and education.
Villa business secretary Ibrahim Rasheed added: “We are all holding our breath.”
Rasheed said the company will continue to seek “a peaceful resolution” and “hope for justice”.
He noted that Villa companies employ about 5,000 people.
In an interview on his Villa Television on Saturday, Gasim repeatedly appealed for talks with president Abdulla Yameen and tourism minister Ahmed Adeeb to resolve the dispute.
However, the Villa officials said the government has not responded to “pleas” for discussions.
Adeeb meanwhile accused Gasim at a ruling coalition rally last week of hoarding islands and lagoons and refusing to pay money owed to the state.
“Fabricated”
The Maldives Inland Revenue Authority (MIRA) issued the US$90 million notice after the tourism ministry terminated agreements for several properties leased to Villa and subsidiary companies for resort development.
The move followed Gasim’s JP forming an alliance with the main opposition Maldivian Democratic Party. However, the government denies the opposition’s accusations of unfairly targeting Gasim’s business interests.
Some 27 cases challenging the termination of the agreements and MIRA’s notice as well as appeals of the civil court’s refusal to grant stay orders are ongoing at court.
While the tourism ministry cited lack of “good faith” as the reason, the Villa officials insisted the terminations were unlawful and that the fines were “fabricated”.
If rent is not paid, the government is required to give a 30-day notice before issuing fines or seizing the properties, they noted.
The lease agreements also specify procedures for termination on the grounds of financial or non-financial breaches, but the tourism ministry’s termination notices did not refer to any violation.
“This is something that investors should seriously consider. This is a frightening and dangerous thing,” said Villa lawyer Ahmed Shafeeq.
In response to a letter from Villa contending there was no basis for the fines, Shimad said MIRA told the company it was “following instructions” from the tourism ministry.
Settlement agreement
The properties at stake were leased under a settlement agreement signed with the tourism ministry on December 12, 2013, less than a month after president Yameen took office.
The settlement agreement was reached after the Supreme Court on November 19 ordered the state to pay US$9.7 million to Villa in one month as compensation for damages incurred in a project to develop a city hotel in Laamu Kahdhoo.
As part of the settlement, Villa withdrew cases involving a dispute over a city hotel in Haa Dhaal Hanimadhoo and resort development on Gaaf Dhaal Gazeera.
In return, the government signed five ‘amended and restated lease agreements’ with Villa for three islands and several Kaafu atoll lagoons.
The government also agreed to forgo rents for the islands and lagoons for a construction period of five years and seven years, respectively.
However, after the settlement agreement was terminated in February, MIRA’s notice stated that Villa owed US$75.5 million as fines, US$600,000 as interest, and US$14.8 million as unpaid rent dating back to original lease agreements signed in 2006 and 2007.
The Villa officials noted that the company has paid over US$15 million as advance payments for the properties.
In the case of Kahdhoo, MIRA claimed an unpaid rent of US$293,000 and a fine of US$10 million – 34 times the allegedly unpaid rent – despite the 2013 Supreme Court judgment declaring Villa does not owe rent for the property, the officials said.
Likes(0)Dislikes(0)