Attorney General Azima Shakoor yesterday revealed to local media that the government has to pay US$ 10 million (MVR 154.2 million) to forensic accounting firm Grant Thornton following the firm’s investigation of the State Trading Organisation (STO)’s international illegal oil trade allegedly worth up to US$800 million.
In a press conference following reports that President Mohamed Waheed’s government spent £75,000 (MVR 1.81 million) on advice from former UK Attorney General Baroness Patricia Scotland, Shakoor announced that the government had received invoices for US$10 million from Grant Thorton.
However former Foreign Minister Dr Ahmed Shaheed told Minivan News that the US$10 million was a ‘penalty’ fee that was only to be charged if the investigation was stopped.
“Grant Thorton was working on a contingency basis. Besides hard costs such as flights the investigation itself was free, and we only had to pay a percentage of the assets recovered. However if the government stopped the investigation – say if it made a political deal – then Grant Thorton would impose a penalty,” Dr Shaheed explained.
“As of February, Grant Thorton were ready with a criminal complaint, having obtained a number of documents relating to financial dealings from Singapore banks through court orders issued by Singapore courts. The documents revealed at least US$140 million defrauded between 2002-2004. There would of course be no penalty if the government suspended the investigation due to lack of evidence or progress,” Dr Shaheed said.
Following the controversial transfer of power on February 7 2012 that saw the ousting of President Nasheed’s government, the case fell silent – despite the matter having been forwarded to the Prosecutor General’s office a week earlier.
Nasheed’s Presidential Commission on corruption, which had been charged with investigating the STO case and of which Dr Shaheed was appointed a member, was disbanded – one of incoming President Mohamed Waheed Hassan’s first acts in power.
Burma oil trade expose
The oil trade first came into the limelight following an explosive article in India’s The Week magazine by Sumon K Chakrabarti, Chief National Correspondent of CNN-IBN, which accused former STO head Abdulla Yameen – Gayoom’s half-brother – of being “the kingpin” of a scheme to buy subsidised oil through the State Trading Organisation’s branch in Singapore and sell it on through an entity called ‘Mocom Trading’ to the Burmese military junta, at a black market premium.
“The Maldives receives subsidised oil from OPEC nations, thanks to its 100 percent Sunni Muslim population. The Gayooms bought oil, saying it was for the Maldives, and sold it to Myanmar on the international black market. As Myanmar is facing international sanctions, the junta secretly sold the Burmese and ‘Maldivian’ oil to certain Asian countries, including a wannabe superpower,” alleged Chakrabarti.
“Sources in the Singapore Police said their investigation has confirmed ‘shipping fraud through the diversion of chartered vessels where oil cargo intended for the Maldives was sold on the black market creating a super profit for many years,’” the report added.
Quoting an unnamed Maldivian cabinet Minister, The Week stated that: “what is becoming clear is that oil tankers regularly left Singapore for the Maldives, but never arrived here.”
The article drew heavily on the investigation report by Grant Thorton, commissioned by the Maldives government in March 2010, which obtained three hard drives containing financial information detailing transactions from 2002 to 2008. No digital data was available before 2002, and the paper trail “was hazy”.
According to The Week, Grant Thorton’s report identifies Myanmar businessman and head of the Kanbawza Bank and Kanbawza Football Club, Aung Ko Win, as the middleman acting between the Maldivian connection and Vice-Senior General Maung Aye, the second highest-ranking member of the Burmese junta – one of the world’s most oppressive regimes.
Operation
According to The Week article, the engine of the operation was the Singaporean branch of the government-owned State Trading Organisation (STO), of which Yameen was the board chairman until 2005.
Fuel was purchased by STO Singapore from companies including Shell Eastern Petroleum (Pte) Ltd, Singapore Petroleum Company and Petronas, and sold mostly to the STO (for Maldivian consumption) and Myanmar, “except in 2002, when the bulk of the revenue came from Malaysia.”
The “first red flag” appeared in an audit report on the STO by KPMG, one of the four major international auditing firms which took over the STO’s audits in 2004 from Price WaterhouseCoopers.
The firm noted: “A company incorporated in Singapore by the name of Mocom Trading Pte Ltd in 2004 has not been discluded under Note No. 30 to the Financial Statements. There was no evidence available with regard to approval of the incorporation. Further, we are unable to establish the volume and the nature of the company with the group.”
In a subsequent report, KMPG noted: “The name of the company has been struck off on 20th April 2006.”
Investigators learned that Mocom Trading was set up in February 2004 as a joint venture between STO Singapore and a Malaysian company called ‘Mocom Corporation Sdn Bhd’, with the purpose of selling oil to Myanmar and an authorised capital of US$1 million.
According to The Week, the company had four shareholders: Kamal Bin Rashid, a Burmese national, two Maldivians: Fathimath Ashan and Sana Mansoor, and a Malaysian man named Raja Abdul Rashid Bin Raja Badiozaman. Badiozaman was the Chief of Intelligence for the Malaysian armed forces for seven years and a 34 year veteran of the military, prior to his retirement in 1995 at the rank of Lieutenant General.
As well as the four shareholders, former Managing Director of STO Singapore Ahmed Muneez served as director. The Week reported that Muneez informed investigators that Mocom Corportation was one of four companies with a tender to sell oil to the Burmese junta, alongside Daewoo, Petrocom Energy and Hyundai.
Under the contract, wrote The Week, “STO Singapore was to supply Mocom Trading with diesel. But since Mocom Corporation held the original contact, the company was entitled to commission of nearly 40 percent of the profits.”
That commission was to be deposited in an United Overseas Bank account in Singapore, “a US dollar account held solely by Rashid. So, the books would show that the commission was being paid to Mocom, but Rashid would pocket it.”
In a second example cited by The Week, investigators discovered that “STO Singapore and Mocom Trading duplicated sales invoices to Myanmar. The invoices showed the number of barrels delivered and the unit price. Both sets of invoices were identical, except for the price per barrel. The unit price on the STO Singapore invoices was US$5 more than the unit price of the Mocom Trading invoice. This was done to confuse auditors.”
As a result, “the sum total of all Mocom Trading invoices to Myanmar Petrochemical Enterprises was US$45,751,423, while the sum total of the invoices raised by STO Singapore was US$51,423,523 – a difference of US$5,672,100.”
Furthermore, “investigators found instances where bills of lading (indicating receipt of consignment) were unsigned by the ship’s master.”
Money from the Maldives
Despite his officially stepping down from the STO in 2005, The Week referenced the report as saying that debit notes in Singapore “show payments made on account of Yameen in 2007 and 2008.”
Citing the report directly, The Week wrote: “The debit notes were created as a result of receiving funds from Mr Yameen deposited at the STO head office, which were then transferred to STO Singapore’s bank accounts. This corresponded with a document received from STO head office confirming the payments were deposited by Yameen into STO’s bank accounts via cheque.
The Week claimed that Yameen was aided by Muneez on the STO Singapore side, and by Mohamed Hussain Maniku, former STO managing director, on the Maldivian end until 2008.
“In conversation with Mr Muneez, this was to provide monies for the living expenses of his [Yameen’s] son and daughter, both studying in Singapore. Their living expenses were distributed by Mr Muneez,” the Grant Thorton report stated, according to The Week.
In a previous interview with Minivan News, Yameen confirmed that he had used the STO’s accounts to send money to his children in Singapore, “and I have all the receipts.”
He described the then STO head in Singapore as “a personal friend”, and said “I always paid the STO in advance. It was a legitimate way of avoiding foreign exchange [fees]. The STO was not lending me money.”
He denied sending money following his departure from the organisation: “After I left, I did not do it. In fact I did not do it 3 to4 years before leaving the STO. I used telegraphic transfer.”
Yameen described the wider allegations contained in The Week article as “absolute rubbish”, and denied being under investigation by the Singaporean police, saying that he had friends in Singapore who would have informed him if that were the case.
The article, he said, was part of a smear campaign orchestrated by then President of the Maldives Mohamed Nasheed, a freelance writer and the dismissed Auditor General “now in London”, who he claimed had hired the audit team – “they spent two weeks in the STO in Singapore conducting an investigation.”
Yameen said he did not have a hand in any of the STO’s operations in Singapore, and that if Muneez was managing director at the time of any alleged wrong-doing, “any allegations should carry his name.”
He denied any knowledge or affiliation with Steven Law or Lo Hsing Han, and said that as for Mocom Trading, “if that company is registered, Maniku would know about it.”
Asked to confirm whether the STO Singapore had been supplying fuel to Myanmar during his time as chair of the board, “it could have been – Myanmar, Vietnam, the STO is an entrepreneurial trade organisation. It trades [commodities like] oil, cement, sugar, rice to places in need. It’s perfectly legitimate. “
Asked whether it was appropriate to trade goods to a country ostracised by the international community, Yameen observed that the trading had “nothing to do with the moral high-ground, at least at that time. Even even now the STO buys from one country and sells to those in need.”
Asked why the President would hire a freelance writer to smear his reputation after the local council elections, “that’s because Nasheed would like to hold me in captivity.”
The only way Nasheed could exert political control, Yameen claimed, “was to resort to this kind of political blackmail”.
“Unfortunately he has not been able to do that with me. I was a perfectly clean minister while in Gayoom’s cabinet. They have nothing on me.”
On February 1, 2012, the Presidential Commission set up during Nasheed’s administration to look into the malpractices of his predecessor Gayoom’s administration, sent the case to Prosecutor General for prosecution.
Parliament resolution
However, in June 2011, former Maldivian Democratic Party (MDP) MP Mohamed Musthafa presented a resolution to the parliament demanding the investigation by the parliament.
In the motion, Musthafa claimed that the article in the week magazine had outlined how the fraud was conducted to local media, and provided evidence.
His resolution requests an investigation into what it describes as “the biggest corruption case in the history of the Maldives”.
Issues relating to the Singapore-based joint venture that allegedly carried out the deal, Mocom Trading Pvt Ltd, which was used established to carry out this fraud, were first raised by audit firm KPMG, Musthafa noted in the resolution.
The resolution stated that later in 2004, audit firm Price Water House Coopers also audited the STO.
“This year the government handed the auditing to [forensic accountancy firm] Grant Thornton which found that the two audit reports contained legitimate concerns in their reports,’’ the resolution said.
Yameen dismissed the allegations and called on the government of Nasheed to investigate the allegations during the debate on the resolution.
He conceded that the STO did sell oil to Burma “but if you claim that the trade was illegal, you have to prove it first.”
Yameen added that STO senior officials alleged to be involved in the oil trade were still employed by the government: “They are now in high posts in the MDP,” he said.
“So if you dare to investigate this, by all means go ahead,” he continued. “I encourage that this be investigated. The other thing I want to say is that I have now become impatient. Even if they stack US$800 million worth of documents on one end of the scale, there is no way they would be able to prove [any wrongdoing].
“The documents are with the government. We did not take documents home with us when we left office,” he said.
Yameen claimed at the time that the Nasheed administration possessed a list of senior officials of the previous government who had purchased assets overseas.
“The government will have that list now,” he said. “Why is it that they won’t make it public? I know that this work was done under the World Bank’s stolen assets recovery programme [StAR]. This list will have people who are now helping this government, not anyone else. Why don’t you release the list?”
The MP for Mulaku claimed that the government had paid “over a million dollars” to Grant Thornton, without uncovering any evidence to implicate him..
“In such investigations, forensic accountants are given two or three weeks to complete their work,” he said. “[But] this has now been dragged out for over a year.”
Yameen said that he was “ready to sue” for defamation if a final report “under seal and signature of Grant Thornton” was made public.
“But there’s no way to file this suit because no official document has been released,” he continued. “All that’s been released are draft reports without any signature or seal that can be taken to court.”
Yameen added that “the US$800 million worth of trade was done with back-to-back LCs (lines of credit) in Singapore based on trust between one bank and another.”
“All the bank documentation is there,” he said, claiming that Grant Thornton had cleared out all the “invoices and documents” from STO Singapore so that “there’s not even one photocopy left.”
“How can eight or nine years worth of documents of a government company be taken like this?” he asked. “I know this for a fact.”
The right of individuals to be considered innocent until proven guilty was “a sacred provision” in the Maldivian constitution, he said.
The resolution was later sent to a committee to investigate by an approval of 52 – 11.
In his closing statement, Musthafa said that MP Yameen’s conceding during the debate that US$800 million worth of trade in oil did take place had “fulfilled the main purpose of my resolution.”
Counter claim?
The Attorney General’s revealing of the expenses of the Grant Thornton investigation comes a day after it was revealed that President Waheed’s government spent £75,000 (MVR 1.81 million) on advice from former UK Attorney General and member of the House of Lords, Baroness Patricia Scotland, in a bid to challenge the Commonwealth’s “biased” stance on the Maldives.
The Maldives was suspended from the Commonwealth Ministerial Action Group (CMAG) – the Commonwealth’s democracy and human rights arm – and placed on its formal agenda after former President Mohamed Nasheed alleged that his resignation on February 7 had taken place under duress. Nasheed contended he was forced out of office amid a mutiny by police and armed forces, orchestrated by former President Maumoon Abdul Gayoom and funded by several local wealthy resort businessmen.
CMAG swiftly challenged the impartiality of the Commission of National Inquiry (CNI) established by incoming President Mohamed Waheed to examine the circumstances of his own succession, and called on Waheed to hold early elections to restore the country’s democratic legitimacy.
After a number of countries – including the UK and EU – backed the Commonwealth’s stance, the government was pressured into reforming the CNI to include a member of Nasheed’s choosing and a retired judge from Singapore, GP Selvam. The reformed Commission is due to publish its findings in late August.
“The Maldives government is of the view that the Maldives has been placed on the [CMAG] agenda unfairly, and there is a general feeling that the Commonwealth and the CMAG view points are biased in favour of President Nasheed’s allegation of a coup,” the Attorney General’s office, stated in the terms of reference.
The terms of reference document for the contract, obtained by Minivan News, is dated May 28, 2012 and is signed by Scotland and the Maldives’ Deputy Attorney General, Aishath Bisham. It also carries the official stamp of the Attorney General’s Office.
The story first emerged in the Daily Mail, a UK newspaper based in London. The Mail established that the peer and former Attorney General had not listed the payment from the Maldives on the House of Lords’ register of members’ interests.
“Her entry says she has set up a firm to provide ‘private consultancy services’ but says it is ‘not trading at present’,” the Daily Mail reported.
In a statement, Baroness Scotland confirmed she had been “instructed by the Attorney General of the Maldives to give legal advice”, and slammed the leak of the terms of reference and “all communications passing between myself and the Attorney General, whether written or oral, pertaining to the nature and extent of that advice, as confidential and legally privileged.”
She additionally claimed to have been approached by both the government and the opposition (MDP), and said she had accepted an invitation to chair a roundtable “at which all parties are to be invited.”
“I am a senior barrister with specific expertise in the area of constitutional law, criminal and civil law reform, and am skilled in mediation,” she explained.
Baroness Scotland was previously scrutinised by the UK press in 2009 after she was found to have been employing an illegal immigrant as a housekeeper in her London home.
As the story emerged, MPs from the UK’s Conservative Party – which has long backed Nasheed and the MDP – seized the opportunity to attack the former UK Labour Party Cabinet Minister.
Conservative MP Karen Lumley told the Daily Mail that is was “disgusting that a former British attorney-general should take a well-paid job advising the new regime, which has no democratic mandate. President Nasheed was overthrown in a coup and the Maldives is now very unstable. Many of my friends there have been arrested by the new regime.”
Conservative MP John Glen told the paper that Baroness Scotland should “hang her head in shame”.
“What happened in the Maldives was a military coup,” he said, adding that it was “outrageous” that the former AG should be “advising a regime responsible for ousting a democratically-elected president.”
Former Maldives High Commissioner to the UK, Dr Farahanaz Faizal, described the government’s employment of Baroness Scotland as “absolutely shocking. If the government wanted legal advice to support the AG’s Office, the proper way is to request the UK government bilaterally.”
“To think that someone of her calibre would undertake an assignment to check if Foreign Ministers of Australia, Canada, Bangladesh, Jamaica, and others of CMAG had acted against their mandate is disgraceful,” Dr Faizal said.
Following the reports, President’s Office Spokesperson Abbas Adil Riza in an interview given to local TV station VTV denied the allegations.
“It is not true that the government spent 75,000 pounds on a former British attorney general. It is part of the lies that the Maldivian Democratic Party is spreading,” Riza was reported as stating in Haama Daily.
President’s Office Spokesperson Masood Imad meanwhile told Minivan News “I think that case was handled by [President Waheed’s Special Advisor] Dr Hassan Saeed.”
“[Baroness Scotland] did consult with us during the time CMAG was pressuring us, and we sought legal advice as to how to proceed,” Masood added.
In today’s press conference, in contrast to Riza, Shakoor conceded that the claims made in Daily Mail were true and that It was normal for the government to seek legal advice on international matters.
“The government has previously sought international legal advice on several other issues including the Air Maldives case and GMR’s lawsuit against Maldives government in Singapore arbitration court over the Airport Development Charge (ADC),” she said.
Shakoor said that the case of Scotland was carried out similarly.
“We believe that the CMAG has put the Maldives in its agenda not in accordance with their own procedures and also their calls for an early election reflects that they did not do proper research on the Maldivian Constitutional mechanism, therefore we had to seek legal advice from Baroness Scotland,” he added.
MDP Spokesperson Hamid Abdul Ghafoor was not responding at time of press.
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