Government decides to implement a ‘green tax’ on tourists

Tourism minister Ahmed Adeeb has told local media that a bill detailing proposed ‘green tax’ for tourists will be sent to parliament this month.

“Levying this tax is necessary given Maldives’ fragile environment. Revenue generated from the tax will go into managing the waste from local resorts and other islands,” said Adeeb who also serves as the co- chair in the cabinet’s Economic Council.

The exact percentage to be levied will be decided after consultations with relevant stakeholders, he added.

Earlier this month, Adeeb said he would aim to resolve waste management issues within the next two years using state-owned companies, after announcing the termination of the deal with India based Tatva Global Renewable Energy.

Minister of Finance and Treasury Abdulla Jihad also spoke of the proposed green tax while submitting a record MVR24.3 billion (US$1.5 billion) state budget for parliamentary approval today.

Jihad noted that the tax will form part of revenue raising measures, which also include the addition of ten resorts to the current 112. The proposed changes are anticipated to raise MVR3.4 billion (US$220 million) in new revenue.

Levies on the tourism industry – which accounts indirectly for up to 90 percent of the country’s GDP – formed a major part of proposed revenue raising measures in 2014.

An IMF-recommended hike on Tourism Goods and Service Tax (T-GST) from eight to 12 percent was approved by parliament in February and came into force last Saturday (November 1), prompting concerns from industry insiders.

Speaking to Minivan News today, former Managing Director of Maldives Tourism Development Corporation (MTDC) Mohamed Matheen said that the budget issues could not be resolved without addressing the structural issues within the budget.

“The budget deficit cannot be resolved regardless of how the tax regime is set without addressing issues like the high recurrent expenditures of the government, which is a lot higher than the majority of the countries,” said Matheen.

One general manager from a prominent resort told Minivan News last weekend that bookings appeared to be down for November, with both guests and operators aware of the “double tax” as the T-GST increase combines with the bed tax – a measure also continued this year as a way to boost government coffers.

“November will be tough,” he explained. “Top end resorts will really feel this. There’s no way further increases could be stood.”

He also expressed concern that the resorts were being asked to carry the fiscal burden of the government’s failure to curb expenditure.

Former President Mohamed Nasheed has also criticised the hike in the T-GST saying that it would cause immense difficulties to the general public.

“Now a [ticket] to a flight to Addu has gotten more expensive than a flight to Colombo. This is not, in any situation, how it should be priced,” Nasheed told local media.

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MDP may challenge constitutionality of amendment to Audit Act

The opposition Maldivian Democratic Party’s (MDP) parliamentary group has decided to make a recommendation to the party’s national executive committee (NEC) to challenge the constitutionality of amendments brought to the Audit Act last week.

“The NEC will make a decision tomorrow,” MP Rozaina Adam said at a press conference this morning.

Under Article 143 of the Constitution, the Supreme Court and High Court has the jurisdiction “to enquire into and rule on the constitutional validity of any statute or part thereof enacted by the People’s Majlis.”

Rozaina argued that the amendment stipulating that the president shall reappoint an auditor general within 30 days was unconstitutional.

Progressive Party of Maldives (PPM) MP Ahmed Thoriq had proposed adding a clause to the audit law stating that the president shall nominate for parliamentary approval an individual or individuals to the post of auditor general within 30 days of ratifying the amendments.

The amendment was passed with 36 votes in favour and 22 against at Wednesday’s (October 29) sitting of parliament.

At today’s press conference, MP Imthiyaz Fahmy meanwhile stressed the importance of the public protesting the unconstitutional move.

Imthiyaz said he had learned that parliament’s Counselor General Fathmath Filza had also advised Speaker Abdulla Maseeh Mohamed that the amendment was unconstitutional.

President Abdulla Yameen ratified the amendments less than 24 hours after it was passed, he noted.

Imthiyaz said the haste with which the amendment was passed and ratified shows the PPM government’s eagerness to replace the auditor general following allegations of corruption made against the party’s deputy leader – Tourism Minister Ahmed Adeeb – in a special audit report of the Maldives Marketing and Public Relations Company (MMPRC).

Meanwhile, Auditor General Niyaz Ibrahim told newspaper Haveeru last night that he would also contest the constitutionality of the amendment at the Supreme Court.

The amendment contravenes the process specified in the Constitution for the appointment and removal of the auditor general, Niyaz contended.

Article 218 of the Constitution states that the auditor general could be removed from office “(a) on the ground of misconduct, incapacity or incompetence; and (b) a finding to that effect by a committee of the People’s Majlis, pursuant to article (a) and upon the approval of such finding by the People’s Majlis by a majority of those present and voting, calling for the Auditor General’s removal from office”.

Niyaz told the local daily that he does not intend to remain in the post even if the Supreme Court strikes down the amendment.

Following the release of the MMPRC special audit report, Niyaz revealed that death threats were sent to both himself and his family. Niyaz is currently on leave.

During last week’s parliamentary debate, PPM MP Thoriq said he proposed the amendment with reference to Article 211(b) of the Constitution, which states, “A statute shall specify the responsibilities, powers, mandate, qualifications, and ethical standards of the Auditor General.”

Thoriq noted that the Audit Act was passed in 2007 before the ratification of the Constitution the following year and did not specify the responsibilities, mandate, qualification and ethical standards of the auditor general.

PPM MP Ibrahim Waheed has meanwhile told local media that the post of auditor general became vacant with the president’s ratification of the amendments.

Waheed contended that as Niyaz was appointed under the 2007 audit law, a new auditor general must be appointed in accordance with the Constitution following the amendments to the Audit Act.

Article 210 of the Constitutions states, “The President shall appoint as Auditor General a person approved by a majority of the total membership of the People’s Majlis from the names submitted to the People’s Majlis as provided for in law.”

Waheed argued that Niyaz was appointed in the absence of a law passed after the adoption of the Constitution in August 2008.

“So the legal obligations and responsibilities of the present Auditor General will stop. And if he is willing to go ahead, he also has to apply to the post just like others. An Auditor General will be appointed under this constitution after the parliament approves the name sent by the president,” he was quoted as saying by Sun Online.

The 17th People’s Majlis had unanimously approved former President Mohamed Nasheed’s nomination of Niyaz Ibrahim to the post of auditor general in May 2011.

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Adeeb denies corruption allegations as MDP calls for prosecution

Tourism Minister Ahmed Adeeb has denied allegations of corruption in a special audit report of the Maldives Marketing and Public Relations Company (MMPRC) while the opposition has called on the prosecutor general to press charges.

The report (Dhivehi) – made public on Thursday (October 30) – implicated Adeeb in corrupt transactions worth US$6 million between the MMPRC and the Maldives Ports Limited (MPL) and the Maldives Tourism Development Corporation (MTDC).

The MMPRC obtained MVR77 million (US$5 million) from MPL to be paid back in dollars and US$1 million from MTDC as a loan, which was immediately transferred to two companies – Millenium Capital Management Pvt Ltd and Montillion International Private Ltd, both with ties to Adeeb.

Speaking at a press conference at private broadcaster DhiTV’s studio last night (October 31), Adeeb insisted that the MVR77 million was not a financial loss to the state, noting that US$3 million has been repaid to MPL with the remainder due in December.

“Under my [tenure] as tourism ministry, in order to avoid state companies going into the dollar black market, I have obtained dollars for the state from one state company to another, the tourism industry, and various private parties,” Adeeb said.

Adeeb claimed to have arranged for local businessmen to purchase treasury bills worth MVR800 to 900 million as of October 2013 to ease the government’s cash flow problems.

The agreement between MMPRC and MPL was approved by the respective boards of the state-owned enterprises, the ruling Progressive of Party of Maldives’ (PPM) deputy leader stressed.

The MVR77 million from MPL was not embezzled or misappropriated, he insisted, claiming that the government routinely converts rufiyaa into dollars through private parties.

On the allegation that the tourism ministry awarded an italian-owned company an island for resort development to pay back US$2.25million of the US$6million MMPRC owed to MPL and MTDC, Adeeb claimed that Dhaalu Maagau was used as a picnic island by PPM MP Ahmed Nazim’s friends.

The former deputy speaker of parliament had repeatedly sought to secure the island, Adeeb said, dismissing the allegation that the Italian paid the lease rent for the island through Adeeb’s father’s Montillion company.

Adeeb also pledged to release his financial statement to the media on Sunday (November 2) and denied failing to declare assets.

According to the audit report, Adeeb has failed to declare assets as stipulated by Article 138 of the Constitution since he was appointed tourism minister in 2012.

Counter-allegations

When the US$6 million corruption scandal first surfaced in May, Adeeb told Minivan News that the “defamation attempt” was linked to his refusal to support certain individuals for speaker and deputy speaker of the 18th People’s Majlis.

Minivan News understands MP Ahmed Nazim was involved in leaking documents related to the case to online news outlet CNM, which first broke the story of the Anti-Corruption Commission (ACC) investigating the transactions.

Nazim’s passport was withheld last week, but he left the country on the date the court order was issued.

In May, Adeeb confirmed to Minivan News that two repayment cheques dated May 10 and 15 bounced due to insufficient funds.

The MTDC’s US$1 million had been reimbursed, Adeeb said, while MPL had been paid one-third of the owed amount in dollars. The remaining two thirds are due in June, he added.

At last night’s press briefing, Adeeb alleged “extraordinary ties” between Nazim and Auditor General Niyaz Ibrahim.

Following his refusal to support Nazim for the deputy speaker’s post, Adeeb said Nazim threatened to put out audit reports implicating him as well as family members in corrupt dealings.

Moreover, the auditor general’s office neither sought a statement from him nor posed any questions regarding the transactions, Adeeb said.

“I am most saddened that professionals, specialised people, are brought in between our political rivalry in the political arena,” he said.

“Unconstitutional”

The opposition Maldivian Democratic Party (MDP) meanwhile released a press statement yesterday condemning the government’s “unconstitutional” and “unlawful” attempts to replace the auditor general before the end of his seven-year term.

Last week, parliament passed amendments to the Audit Act requiring the president to reappoint an auditor general within 30 days of ratifying the amendments.

President Abdulla Yameen ratified the amendments on Thursday.

The MDP contended that the auditor general could only be removed from office through the process specified in the Constitution, which was “(a) on the ground of misconduct, incapacity or incompetence; and (b) a finding to that effect by a committee of the People’s Majlis, pursuant to article (a) and upon the approval of such finding by the People’s Majlis by a majority of those present and voting, calling for the Auditor General’s removal from office”.

The attempt to remove the auditor general shows the level of corruption in the current administration, the press release stated, adding that the government was undermining independent institutions.

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Tourism Minister implicated in US$6million corruption scandal

An audit report has implicated Tourism Minister Ahmed Adeeb in a corruption scandal involving US$6million, a day after ruling Progressive Party of the Maldives (PPM) amended the Audit Law to reappoint the Auditor General (AG).

AG Niyaz Ibrahim, in today’s special audit report, said the Maldives Marketing and Public Relations Company (MMPRC) obtained a US$1million loan from Maldives Tourism Development Corporation in the guise of making an urgent payment to a foreign party and subsequently loaned the money to a company owned by Adeeb’s father.

Adeeb owned a 35 percent share in Montillion International Private Ltd, but transferred his shares to his father in March 2012 when he assumed the post of Tourism Minister.

The company only made MVR 70,100 in 2011 through trade, but in the period between 2012 and 2014, US$ 6.8 million and MVR 3.6 million from tourism related business rolled through the company’s accounts, the report noted.

In a separate case, the MMPRC also asked the Maldives Ports Ltd (MPL) to hand over MVR 77.1million to pay the company US$5million at a later date. MPL agreed to transaction despite demonstrating no need for dollars.

MMPRC immediately transferred MVR 77.1million to a private company Millenium Capital Management Pvt Ltd. Only US$ 3 million of the pledged US$5million has been paid back. The audit report said Adeeb helped MMPRC push the deal through.

It also suggested the Tourism Ministry awarded a company owned by an Italian an island for resort development to pay back US$2.25million of the US$6million MMPRC owed to MPL and MTDC.

According to the report, Adeeb has failed to declare assets as per Article 138 of the Constitution since he took up the post of Tourism Minister.

The Tourism Ministry and Maldives Inland Revenue Authority (MIRA) refused to cooperate with the investigation, the report noted.

In a tweet Adeeb has condemned the report as politically motivated.

Channel News Maldives (CNM) broke the story of the US$6million corruption scandal in May. Its reporter Abdulla Haseen was charged with disobedience to order in August, but the Prosecutor General withdrew the charges a few weeks later.

Minivan News understands former deputy Speaker of Majlis Mohamed Nazim was involved in leaking documents to CNM. His passport was withheld last week, but Nazim left the country on the date the warrant was issued.

Millenium, Montillion, New Mood

Niyaz said MMPRC had obtained MVR77.1million from MPL and US$1million from MTDC to provide illegal loans to private companies.

Although MPL approved the MVR 77.1million payment in exchange for US$5 million, the company had no need of dollars and the transaction was made on MMPRC’s initiation, not MPL’s.

Further, MPL’s 2014 budget shows it required only US$2.2million for machinery in 2014, but the bidding process had not been opened at the time of transaction. MPL also had US$800,000 in treasury bonds and a large amount of dollars in its accounts.

Moreover, MMPRC is not authorized to engage in dollar trade and does not have the capacity to buy or sell US$5 million, as its working capital at the end of 2013 stood at US$4.5million and assets were only worth MVR 324,485.

MPL authorized the “risky” transfer after MMPRC issued two dated checks. When MMPRC failed to make its second payment of US$2.5 million on July 8, the agreement was amended to allow the company to pay back the money by December 1. The report said the amendment was made because Millennium failed to repay MMPRC on time.

In the second case, MMPRC on April 9 asked MTDC for an urgent loan of US$1million to make an urgent payment to a foreign party for tourism promotion. The loan was to be paid back by May 15.

The money was transferred to Adeeb’s father’s company Montillion on April 15.

But MMPRC made no payment to any foreign party in the period. The loan was paid back by New Mood Resort Pvt Ltd, which was given Dhaalu Atoll Maagau Island, at a head lease rent of US$2.25 million.

Toursim Ministry and MIRA refused to reveal details of the Maagau deal despite repeated requests, the audit report said.

Montillion is also accused of bribing a senior tourism ministry official with US$450,000 in February in a separate resort development deal.

Neither the Finance Ministry nor the MMPRC board were involved in either case. The MMPRC’s Managing Director Abdullah Ziyath personally handled all of the transactions, including picking up checks, against the company’s procedures.

Niyaz has recommended all individuals involved in the two cases be investigated for corruption and charged with abuse of power.

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Corruption allegations a political attempt at defamation, says Tourism Minister

Tourism Minister Ahmed Adeeb has denounced corruption allegations publicised by local media as a “political attack” aimed to defame him.

A case filed at the Anti Corruption Commission (ACC) last week alleged Adeeb abused his position of power to obtain MVR 77.1 million (US$5 million) from Maldives Ports Limited and US$1 million from Maldives Tourism Development Corporation (MTDC).

It is alleged that Adeeb subsequently loaned the funds to relatives and friends via state-owned tourism promotion company the Maldives Marketing and Public Relations Corporation (MMPRC).

The complainant claimed the MMPRC had obtained Maldivian Rufiyaa from the MPL in the guise of buying dollars with a promise to reimburse the amount four months later. However, two repayment cheques dated May 10 and 15 bounced due to insufficient funds.

The US$1 million reimbursement dated check for MTDC also bounced, they added.

Speaking to Minivan News today, Adeeb did not deny involvement in the transfer but said such transactions were routine between state owned companies in order to avoid purchasing dollars on the black market.

“The problem here is that I am being singled out and targeted,” he said, suggesting the unfair “defamation attempt” was linked to his refusal to support certain individuals for the position of speaker of the 18th People’s Majlis.

“There is absolutely no room for anyone to say that I fled with the MMPRC’s coffers,” he continued.

The minister confirmed cheques had bounced, but said the MTDC’s US$1 million had been reimbursed, while MPL had been paid one- third of the owed amount in dollars. The remaining two thirds are due in June, he added.

The ACC and the auditor general have confirmed they are investigating the case.

Suspicious transactions

Leaked documents filed at the ACC include an MMPRC letter to MPL CEO Mahdi Imad on February 24, in which the company’s Managing Director Abdulla Ziyath asked the MPL for the rufiyaa equivalent of US$5 million. The amount was to be paid back in dollars in four months through dated checks.

“Reference is made to the meeting held between the Tourism Minister Ahmed Adeeb and Maldives Ports Limited CEO Mahdi Imad,” the letter said

“An agreement is to be drafted by MPL for this transaction whose purpose is to provide foreign currency support to MPL through other government companies,” it read.

The complainant, however, questioned the justification, claiming: “The MMPRC is run on state funds, and as the company does not earn in dollars, it is highly questionable that the MPL gave the company money to buy dollars,”

MPL had also transferred rufiyaa to MMPRC at a time when the company had failed to pay dividends to the government. The company had argued it did not have money in its accounts, the complainant said.

They further alleged the MMPRC Managing Director Abdulla Ziyath personally went to MPL with the company’s seal to collect the cheques, demonstrating “the act was a planned act, for personal gain by the leaders of MPL and MMPRC.”

“When one company’s MD personally goes to receive funds from another company, it is evident this act is committed in secrecy, behind the company’s employees’ backs.”

The accuser also questioned why a company set up for tourism promotion was engaging in dollar sales. They also said it was against procedures for the MPL to release the money without any security measures.

In response, Adeeb said that as Tourism Minister he had also helped the state’s primary wholesaler State Trading Organisation (STO) obtain dollars to import goods.

He further pointed out the transactions took place between the companies via board resolutions and official letters, not through documents he had signed. He claimed the MPL needed dollars to buy equipment such as barges.

MPL’s Mahdi Imad was not responding at the time of press and an MMPRC official said Abdulla Ziyath was on leave today.

Loans to relatives

The complainant said as soon as the MMPRC obtained the money, it was transferred in two installments to a company owned by Adeeb’s friend called Millennium Capital Management without any bank checks or security procedures.

The US$1 million obtained from MTDC was loaned to a company owned by Adeeb’s father called Montillion International Pvt Ltd. Adeeb used to own majority of the shares in the company, but on becoming tourism minister in 2012, transferred all of his shares to his father Abdul Ghafoor Adam.

The complainant does not appear to have submitted any supporting evidence for the transfer of funds from MMPRC to the two companies.

When asked if the MMPRC had indeed transferred the funds to companies owned by his friends and relatives, Adeeb did not deny the claim and said he does not hold any business interests and is not a board member of any company.

“If you look at a 360 degrees, the case is very clear,” he said claiming the media was very “judgmental.”

Adeeb has previously been accused of involvement with an infamous pair of Armenian brothers linked with drug trafficking, money laundering, raids on media outlets and other serious crimes in Kenya.

Photos of the Arturs in the company of Adeeb and Minister of Defense Mohamed Nazim Maldivian ministers emerged on social media in April 2013, apparently taken during the Piston Motor Racing Challenge held on Hulhumalé between January 25 and 26.

One photo showed Artur Sargsyan next to Adeeb and Nazim, while another has him apparently starting one of the motorcycle races at the event, which was organised by the Maldivian National Defence Force (MNDF). Another image showed Sargsyan at the red carpet opening for the Olympus Cinema.

Adeeb acknowledged meeting the brothers during the event, but said he had no personal links with them, saying the brothers had come to see him over a business dispute with members of the opposition Maldivian Democratic Party (MDP).

He had asked the brothers to leave “for the good of the country.”

However, letter from the Tourism Ministry to immigration authorities requesting a residency visa for Margaryan and Sargayan Artur – dated January 27 and signed by Adeeb – was subsequently leaked on social media.

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MTDC sells Herethera resort for US$33 million

The Maldives Tourism Development Corporation (MTDC) has sold the Herethera Island Resort in Addu City for US$33 million to Singapore’s Canaries Private Ltd.

Of the four companies that submitted bids following a public announcement to sell the resort on December 18, MTDC said in a press release on Monday (March 31) that the Singaporean company submitted the highest bid.

The agreement to transfer lease holder rights for the resort was signed on March 31.

The press release also noted that following the sale of the resort property the MTDC has repaid a loan obtained from the Bank of Maldives for developing the resort.

In June 2013, MTDC’s board of directors decided to sell Herethera – the government-owned company’s biggest asset – for US$30 million to a company with a majority stake owned by local tourism magnate ‘Champa’ Hussain Afeef.

MTDC Managing Director Mohamed Matheen told newspaper Haveeru at the time that the decision was made to sell Herethera to Afeef’s Treetop Investment Pvt Ltd because the government corporation did not have the finances to profitably operate the resort.

He added that a large investment was needed to fix problems with the beach and the environment of the resort in the southernmost atoll.

Herethera was the first resort developed and opened by MTDC while Afeef was chairman of the government’s tourism company.

Tourism pioneer Afeef meanwhile told the local daily that the Herethera development would take place in conjunction with the development of the international airport in Gan.

In November 2012, thirty percent of the Addu International Airport Ltd (AIAL) was sold to Afeef’s Kasa Holdings to raise finances to develop the Gan airport in Addu City.

However, the decision to sell the resort to Afeef was reversed following the election of President Abdulla Yameen.

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Herathera Resort to be sold to a Singaporean company for USD 33.3 million

Maldives Tourism Development Corporation Public Limited Company (MTDC) has announced that it will be selling the company’s first resort Herathera Island Resort to a Singaporean company for USD 33.3 million.

MTDC Executive Director Ahmed Niyaz stated that four companies had shown interest by the time the announcement of sale of the resort had expired on December 31, local media reported.

Niyaz stated the contract had been awarded to the highest bidder Singaporean developer Canaries Pvt Ltd.

“We decided to sell the island to whoever offered the highest price. Thus, as Canaries submitted the highest price, we are now in the process of handing over the award letter to them. We will do so within the next two days,” he said.

He further revealed that the second highest price had also been submitted by a Singaporean company, whle the third highest price was offered by Maldivian businessman ‘Champa’ Hussain Afeef’s Treetop Maldives company.

The fourth party to have expressed interest was a Malaysian company which, according to Niyaz, had been disqualified for not fulfilling the requirement of submitting a bank guarantee of USD 1 million.

Niyaz stated that Canaries Pvt Ltd must submit the full payment for the island within thirty days of the award letter being issued. If it fails to do so, the company’s bank guarantee will be claimed by the Maldivian government and the island will be sold to the next highest bidder.

The previous board of directors of MTDC had decided to sell the four star resort to Champa Hussain Afeef for USD 30 million. However, the decision had been revoked after the board was recompiled.

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Bank of Maldives sends MTDC notice for repayment of Herethere development loan

The Bank of Maldives Plc Ltd (BML) has sent notice to the government-owned Maldives Tourism Development Corporation (MTDC) to settle US$17.5 million overdue from a US$25 million loan provided to develop the Herethere resort in Addu City.

According to Sun Online, while the  loan requires a payment of $435,000 per month until February next year, the government tourism was sent notice by the national bank over non-payment of US$700,000 in line with the scheduled repayments.

“We wanted to sell the resort and completely pay off the bank loan. But the company’s work has come to a halt because of the delay, as the government is unable to appoint directors to the company’s board. We want to sell the resort as soon as possible and complete the repayment of the loan,” an MTDC official was quoted as saying.

Earlier this month, the MTDC board of directors decided to sell its biggest asset, Herethere resort, for US$30 million to a company with a majority stake owned by local tourism magnate ‘Champa’ Hussain Afeef.

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MTDC to sell Herethere resort for US$30 million

The Maldives Tourism Development Corporation’s (MTDC’s) board of directors has decided to sell the government-owned company’s biggest asset, Herethere resort in Addu City, for US$30 million to a company with a majority stake owned by local tourism magnate ‘Champa’ Hussain Afeef.

MTDC Managing Director Mohamed Matheen told newspaper Haveeru yesterday that the decision was made to sell Herethere to Afeef’s Treetop Investment Pvt Ltd because the government corporation did not have the finances to profitably operate the resort.

He added that a large investment was needed to fix problems with the beach and the environment of the resort in the southernmost atoll.

Herethere was the first resort developed and opened by MTDC while Afeef was chairman of the government’s tourism company.

Tourism pioneer Afeef meanwhile told the local daily that the Herethere development would take place in conjunction with the development of the international airport in Gan.

In November 2012, thirty percent of the Addu International Airport Ltd (AIAL) was sold to Afeef’s Kasa Holdings to raise finances to develop the Gan airport in Addu City.

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