Tag: singapore

GMR-Maldives arbitration to begin mid 2014: Attorney General’s Office

The Attorney General’s (AG’s) Office has confirmed that an arbitration case concerning the government’s decision to void its concession agreement with Indian Infrastructure giant GMR will begin by the middle of next year.

Deputy Solicitor General Ahmed Usham today told Minivan News that both parties had agreed to commence proceedings by the middle of 2014 and were now waiting on arbitrators to confirm the exact schedule for when their respective cases would be presented.

The initial agreement was reached after representatives for the state and GMR met in London, England on April 10 for a preliminary procedural meeting.  A timetable was agreed upon for holding hearings over the cancellation of a US$511 million contract to develop and manage a new terminal at Ibrahim Nasir International Airport (INIA).

Usham said that the hearing in London last week had been focused solely on establishing a timetable for when arbitration will begin proper in Singapore.

“It is quite straight forward in these procedural hearings.  We discussed the schedule for hearings, such as when cases would be presented, as well as when parties can reply and make counter claims,” he said. “These arbitrators are quite busy, so it can be difficult to manage time in their schedules.”

The AG’s Office has previously claimed that the Maldives will be represented by Singapore National University Professor M Sonaraja, while former Chief Justice of the UK, Lord Nicholas Addison Phillips, will represent GMR.

The arbitrator mutually agreed by both GMR and the government is retired senior UK Judge, Lord Leonard Hubert Hoffman.

Concession agreement

In 2010, GMR-Malaysia Airports Holdings Berhad (MAHB) consortium, the government of former President Mohamed Nasheed and Maldives Airport Company Limited (MACL) entered into a 25-year concession agreement worth US$511 million (MVR 7.787 billion). The agreement charged the GMR-MAHB Consortium with the management and upgrading of INIA within the 25 year contract period.

However, in November 2012, the government of President Dr Mohamed Waheed Hassan Manik declared the developer’s concession agreement void and ordered it to leave the country within seven days.

A last minute injunction from the Singapore High Court during arbitration proceedings was overturned on December 6, after Singapore’s Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

GMR is seeking US$800 million in compensation for the sudden termination, while the Maldivian government is contending that it owes nothing as the contract was void ab initio – meaning the contract was invalid from the outset.

Should the argument of void ab initio fail, the government has claimed the second legal grounds on which it would argue in favour of termination of the contract would be that the contract had been ‘frustrated’.

‘Frustration of a contract’ is an English contract law doctrine which acts as a device to set aside contracts where an unforeseen event either renders contractual obligations impossible, or radically changes the party’s principle purpose for entering into the contract.

“The government has given a seven day notice to GMR to leave the airport. The agreement states that GMR should be given a 30 day notice but the government believes that since the contract is void, it need not be followed,” said then Attorney General Azima Shukoor.

The awarding of the bid in 2010 was overseen by the World Bank’s International Finance Corporation (IFC), which the Waheed government has accused of being “negligent” and “irresponsible”.

Should the matter be decided in the government’s favour, uncertainty remains as to the potential impact on foreign investor sentiment given the prospect of sudden asset seizure under the ‘void ab initio’ precedent.

If decided in GMR’s favour, the outcome of the case could potentially see the Maldives facing sovereign bankruptcy, with millions of dollars in additional debt emptying the state’s already dwindling reserves, crippling the country’s ability to obtain further credit, and potentially sparking an economic or currency crisis.

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Maldives overcome Singapore in second ACC Twenty20 tournament match

The Maldives has bounced back from defeat in its opening match of the Asian Cricket Council (ACC’s) Twenty20 elite cup tournament in Nepal with a five wicket victory over Singapore yesterday (March 27).

Having previously been defeated by host nation Nepal by 76 runs on Tuesday (March 26), the Maldives secured a narrow victory over Singapore during its second match of the tournament, held at the cricket ground at Pulchowk’s Institute of Engineering, the Himalayan Times publication has reported.

According to the ACC, the Maldives will now face Hong Kong on Friday (March 29), before playing its final Group A fixture against Malaysia on Sunday (March 31).

The Maldives squad is competing in the group for one of two spots available at the World Twenty20 Qualifier tournament to be held in the UAE in November.

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Committee to enlist Singapore parliament in US$800 million oil trade probe

Parliament’s Committee on National Security is requesting assistance from the parliament of Singapore to investigate the case related to US$800 million in “illegal” oil trade allegedly conducted by former President Maumoon Abdul Gayoom and his half-brother, the Progressive Party of the Maldives (PPM) presidential prospect, MP AbdullaYameen, Sun Online reports.

During the committee meeting Monday (January 21) MP Reeko Moosa Manik announced the parliament was notified to contact Singapore’s parliament requesting they facilitate meetings with the Singapore police and anti-corruption authority.

The Foreign Ministry refused to fully cooperate and said it would take two weeks to arrange the requested meetings, according to local media.

Travel to Singapore and Malaysia for the investigation was scheduled for January 20, however was delayed due to the “failure to arrange meetings with [the necessary] investigative bodies,” added Sun Online.

The alleged international money laundering racket involved Yameen as “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.

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Maldives without budgetary provisions to cover GMR’s US$800m compensation claim

Financial authorities in the Maldives have said no budgetary provisions presently exist to cover an estimated US$800 million in compensation being sought by Indian infrastructure group GMR after the government abruptly terminated its agreement to develop Ibrahim Nasir International Airport (INIA).

Finance Minister Abdulla Jihad told Minivan News today that no mechanism was 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.

GMR 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.

However, Jihad today played down fears that any potential fine could prove perilous for the Maldives’ economy, as well as attempts to reduce its 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. “GMR cannot decide, it will be down to the court [hearing the arbitration].”

Jihad also claimed that there had been no communication between GMR and the Maldives government over compensation as the matter was presently being dealt with through arbitration.

“There has been no communication [with GMR] over the levels of compensation,” he said.

Budget battle

With the compensation case pending, the Maldives government is this month attempting to reduce its spending as it also faces calls to cover debts from its neighbours and pressure from the International Monetary Fund (IMF) to reduce a ballooning fiscal deficit and protect dwindling state reserves.

The Indian government last month requested that the Maldives repay US$100 million in treasury bond funds by February 2013 – a matter it claimed was not related to a diplomatic row over the airport dispute at the time. Local media has previously reported that state reserves could fall to just US$140 million (MVR2.2 billion) once the payments are settled.

It is amidst these budgetary challenges that GMR has said it was seeking up to US$800 million in compensation following the termination of its US$511 million concession agreement signed under the former government back in 2010.

“Preliminary estimate”

GMR’s chief Financial Officer (CFO) Sidharath Kapur told Minivan News today 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.

Kapur added that on 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.

Speaking to the India-based Economic Times newspaper today, Government Spokesperson Masood Imad suggested GMR had been a victim of failing to perform proper due diligence before signing a contract with the former government – which was ousted following a police and military mutiny in February 2012.

A particular point of contention for GMR during the contract’s lifetime was an Airport Development Charge (ADC) – a US$25 fee for outgoing passengers stipulated in the concession agreement – which was blocked by the then-opposition Dhivehi Qaumee Party (DQP) in the Civil Court on the grounds that it was a tax not authorised by parliament.

Former President Nasheed’s administration chose to honour the original contract, and instructed GMR to deduct the ADC revenues from the concession fees due the government, while it sought to appeal the Civil Court ruling.

However, the Nasheed government fell in February 2012 and the opposition inherited the result of its court victory, receiving a succession of bills from the airport developer throughout 2012, despite the government’s insistence that the January 5 letter from MACL outlining the arrangement was no longer valid.

Government spokesperson Imad alleged that the ADC dispute has resulted from a lack of transparency by the former administration. “We feel the former government should have been transparent with GMR on the ADC issue,” he was quoted as telling the Economic Times today.

However, Kapur rejected the governments’ claims, stressing that its tender agreement to develop INIA had been overseen by legal and financial experts including the International Finance Corporation (IFC), a World Bank entity, as well as the certified approval from the former Attorney General Ahmed Ali Sawad.

“The IFC had clearly said that there are no further approvals required for the ADC. We were in compliance with all laws and all approvals had been taken as backed by the then attorney general of the Maldives,” he said. “Beyond that, what further due diligence could we do? Any international bidder would have taken comfort in that level of due diligence.”

With GMR’s calls for compensation currently being heard by the Singaporean judiciary, Kapur said the company believed there was a high probability it would be awarded financial remuneration to be paid by the Maldivian government.

Pointing to the verdict given by the Supreme Court in Singapore earlier this month, Kapur said that in allowing the Maldives government to expropriate the airport, the provision of compensation was required to be given to the company.

“What the appellate court has said is that appropriate compensation must be paid.  [The Maldives government] have the right to do as they wish as long as compensation is paid, this is binding on the Maldivian government,” he said.

While expecting a favourable outcome in its calls for compensation, Kapur added that the company was aware of the Maldives’ present financial vulnerabilities as well as its ability to cover any such payments.

“The possibility of getting compensation is high, but [the Maldives government’s] ability to pay is unknown,” he said.

Kapur added that in other international tribunal cases such as this, there were a number of methods that a court can use to ensure compensation is implemented. However, he said it was still too early to speculate on what form these methods may take in the case of the INIA dispute.

“Specific mechanisms”

Meanwhile, in a letter sent to the Maldives’ Ministry of Finance and Treasury, Andrew Harrison, CEO of the GMR Male International Airport Limited (GMIAL) that ran INIA under the agreement, reiterated the company’s argument that there had been “specific mechanisms” established to terminate the contract under specified circumstances.

“There is no suggestion that any of the circumstances arose,” the letter was reported to have read, according to the Economic Times.

Harrison was also said to have claimed that despite the present government’s stand that the contract was “void ab initio” or invalid from the beginning, the government “also warranted and specifically represented that the Concession Agreement was valid, legal and binding.”

“Further, as part of the closing of the financial transaction on 28 December 2010, the then Attorney General of the Maldives rendered a formal legal opinion confirming that the Concession Agreement was lawful,” the letter was said to state.

Minivan News was trying to obtain a copy of the letter at the time of press.

Smooth takeover

Management of INIA was taken over by the state-owned  Maldives Airports Company Ltd (MACL) on Saturday (December 8 ) after the Singaporean Supreme Court had overturned an injunction blocking the Maldivian government from voiding its concession agreement with GMR.

Both GMR and the MACL have this week praised the management handover as “going smoothly” as the government began planning for the future of INIA beyond the aborted privatisation plan. The termination of GMR’s contract officially ended the largest single foreign investment project in the country’s history.

On Tuesday (December 11), the Maldives cabinet recommended the formation of a government-owned company to run Ibrahim Nasir International Airport (INIA)

Looking towards the future of the airport, the cabinet recommended that Male’ International Airport Ltd be formed with 100 percent government shares, while claiming full authority to operate and develop INIA through a special contract with the Maldives Airports Company Ltd (MACL).

Speaking to Indian media earlier this week, President Dr Mohamed Waheed Hassan Manik has dismissed suggestions that China urged the Maldives to push out the Indian company.

“The only significant cooperation we have with China at this time is through development assistance… like building the museum, housing projects. I don’t think India should worry about it at all,” Waheed was quoted as saying in the Hindu newspaper.

The claims were made as Maldives Defence Minister Colonel (Retired) Mohamed Nazim departed to China for a five-day official visit said to be focused on securing its assistance in developing the Maldivian military.

The President had claimed that the Maldives was presently “not looking for a foreign investor” to develop the international airport, with the government announcing that it was undecided on whether any new privatisation agreement would be sought in future.

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Government continues bid to seize airport despite injunction from High Court of Singapore

Additional reporting by Mohamed Naahee

The Maldivian government has dismissed an injunction granted to GMR by the High Court of Singapore, and vowed that the airport will be run by the state-owned Maldives Airport Company Limited (MACL) by the coming Saturday (December 7).

The Singaporean High Court on Monday morning issued an injunction against cabinet’s decision the previous Tuesday to void the concession agreement for the US$511 million project, and issue the developer a seven day eviction notice.

Under the injunction, “Both MACL and the Ministry of Finance and Treasury, pursuant to the notice issued on 27th Nov 2012 either directly or indirectly, are not allowed to interfere with the rights of the Investor (GMR-MAHB consortium) under the concession agreement,” GMR said in a statement today.

The injunction prompted President Mohamed Waheed’s Special Advisor Dr Hassan Saeed, Defense and acting Transport Minister Mohamed Nazim and Home Minister Dr Mohamed Jameel to call a press conference on Monday shortly after midday.

“The government believes that the injunction issued by the Singapore court can be legally contested in a higher court. The government has decided to appeal the injunction as we believe the injunction lacks any grounds to stop the takeover,” said Hassan Saeed.

“I believe that the Singapore court interpreted the law wrong. We cannot wait for a hearing of the appeal. What I am saying is there is no damage to GMR but we face damages by not terminating the agreement,” Saeed said.

“The injunction did not overrule the government’s grounds that the contract was void from the beginning. Neither did it rule against the government’s grounds that the contract was frustrated. As you would know the Civil Court ruling over the ADC made the contract impossible to act upon,” said Saeed, referring to the airport development charge which his own Dhivehi Qaumee Party (DQP) successfully disputed in court while in opposition.

“This is a sovereign country. We have given them a sovereign guarantee. That means the government will compensate for their damages. An injunction cannot be issued like this to a sovereign state,” he continued.

Defense Minister Nazim meanwhile pledged the government would “continue the airport takeover and Insha Allah from next Saturday onwards MACL will be running the airport.”

“The government remains firm and committed towards implementing its decision to terminate the agreement. We will not reconsider it,” he said.

Following the government’s decision to declare the contract void last week, the Immigration Department announced it was halting the renewal of work permits for foreign nationals associated with the project, immediately affecting 17 of the airport’s 140 foreign staff.

The Civil Aviation Authority (CAA) meanwhile informed GMR that it would withdraw the operator’s aerodrome certificate at 23:59 on December 7.

GMR’s Head of Corporate Communications Arun Bhaghat reiterated to Minivan News that the company had no intention of leaving.

“It is not our intention to leave. We hope the government will act according to the law and respect the legal formalities,” he said.

Spokesperson for the International Air Transport Authority (IATA), Albert Tjoeng,  told Minivan News that it was the organisation’s understanding that the airport owner “remains unchanged – it is still the Maldives government.  What is changing is the operator of the airport.”

“The priority is to ensure uninterrupted operations at the airport, with no degradation in safety, efficiency and quality of service,” Tjoeng said.

“It is the responsibility of the civil aviation authority to regulate safety at the airport.  While this is a commercial matter between the government and the airport operator, it should not lead to cost increases for airlines operating to the airport.”

Lawyer acting for GMR, Fayyaz Ismail of Aequitas Legal Consultants (ALC), told Minivan News that if the government failed to comply with the injunction, “the Maldives will no longer be respected as upholding its obligations under international law, which will be very detrimental to future foreign investment. Hopefully they will be reasonable.”

Former President Mohamed Nasheed, under whose administration the contract was signed, declared that “President Waheed cannot ignore international law at his whim and fancy. Rules are rules and they must be respected.”

Lenders write to MACL

Axis Bank, one of the main lenders to the airport development project, has meanwhile sent a letter to MACL dated November 28 in which it reminded the government that the Finance Ministry was the guarantor of the direct agreement “in which the guarantor has undertaken and irrevocably guaranteed to pay any sums due… as a separate and independent obligation notwithstanding any termination of the concession agreement by the grantor or the project company for any reason whatsoever.”

“As a sovereign undertaking by the Republic of Maldives, we are sure that the Ministry of Finance and Treasury shall honour the aforesaid guarantee to repay the Finance Parties, notwithstanding the grounds on which the Ministry has declared he Concession Agreement as void, which has the consequences of terminating the Concession Agreement,” the bank wrote.

“We fear that the taking over of the airport without setting the dues of the Finance Parties shall be detrimental to the interests of the Finance Parties and shall go against the spirit of foreign investment in developmental projects of the Republic of Maldives.”

India considers withdrawing aid, withdraws representative

Indian media has meanwhile reported that the Indian government is considering freezing aid to the economically-crippled archipelago, notably a US$25 million loan necessary for the payment of civil servant salaries and the construction of a police academy.

“We are not happy with the way Maldives cancelled the GMR airport deal. This has surely left an impact on our bilateral ties,” a foreign ministry official told AFP. “A decision whether the money should be given or not will be taken soon.”

However the Indian High Commission told newspaper Haveeru that the suggestion was “unofficial” and that such a decision would not be “unilateral”.

Indian media also reported that High Commissioner D M Mulay had been appointed Indian Consul General in New York, and is to be replaced by Rajiv Shahare.

President’s Office Spokesperson Abbas Adil Riza had described Mulay as a “traitor and enemy of the Maldives and the Maldivian people” during a rally on November 9 calling for the government to “reclaim” Ibrahim Nasir International Airport (INIA) from GMR.

The remarks were widely reported by Indian media, sparking a diplomatic row and forcing the President’s Office to issue a statement distancing itself from the comments.

However Riza subsequently stood by his comments spoke at a second rally, characterising the Indian media coverage of his remarks as a “success” and urging participants to persevere “until GMR leaves this country.”

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High Court of Singapore upholds injunction against MACL, blocking action over ADC in Maldives’ Civil Court

The High Court of Singapore has rejected an attempt by the Maldives Airports Company Limited (MACL) to release an injunction blocking the government from taking action in the Civil Court of Maldives blocking GMR’s offset of the airport development charge (ADC).

MACL is the government party in the concession agreement with Indian infrastructure giant GMR to manage and develop Ibrahim Nasir International Airport, signed during the Nasheed administration.

Opposition parties at the time the agreement was signed – and are now in government following February 7’s controversial transfer of power – first opposed GMR’s development of the airport on nationalistic grounds, and then levelled numerous allegations against the company ranging from corruption to concerns that the deal would allow Israeli bombers to refuel en route to bombing Arab countries.

The opposition had some success in disrupting the agreement in late 2011, after the Dhivehi Qaumee Party (DQP) won a case in the Civil Court blocking GMR from levying an airport development charge (ADC) as stipulated in its concession agreement.

MACL in a letter sent on January 5, 2012, instructed GMR to deduct the ADC revenues from the concession fees due the government, while it sought to appeal the Civil Court ruling. However the Nasheed government fell a month later and the opposition inherited the problem, receiving 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 now owes the airport developer US$3.7 million.

“The net result of this is that the Maldivian government now has to pay GMR for running the airport. On this basis it is likely that the Maldivian government will end up paying about MVR 8 billion (US$519 million) to GMR for the duration of the contract,” wrote Dr Hassan Saeed, President Mohamed Waheed’s Special Advisor, in a recent appeal to Indian Prime Minister Manmohan Singh calling on him to cancel the Maldives’ agreement with GMR.

Saeed is the leader of the DQP, the party that filed the case against the ADC while in opposition, and has strongly opposed GMR’s involvement in the airport development.

As per the concession agreement, the ADC matter was referred to the Singapore Court of Arbitration.

The High Court of Singapore on July 23 granted an injunction in favor of GMR, restraining MACL from taking any step in the Civil Courts of the Maldives preventing the company “from adjustment/set-off of the Airport Development Charge and insurance surcharge, as per MACL’s 5th January 2012 letter, which is now referred to arbitration,” according to the airport operator.

MACL approached the High Court of Singapore in October 2012 seeking to have the injunction lifted. However the court dismissed the application on November 19.

MACL has challenged the validity of the July 5 letter instructing GMR to deduct the ADC from its concession revenues, claiming that it was signed by the former MACL Chairman ‘Bandhu’ Ibrahim Saleem without approval from the company’s board, and noted that he had been subsequently replaced under the new administration.

“The dispute raised by MACL on the validity of the 5th January 2012 letter will be decided in the arbitration proceedings to be held in Singapore,” GMR noted in a statement.

Attorney General (AG) Aishath Azima Shakoor claimed in local newspaper Haveeru on Monday that the Singaporean court had permitted MACL to try the matter in a Maldivian court, and allow the company to sue Saleem for the loss of revenue caused by the July 5 letter.

“But in accordance with the agreement whether MACL had the right to ignore or comply with the letter would be decided by arbitration. Even if a Maldivian Court rules the letter as null and void it would not binding for the arbitration,” Azima was reported as telling the paper.

There was, she said, no impediment to the government terminating the GMR agreement altogether, although this would be subject to compensation payable to GMR to be decided through arbitration.

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Attorney General asks for Supreme Court to decide jurisdiction on GMR

The Attorney General Azima Shukoor has said she will ask the Supreme Court to rule on whether the laws of the Maldives can be applied to the government’s agreement with GMR concerning the development of Ibrahim Nasir International Airport (INIA), local media has reported.

Shukoor, who was not responding to calls at the time of press today, said a request was sent following the release of a Supreme Court statement yesterday.

“It is against the International laws and the United Nations Charter that any action that undermines any sovereign right of a sovereign state, it is clear that courts of a sovereign nation has the jurisdiction to look into any matter that takes place within the boundaries of that state as according to the constitution and laws of that state,” read the statement.

“Even though a contract has an arbitration clause giving right to arbitrate in a foreign court does not limit a local courts jurisdiction to look into the formed contract, and it is clear that such limitations are in violation of UN Charters principles of sovereign equality, principle of sovereign non intervention within domestic jurisdiction, principle of self determination rights,” read the statement.

Shukoor told Haveeru that if the case could be dealt with by the Maldivian courts, the process would become much easier.

However, she also expressed her confidence that government would be successful in the arbitration case regarding the Airport Development Charge, which was file by GMR in Singapore.

“We can win the case at the Singapore Arbitration even by biding our time. It is quite certain,” she told Haveeru.

The original agreement, argued Azima, was drafted under UK law although both sides agreed to settle any disputes through third party arbitration.

Arbitration

Third party arbitration is often used in order to gain impartial decisions from international experts whilst avoiding the uncertainties and potential limitations of local courts.

One of the world’s leading arbitration companies, the Singapore International Arbitration Centre (SIAC) gives a number of examples of why Singapore is frequently chosen for international arbitration.

Number one in its list is the country’s strong reputation for neutrality, currently placed fifth in Transparency International’s Corruption Perceptions Index, behind New Zealand, Denmark, Finland and Sweden

The Maldives is currently placed 134th in this list alongside Eritrea, Pakistan, and Sierra Leone.

The Maldives judicial system has also faced issues regarding its political independence since the adoption of the 2008 constitution.

A recent report by the International Federation for Human Rights (FIDH) said that “different sections of the judiciary have failed to become fully independent and still lack adequate expertise.”

“According to testimonies from members of the judiciary met by the FIDH team in Male’, under the successive administrations, no political party has actually ever shown any willingness to establish an independent judiciary since each seems to benefit from the existing system,” said the report.

“Moreover, the judiciary is allegedly under the influence of the business sector. For instance, the member of the JSC appointed by the Majlis is also one of the main business tycoon of the country. His presence in the body overseeing the conduct of judges, as well as the general pressure imposed upon the business sector on the judiciary, has therefore been subjected to controversy,” it concluded.

Both civil society groups as well as the current government have acknowledged the need for stronger independent institutions in the country.

President of the Anti Corruption Commission (ACC) Hassan Luthfee told local media yesterday that one of its three cases regarding the GMR deal was nearing completion.

Luthfee, who has recently questioned the ability of the ACC to fulfil its mandate, told Minivan News last week that a high profile case such as this was not easy for the institution to finish which was likely to result in delays.

“Even an international organization such as the International Finance Corporation (IFC) had provided expertise in this case. So when such an allegation of a major criminal offence has been made we must probe the matter quite extensively. This is by far the most high profile and sensitive case. So we must be certain,” he told Haveeru yesterday.

The IFC was forced to defend itself this week after being described by senior cabinet figures as “irresponsible and negligent” during the INIA bidding process.

Shukoor had said last week that as long as the agreement between GMR and the government is not invalidated, the agreement would be “legally binding” despite a “majority of the people” who wish to “terminate the agreement immediately”.

She also expressed the government’s concern about the effect on investor confidence that may result if the agreement was terminated.

Independent MP Mohamed Nasheed today told local media that, despite indicating its willingness to do so, the Majlis had not at present become a party to the 1958 New York Arbitration Convention which deals with the recognition and enforcement of arbitration awards.

Nasheed argued that the Maldivian constitution requires citizens to act in accordance with international conventions which have been backed by domestic legislation.

He added, however, that the Maldives’ Arbitration Act was still in the committee stage.

Nasheed was not responding to calls at the time of press.

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CNI committed to August deadline as co-chair temporarily departs for Singapore

The revised Committee of National Inquiry (CNI) charged with investigating February’s controversial transfer of power has said it remains committed to releasing its findings later this month, despite its Singaporean co-chair returning to Singapore until August 25.

Former President Mohamed Nasheed’s member on the commission, Ahmed ‘Gahaa’ Saeed, said today that the CNI’s investigations were continuing, despite co-chair G P Selvam – a retired Singaporian Judge – having to return to his home country to work on an arbitration case.

Saeed maintained that the commission’s report was expected to be sent to authorities on August 29, before being publicly released the next day, with Selvam believed to be working on the findings during his trip. Local media, citing a source in the CNI, reported yesterday that Selvam had been out of the country on business since August 3.

Without wanting to discuss the commission’s findings so far, Saeed told Minivan News that in previous cases where Selvam had been called to Singapore, any interviews with “important”, high profile witnesses had been rescheduled to allow him to hear such testimonies.

“When working with international partners, in some cases they will have existing commitments,” he said. “However, the commission’s work is continuing. Right now, [Selvam] is also preparing the report.”

A person familiar with the CNI’s workings meanwhile told Minivan News on condition of anonymity that there was some concern that the absence of the judge’ “may constrain” the panel’s ability to investigate at full capacity.

President’s Office spokesperson Abbas Adil Riza said the government had been aware of Selvam’s plans to return to Singapore, and believed that the CNI’s work would be completed “on schedule”.

“The CNI has not requested any additional time from the government to complete its findings,” he said.

CNI deadline

Earlier this month, Selvam stated at a press conference that the CNI’s findings would not state against whom the state should press possible charges.  He contended that this was for the Prosecutor General (PG) to decide.

Days earlier, former President Maumoon Abdul Gayoom, said he would not accept that the toppling of former President Nasheed’s government on February 7 was a coup d’état, even if the Commission of National Inquiry (CNI)’s report came to such a conclusion.

Initially, the commission was mandated to release its findings on July 31, but CNI members stated that their final report will be delayed, after hundreds of people have come forward offering new information.

Selvam at the time said that the new date for the report’s completion would be the end of August, which was later approved by the government.

Saeed said at the time that 244 people had registered to provide information to the commission following the reforming of the CNI.

“There has been a lot of interest. We will speak to each and every single one,” he said.

The new names joined the 87 spoken to by the government’s original three member panel, taking the total number of contributors to 331.

“That’s one contributor for every 1000 of population,” Saeed remarked.

Following the remarks by the commission, President Mohamed Waheed Hassan extended the deadline by which the CNI must conclude its report into February’s transfer of power by August 30, 2012.

The first three-member CNI was appointed by President Mohamed Waheed, following a police and military mutiny and Nasheed’s resignation, in what he and his party have described as a coup d’état.

Facing pressure from the Commonwealth and civil society NGOs, the government eventually agreed to reform the commission to include a retired Singaporean judge and a representative for Nasheed.

The former CNI subsequently released a ‘timeline’ into events that took place from January 16 to February 7.

The MDP accused the commission of trying to prejudice the work of new commission, and then released its own version of events in response – the ‘Ameen- Aslam’ report based on interviews with the security services. The government described the publication of this report as a “terrorist act”.

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Government agrees to amend GMR fee while rooting for ADC

The government has agreed to deduct expected revenue from the US$25 (Rf385.5) Airport Development Charge that was to be charged from passengers departing on international flights from Ibrahim Nasir International Airport (INIA) from GMR’s concession fee to the Maldives government.

The agreement is subject to change according to a verdict from the High Court in a related case, and the passage of a bill currently before Parliament.

GMR’s request that the amount be deducted from its concession fee to the government was made to Maldives Airports Company Limited (MACL) last week, and approved following discussions between the Finance Ministry and the Maldives Airports Company Limited (MACL).

MACL officials did not respond to phone calls at time of press.

The ADC was to be charged after midnight on January 1, 2012, however the Maldives’ Civil Court blocked the fee on the grounds that it is essentially the same as a pre-existing Airport Services Charge (ASC) of US$18 for foreigners and US$12 for locals above two years of age.

Citing a contractual obligation with GMR, the government subsequently appealed the case to the High Court, where it is currently awaiting a verdict.

Having received nearly 1 million tourist arrivals in 2011, the government and GMR expected the ADC would generate US$25 million in revenue towards the current renovation of INIA.

Although the expected revenue is said to include fees charged from foreigners and Maldivians traveling abroad, it appears that at US$25 apiece the nearly 1 million tourists alone would meet the revenue needs stipulated in GMR’s original agreement.

President’s Office Press Secretary Mohamed Zuhair informed Minivan News that the notion of exempting Maldivians from the ADC had been raised in meetings, but rejected on the grounds that such an exemption would not generate the necessary revenue.

“The government and GMR have calculated to assure that shareholders and banks are properly recompensed,” he explained. “It should be a matter of pride and joy for any Maldivian to help with the development of their airport.”

Economic Development Minister Mahmoud Razee did not believe the deduction of ADC revenue from the concession fee would impact airport development.

“The government agreed to GMR’s request because the numbers were calculated accordingly” to ensure that the project was not compromised, he said.

Razee added that the agreement is only temporary.

“The government is working through the courts and the Majlis [Parliament] to find a resolution,” he said, affirming that the government continues to favor an ADC.

“When the IFC (International Finance Corporation) did the sums it took as part of the income the ADC revenue,” he explained. “Maldives receives a couple million passengers coming and going every year, but if you compare it to a place like Singapore which transits 30 to 40 million passengers a year, and you need to ensure that you are getting an internal rate of return satisfactory to the investor, you need to adjust that rate.

“So we are trying to maintain a good rate of return for the government and the airport,” he explained.

The matter is being addressed at the parliamentary level in an Amendment of Collection of Airport Tax (international travelers) Act 7/78 Bill. However, Parliament is in recess until March.

GMR previously noted that the payment of a development fee was “a common concept in many airports globally”, particularly as a part of concession agreements where airports are privatised.

“The reason for the inclusion of ADC in many global concession agreements is to address the funding needs to meet the investment model required to upgrade and develop new airport facilities at significant costs,” GMR stated.

The company further claimed that the charge was included in the concession fee proposed between GMR and the government in 2010.

Speaking at the groundbreaking ceremony for INIA’s new terminal on December 19, President Nasheed said he wished to assure GMR that the government was “200 percent behind your contract, and every single other contract the government has signed with any other foreign party in this country. Not just contracts signed by our government, but also contracts that any ruler of the Maldives has signed with any party. We will honour it.”

GMR’s 25 year concession agreement to construct and manage a new US$400 million terminal (to be competed in 2014) is the single largest foreign investment in the history of the Maldives.

Meanwhile, in April India’s Supreme Court ruled against the charging of airport development fees which are not approved by India’s Airport Economic Regulatory Authority (AERA). However Delhi airport, developed by GMR, continued to charge the fee as GMR had obtained permission to collect the sum in 2010.

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