Termination of misappropriated state funds investigation cost government MVR66 million

The termination of an agreement to investigate the alleged misappropriation of state funds by the regime of former President Maumoon Abdul Gayoom cost the government MVR66.17 million (US$4.2 million), a special audit report of the defunct presidential commission has revealed.

The report released last month explained that UK-based firm Grant Thornton dissolved the ‘asset tracing, recovery and repatriation’ agreement on April 30, 2012, after the Attorney General’s (AG) Office failed to respond to eight emails seeking instructions on how to proceed following the controversial transfer of presidential power on February 7, 2012.

The report noted that a settlement agreement was reached following a mediation process in March 2013 for the government to pay the forensic accountancy firm MVR64.61 million (US$4.1 million).

The government also paid MVR1.56 million (US$101,167) for legal counsel – to Eversheds LLP – employed for the arbitration process.

Following full payment of the settlement claim, the report revealed that Grant Thornton handed over all documents and information related to its investigation as well as minutes of meetings and expert findings on November 13, 2013.

The AG’s Office shared the documents with the Anti-Corruption Commission (ACC).

“As the agreement was brought to an end before Grant Thornton’s investigation was fully concluded and because the presidential commission’s investigations had noted a number of cases of suspected corruption and embezzlement when its work came to a halt, this office believes that the investigations should be completed,” the audit report stated.

The Auditor General’s Office recommended the ACC conclude the investigations commenced by Grant Thornton.

Oil trade

Former President Mohamed Nasheed formed the presidential commission in May 2009 to investigate alleged corruption during his predecessor’s 30-year reign.

The audit report noted that the commission’s investigations were mainly conducted through Grant Thornton, which included the alleged illegal oil trade involving the State Trading Organisation’s (STO) Singapore branch, the 2007 audit report of the Bank of Maldives, and asset tracing of senior government officials.

Nasheed’s vice-president, former President Dr Mohamed Waheed Hassan Manik, dissolved the presidential commission shortly after assuming office on February 7, 2012.

A week before the transfer of power, the presidential commission forwarded for prosecution a case against then-opposition MP Abdulla Yameen for his involvement in the alleged oil trade during his time as chairman of the STO.

The allegations first appeared in February 2011 in India’s The Week magazine, which described Yameen as “the kingpin” of a scheme to buy subsidised oil through STO’s branch in Singapore and sell it through a joint venture called ‘Mocom Trading’ to the Burmese military junta, at a black market premium price.

The article drew heavily on an investigation report by Grant Thornton, which obtained three hard drives containing financial information detailing transactions from 2002 to 2008.

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 a potentially lucrative deal of selling oil to Myanmar and an authorised capital of US$1 million, it acted as a front for an international money laundering racket.

The presidential commission sought criminal charges against Yameen and two other shareholders of STO Singapore – former Managing Director of STO Mohamed Manik and former Managing Director of STO Singapore Ahmed Muneez – and asked the AG’s Office to pursue civil compensation suits.

Yameen has dismissed the allegations on several occasions and disputed the illegality of the oil trade.

“It’s perfectly legitimate. I was a perfectly clean minister while in Gayoom’s cabinet. They have nothing on me,” he told Minivan News in February 2011.

Moreover, grilled by parliament’s national security committee in November 2011, he denied any involvement in “micro-management” of STO subsidiary companies. Upon assuming office in November, President Yameen called on the ACC to investigate the allegations.

Presidential commission audit

The audit report noted that the commission tasked Grant Thornton with investigating the finances of 12 associates and relatives of former President Gayoom.

If the amount of funds or assets recovered by Grant Thornton reached £1.5 million after deducting investigating costs, the government agreed to pay 25 percent as a fee and 35 percent if the figure exceeded £1.5 million.

In July 2010, the agreement with Grant Thornton was transferred from the audit office to the AG’s Office, the report noted.

Under revised terms of the agreement, the government agreed to pay Grant Thornton 2.5 times the cost of investigation if the agreement was terminated. Additionally, consultancy fees and rates were also raised.

Auditors calculated that the government had to pay MVR20.3 million (US$1.3 million) as a result of the modification.

Among other issues highlighted in the report, the audit office noted that the commission’s expenses were not monitored either by the President’s Office or other state institutions.

Moreover, emailed invoices and bills from Grant Thornton were paid without supporting documents, the report noted.

From May 2009 t0 February 2012, auditors found that the commission spent MVR36.02 million (US$2.3 million) for its investigations.


MP Yameen questioned by National Security Committee over alleged illegal oil trade

MP Abdulla Yameen Abdul Gayoom was grilled by parliament’s National Security Committee today over allegations of an illegal oil trade worth US$800 million with Burma while the Mulaku MP was chairman of the State Trading Organisation (STO).

In the face of repeated questioning during today’s meeting, Yameen denied any involvement in “micro-management” of STO subsidiary companies during his time as chairman until 2005.

resolution proposed by Maldivian Democratic Party (MDP) MP Mohamed Musthafa to investigate the allegations was sent to the National Security Committee on August 2, which has since summoned and questioned senior STO officials.

Article 99 of the constitution grants parliamentary committees the power to “summon any person to appear before it to give evidence under oath, or to produce documents.”

The allegations first appeared in February this year in India’s The Week magazine in a cover story by Sumon K. Chakrabarti, Chief National Correspondent of CNN-IBN, who described Yameen as “the kingpin” of a scheme to buy subsidised oil through STO’s branch in Singapore and sell it through a joint venture called ‘Mocom Trading’ to the Burmese military junta, at a black market premium price.

Mocom Trading
“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.

Referencing 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 an investigation report by international accountancy firm Grant Thornton, commissioned by the government in March 2010, which obtained three hard drives containing financial information of transactions from 2002 to 2008. No digital data was available before 2002, and the paper trail “was hazy”.

In 2004, investigators from accountancy firm KPMG found in an STO audit that Mocom Trading was set up in February that year 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 (employees of STO), and a Malaysian named Raja Abdul Rashid Bin Raja Badiozaman, who was the Chief of Intelligence for the Malaysian armed forces for seven years.

As well as the four shareholders, former Managing Director of STO Singapore, Ahmed Muneez, served as the director.

Malaysia’s Mocom Corporation was one of four companies with a tender to sell oil to the Burmese junta, alongside Daewoo, Petrocom Energy and Hyundai.

Muneez, Ashan and Sana have been questioned by the National Security Committee over the past two weeks.

“Ex officio”

At today’s committee meeting, Yameen maintained that chairmanship of the STO board was an “ex officio” (by right of office) post, and as the affairs of Mocom Trading was managed by the STO subsidiary company in Singapore, “it doesn’t reach the STO board in Male’.”

The STO chairman under the previous government was not an executive chairman who handled day-to-day management of the state-owned enterprise, Yameen explained, adding that appointing board members to subsidiaries was handled by the Managing Director.

“Yameen is the chairman of STO, Singapore STO’s chairman is Mohamed Hussein Manik, Mocom Singapore – its called Mocom Singapore because it was formed in Singapore – has a board, a chairman and MD,” he said. “So information about STO subsidiary companies and STO JVs (joint ventures), even if its run in the Maldives, does not come to the STO board.”

The STO board would not know of the dealings of companies such as Fuel Supply Maldives, which supplies oil to resorts and inhabited islands, “because each company is a legal entity and its board has full discretion to conduct any legal business as broadly as it wants.”

He added that “micro-management issues” of subsidiary companies were not dealt with by the STO board and the chairman “did not know and did not have to know”.

Asked by MDP MP Mohamed Thoriq if he believed Mocom Trading was formed illegally, Yameen said he did not know “even the date the company was formed” or Mocom’s board members.

Former STO Managing Director Manik had previously told the committee that he discovered Mocom’s existence when the issue came up at an annual general meeting.

Asked by Dhivehi Rayyithunge Party (DRP) MP Mohamed Nashiz if he visited Singapore on official trips on behalf of STO, Yameen said he never went to Singapore with the express purpose of evaluating STO Singapore.

Nashiz had said at last night’s meeting that the total value of STO’s oil trade amounted to over US$4 billion – or Rf61 billion – over the course of 14 years and six months “if the information [STO Singapore MD] Muneez gave us was accurate.”

Nashiz suggested that Muneez’s claim that he “made all the decisions on his own” was dubious.

DRP MP Rozaina Adam meanwhile noted today that testimony by STO MD Manik and STO Singapore MD Muneez “conflicted” as Manik insisted he was unaware of Mocom’s formation but Muneez said it was formed after the head office provided all the required legal documentation.

Manik had also revealed at the committee that Muneez’s annual bonus was withheld as a result of his role in forming the joint venture without a board resolution.

Asked by Rozaina if the MD had shared any concerns with the chairman, Yameen said he had not.

Yameen however said he found it “very hard to believe” that the MD or accounting section would have been unaware of the transactions with Mocom.

Moreover, Singapore had the strictest commercial laws in the region and the trade in question was conducted with “back-to-back LCs (lines of credit)” with “first-class banks,” said Yameen, making it difficult to siphon off money to a third party as it would require a letter with instructions to do so, which would have been noted as “highly unusual.”

Today’s meeting was disrupted at frequent intervals by shouting matches that broke out between MDP and the former president’s newly-formed Progressive Party of Maldives (PPM). MP Yameen, half-brother of Gayoom and long-serving Trade Minister in his cabinet, was elected by the PPM interim council as its parliamentary group leader.