The Tourism Ministry has been prevented from taking control of resort properties operated by Yacht Tours Maldives under a Civil Court injunction issued yesterday (June 4), pending a final ruling on a long-running dispute over unpaid rent.
J Hotels and Resorts, a company owned by opposition Maldivian Democratic Party (MDP) MP Abdulla Jabir, went to the Civil Court yesterday to contest the government’s right to reclaim the two resorts over allegations the company had failed to settle rent payments and fines totalling some US$7 million (MVR 107 million).
The company has claimed that the vast majority of the outstanding payment is the result of fines issued by the state during the ongoing payment dispute.
The government has sought to revoke the lease for Alidhoo Resort in Haa Alif Atoll and Kudarah Island Resort in South Alifu Atoll from J Hotels and Resorts’ parent company Yacht Tours Maldives since late last year. The state had previously provided the operator a seven day period to hand over the properties.
However, Yacht Tours Maldives has continued to contest the government’s right to reclaim the land.
“Unlawful cancellation”
Yacht Tours Director Ibrahim Shiham said that the Civil Court injunction issued last night suspended what he alleged was the government’s “unlawful cancellation” of its lease for the two resorts until a ruling was made on the company’s dispute over rent payments.
Speaking to Minivan News, Shiham accused the government of trying to come on to the Kudarah resort property on Monday (June 3) without a court warrant to take back the property, alleging authorities had sought to create a “political drama” out of the case.
He claimed that authorities were refused entry by around “three or four people” on the island, despite local media reports citing a ministry source as claiming that around 50 people had attempted to block their arrival at the resort’s jetty area.
The Tourism Ministry has alleged to Sun Online that Yacht Tours had continuously failed to pay back the rent and fines in installments as previously agreed following the first termination notice.
Yacht Tours meanwhile claimed that uncertainty as a result of the Tourism Ministry’s actions had seen occupancy rates at Alidhoo Resort fall from over 60 per cent in recent weeks to just 11 percent yesterday due to cancelled bookings.
Shiham has alleged that company was being unfairly punished as a result of an “internal argument” between the Ministry of Tourism and the Maldives Inland Revenue Authority (MIRA) over whether to accept an advance payment previously paid by Yacht Tours to cover rent owed to authorities.
He added that under amendments made to tourism regulations back in 2011, a long-term US$1.5 million dollars (MVR 23 million) rent advance for the island of Watavarreha was no longer required to be paid all at once, making the company eligible for a repayment.
Earlier this year, Yacht Tours released documents and transcripts of official letters to media showing it had requested then Minister of Tourism Dr Mariyam Zulfa to transfer a refundable payment from the Watavarreha advance to cover payments owed for Kudarah and Alidhoo.
A follow-up letter, dated August 21, 2011, stated that according to the Maldives Inland Revenue Authority (MIRA), the government owed the company US$1,115,374 (MVR 17,176,760). At the same time, the company was said to owe a total amount of US$1,300,418 (MVR19.9 million) in charges for the three resorts to the state.
Shiham said that the Tourism Ministry under the previous government of former President Mohamed Nasheed had requested MIRA process the payment accordingly.
“However, MIRA did not wish to do this. This has become an internal argument that is nothing to do with us,” he said. “We believe the Tourism Ministry has the authority on this matter.”
Shiham added that as the payments were not related to service taxes that were required to be paid directly to MIRA, the matter of rent should be decided by the Tourism Ministry itself.
With the controversial change of government overnight on February 7, 2012, Yacht Tours has claimed that its agreement was further complicated, leading to MIRA filing a court case against the company.
Speaking to Minivan News this week, former Tourism Minister Dr Zulfa confirmed that Yacht Tours had previously requested the Finance Ministry use the advance payment for Watawarreha Island to cover rent payments for its other properties that were in arrears.
“As a matter of law, I advised the then Finance Minister Mr [Ahmed] Inaz that there was nothing barring such as adjustment since all the resort properties were under the same company name,” she said.
Dr Zulfa added that the company separately requested a refund on the funds paid for Watawarreha, despite the land tax legislation at the time being collected correctly by the government. She added that the advance payment was designed to have been deducted by the government from payable rent.
“I did advise Mr Jabir to submit the matter to court for a legal determination if he felt that the advance payment was rendered unfair and I think he duly did,” she said. “I hope it is clear that the government of President Nasheed did not agree to the refund, but merely advised that an adjustment in rent across all resort-properties leased to Yacht Tours regardless of what island such advance was paid for was possible, because of course they were leased to the same company.”
Tourism Minister Ahmed Adheeb was not responding to calls from the Minivan News at time of press. Deputy Tourism Minister Mohamed Maleeh Jamal was out of the country.
Termination notice
Minister Adheeb earlier this year rejected allegations that the Tourism Ministry was singling out certain resort operators in terms of treatment, adding that each property was required to pay rent or face receiving a termination notice.
Adheeb claimed that when he first took up his position following February’s controversial transfer of power, there were 12 resorts found to be not paying rent at the time.
“We are not tolerating resorts who do not pay rent, any operating resort has to pay. Those who are not paying already have the termination notice. This culture has to go, by the end of this year all resorts will be paying and it will become a more stable industry,” he said at the time.
At a press conference held on December 31, 2012, Adheeb said that resort operator Yacht Tours had been sent termination notices for both Alidhoo and Kudarah resorts, with a seven day period for handover.
He added that while the ministry had come to a payment system agreement with a number of other companies, Yacht Tours had sent no official written communication in regard to the payment of outstanding rents.
The claims were later rejected by Yacht Tours, which in turn alleged that the ministry had failed to respond to its correspondence on the matter of rent payments, leading it to take legal action to resolve the dispute.
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