Tag: world bank

Vice-president announces unlimited health insurance from January 1

Vice President Dr Mohamed Jameel Ahmed has announced the government’s intention to introduce unlimited health insurance – ‘Husnuvaa Aasandha’ – on January 1.

Speaking at the launch of the government’s 100 day manifesto for the Ministry of Health, Jameel promised that the government’s pledge to provide a General Practitioner for every family would also be introduced in the new year.

One month on from the inauguration of President Abdulla Yameen, the government has produced similar 100 day roadmaps in a number of departments, including transport, immigration, and the security forces.

The current scheme – introduced under the administration of President Mohamed Nasheed – set a limit of MVR100,000 (US$6,485) annually for health services for all Maldivian nationals from hospitals and health centres operated by health corporations as well as private hospitals and clinics.

The initial scheme soon proved costlier than the government had envisioned, however, with hundreds reaching their entitlement limit within just a few months. Rocketing demand for services saw a reported 7000-8000 people using the scheme every day, at a cost of up to MVR3 million (US$194,552).

Caps were subsequently introduced on medicines and certain services provided in private clinics and hospitals as well as fees introduced for services at private clinics.

Vice President Jameel said last night called on the private sector to aid the government in providing affordable healthcare.

A recent World Bank report noted that a total of 276,033 citizens – around 84 percent of the population – had used the Aasandha service in its first year, representing about 2.8 percent of 2012’s GDP.

“Overall, a total of about 3.6 million transactions were recorded in the first year that represented an average 13.2 transactions per patient, a relatively high figure for a country with a predominantly young population and limited availability of medical service providers,” said the World Bank.

The same report – the ‘Maldives Development Update’  – described the country as “spending beyond its means”.

At present, public debt stands at an “unsustainable” 81 percent of GDP, the report stated projecting the debt will rise further to about 96 percent by 2015.

The World Bank saw the fiscal sustainability of the Aasandha scheme as its major challenge, offering a series of recommendations to achieve this.

“Substantive savings could be achieved without significantly compromising coverage and quality of services by re-designing the scheme with a focus on provider incentives.”

The World Bank went on to suggest that the bulk purchase of essential and generic drugs could reduce the costs of the scheme, as could tighter controls on overseas treatments.

Jameel has previously acknowledged that a lack services has forced many Maldivians to live abroad for medical purposes, pledging chemotherapy in the public Indira Ghandi Memorial Hospital, as well as nine dialysis units.

He has also promised that screening to diagnose cervical cancer would be introduced under a government insurance scheme.

Jameel had previously stated that the specifics of the government’s health proposals would begin “as soon as we get the budget for it”. The details of the 2014 budget continue to be discussed in the Majlis, with the final draft due to be presented to the full chamber at the end of the week.

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Week in review: December 8 – 14

This week saw the repeatedly delayed budget introduced to the People’s Majlis. Coming in at MVR17.5billion rufiya, the budget – purportedly revised to incorporate President Yameen’s austerity measures – eclipses all previous spending programmes.

A report from the World Bank made clear the tough task the new government faces in nursing the economy towards good health. The report stated that the Maldives continues to spend “beyond its means”.

Noted areas of excess include a high civil service wage bill, with the World Bank suggesting that the government’s short term financing measures risked further damaging the economy.

The exploitation of the country’s persistent shortage of dollars by criminal elements was exposed this week as police reported the activity of thieves masquerading as legitimate exchangers of currency.

When accused of illegally obtaining a budget support loan, recently reappointed Finance Minister pleaded desperation. Abdulla Jihad argued that he had sidestepped the onerous approval procedure to avoid a financial catastrophe in May 2012.

Yameen took fitful steps towards fulfilling his campaign’s austerity pledges this week, ordering the reduction of salary for two grades of state minister – though the cut was only around 12.5 percent instead of the 30-50 mooted before the election.

Similarly, the new government appeared to have reneged on its pledge to provide cash-handouts to old-age pensioners – opting for an insurance scheme instead.

Government performance

Former President Maumoon Abdul Gayoom, however, appeared pleased with his half-brother’s performance thus far, praising his handling of Indo-Maldivian relations while the Defence Minister discussed enhanced military cooperation with Indian counterparts.

The indistinct ‘National Movement’ this week suggested ulterior motives in the bureaucratic thwarting of its plan to celebrate the eviction of Indian infrastructure giant GMR, whose deal to develop the international airport was prematurely terminated twelve months ago.

Elsewhere, the coalition member Adhaalath Party, quashed rumours that it had parted ways with Yameen’s government this week, despite previous reports that it intended to campaign independently in the upcoming local and parliamentary elections.

The ‘roadmaps’ for the first one hundred days of the government continued to be drawn this week, with comprehensive lists now produced in the areas of  transport, health, and immigration.

Whilst the Transport Ministry has promised finished plans for the redevelopment of Ibrahim Nasir International Airport, the health minister talked of significant changes to the IGMH public hospital.

The police service also joined in the policy pledging, with its own promises to improve its service and to build public trust in the institution. The Police Integrity Commission this week suggested that the prosecutor general assist in this task by prosecuting two officers it had found to have been negligent during the arson attack which destroyed Raajje TV in October.

The vacancy at the head of the PG’s Office did not stop the filing of charges in the 8 year old ‘Namoona Dhoni’ case. Pro-democracy activists – prevented from reaching Malé for a national demonstration – now face fresh charges of disobeying lawful orders.

Trust between the Supreme Court and the judicial watchdog appeared scant this week as the Chief Justice baulked at the JSC’s re-shuffling of a number of senior judges. Members of the JSC were later reported to have rejected Chief Justice Faiz’s legal objections.

Corruption and human rights

Confidence in the transparency of the public in public institutions also appeared to be on the wane this week, as Transparency Maldives’ Global Corruption Barometer (GCB) survey revealed that 83 percent of its sample felt corruption to have increased or stayed the same over the past two years.

Despite only appearing mid-table in the list of organisations perceived as being corrupt, the MNDF reacted disproportionately to the local media’s reporting of the survey, labelling CNM’s article on the survey “highly irresponsible journalism”.

The Anti Corruption Commission announced the discovery of graft in the capital’s largest housing programme. The highest number of bribes reported in the GCB was in the area of land services.

International human rights day was observed by the government and civil society in the same week the president ratified the country’s first anti-human trafficking bill. Whilst welcoming the new law, both the Human Rights Commission and the immigration department suggested that institutional strengthening would need to accompany a successful anti-trafficking policy.

Finally, this week saw the release of a United Nations Population Fund report, calling on the state to review existing practices related to sexual behaviour within the judicial process, law enforcement, education and health sectors.

The report stated reproductive health services ought to be expanded to non-married couples as evidence makes clear that the assumption sex does not, or should not, occur outside of marriage is increasingly out of step with social realities.

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“Maldives is spending beyond its means”: World Bank

The Maldives’ economy is at risk due to excessive state expenditure, the World Bank has warned in a new report.

The report titled “Maldives Development Update October 2013” (English) paints a dire financial picture, brought on by the Maldives pursuing untenable measures to finance the state budget.

Noted areas of excess include a high civil service wage bill, healthcare and electricity subsidies, and transfers to State Owned Enterprises (SOEs).

“Maldives is spending beyond its means and financing the budget risks affecting the real economy,” the report said.

Short-term budget financing measures such as selling T-bills and printing money poses risks such as the devaluation of the rufiyaa, while unpaid bills could disrupt basic services such as electricity, the report warned.

Foreign reserves are critically low – despite the Maldives Inland Revenue Authority (MIRA) reporting increased income from taxation – and remain under pressure from high public spending and high demand for imports.

President Abdulla Yameen’s administration has submitted a record MVR 17.5 billion (US$ 1.1 billion) budget for 2014 with a projected deficit of 2.2 percent of GDP. Recurrent expenditure continues to account for over 70 percent of the budget.

Excessive expenditure

According to the report, an already excessive wage bill ballooned by 55 percent in 2013 due to the Supreme Court ordered back payment of salary cuts, and salary increases for the police and military.

The government had budgeted MVR720 million (US$ 46,451,613) for the universal healthcare scheme Aasandha, but spent over MVR 900 million (US$ 58,064,516) the report stated, adding that electricity subsidies had also proved costlier than forecast due to an increase in international oil prices.

Transfers to SOE’s “increased significantly to cover operational losses and salary increases to SOE staff,” the report said.

In February this year, the CEO and Managing Director of Maldives Ports Limited Mahdi Imad was dismissed by the government shortly after the company’s board of directors approved remuneration of MVR120,000 (US$7800) for the post of MD, and MVR130,000 (US$8400) for the post of CEO. The board in November decided to reduce the CEO’s salary to MVR 62,000 (US$4000).

Public debt at 81 percent of GDP

In order to finance the deficit, the Ministry of Finance and Treasury is accused of undertaking measures that “pose macro risks” that have led to “significant accumulation of debt in a short period of time.”

At present, public debt stands at an “unsustainable” 81 percent of GDP, the report stated. The World Bank projects the debt will rise further to about 96 percent by 2015.

“This debt path is unsustainable and suggests there is little room for additional borrowing,” the report warns.

T-bills and monetisation

The government is increasingly relying on short-term commercial borrowing in the form of selling treasury bills (T-bills) to the banking, private sector, and high net worth individuals at steep interest rates. The report also notes the growing monetisation of the deficit and the increasing build-up of arrears.

According to the MMA’s figures, outstanding T-bills stood at MVR8.5 billion at the end of November.

With the private sector’s appetite declining for T- bills, the government has been forced to pay high interest rates. The short-term rates for 28-day and 91-day T-bills rose by 98 and 105 basis points respectively, the World Bank said, reiterating that such unsustainable debt limits room for further borrowing.

In August this year, MMA Governor Dr Fazeel Najeeb said banks were investing in T-bills instead of in the private sector, leading to a slowdown in the private sector.

He also said excessive government expenditure had forced the MMA to print “large quantities of money”. MMA figures show the government has printed over MVR1.7 billion (US$ 109,677,419) this year alone to plug the deficit.

Monetization is causing the value of the rufiyaa to drop, Najeeb warned.

“I believe that the private sector has slowed down, and investments by the banks are heading towards government treasury bills. The value of rufiyaa is dropping because government accounts do not have the money, because it is a necessity to print large quantities of money,” Najeeb said.

The Maldives is currently facing a dollar shortage, with clogged bank counters and the police warning the public to stay vigilant citing increased number of dollar exchange scams.

“The risk of money printing, due to the cash constraints, could threaten external stability, inflation, and risk sharp adjustment in the exchange rate. The biggest risk posed by a sharp exchange rate adjustment is its possible impact on poverty, since the most basic food items in Maldives are imported,” the report warned.

“Unpaid invoices disrupt fuel invoices”

The third measure the government has been taking to finance the budget is the accumulation of arrears. Although the Ministry of Finance and Treasury estimated arrears totalled 3 percent of GDP, the World Bank gave a figure closer to 6 percent.

Most of these payments are owed to the State Owned Enterprises providing utilities and services. About half of the arrears are owed the State Trading Organization (STO) which is responsible for all the trading activity on behalf of the Maldivian government.

“The bulk of the liabilities come from the import of fuel for supplying electricity. Since the company has been relying on credit from suppliers to continue operations, in the event that unpaid invoices disrupt fuel imports, the electricity supply in certain islands could be affected,” the report warns.

In November, newly elected President Abdulla Yameen Abdul Gayoom announced that the STO was bankrupt.

Fears of an impending oil shortage crisis had a risen earlier in the month after then-Managing Director Shahid Ali warned that the company would run out of oil as early as November 10 if it did not pay some of its US$20 million debt to suppliers.

Shahid told an emergency meeting of parliament that government-owned companies had failed to pay the STO the almost US$40 million it was owed, and appealed to the central bank to use the foreign currency reserves to bail it out of its debt. According to local media, MMA printed the money.

“External reserves critically low”

Although reserves have held up “better than expected,” they will continue to be under pressure from high public spending, high demand for imports and pressure on the currency.

The World Bank report notes that foreign reserves dwindled at the beginning of 2013, with the Maldives having to to repay US$100 million in treasury bonds to the Indian government by February 2013. Gross reserves improved, however, due to increased income from MIRA, which had offset the decrease.

At present, reserves stand at US$341.8 million, worth approximately 2.5 months of imports.

With regard to balance of payments, the government estimates the current account deficit will reach US$690 million or 28 percent of GDP by the end of 2013.

“This means reserves will continue to face serious pressures in the future, which could be exacerbated if the government is forced to pay compensation for the reversal of the GMR airport concession,” the report said.

Reserves are also at risk from the potential US$1.4billion compensation settlement resulting from the terminated GMR airport concession deal – an amount that eclipses the annual state budget.

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EU pledges further €4million for climate change adaptation

The European Union has today revealed it is to release an additional €4million to address climate change in the Maldives.

“Climate change is one of the most pressing development issues that we need to address in today’s world,” said EU Ambassador and Head of Delegation to Sri Lanka and the Maldives H.E. Mr David Daly Tin a press release today.

“The EU has always been at the forefront of concrete action against climate change, while Maldives has through its commitment to Carbon Neutrality and more recent pledge to become a UNESCO Biosphere Reserve at the Rio Summit, led the world by example,” he continued.

The EU press release today noted that this latest climate change grant to the Maldives brings the organisation’s overall contribution to €38million over the past four years.

Granting €6.5 million to the Climate Change Trust Fund in 2009, the EU became the first body to give funds to the scheme intended to assist the Maldives in its pledge to become carbon neutral by 2020.

The initiative was agreed between the EU, the World Bank and the administration of President Mohamed Nasheed – whose efforts to raise awareness of climate change brought international acclaim, most notably at the 2009 Climate Change Forum in Copenhagen.

In a recent report titled ‘Turn Down The Heat’, the World Bank reasserted the urgent need for concerted efforts to support the Maldives in adapting to climate change, due to a projected sea level rise of 115 centimetres by 2090.

The new EU funds will go towards replicating previous projects with a particular focus on the country’s two southernmost atolls – Addu and Fuvahmulah – which will also receive capacity building assistance for local government structures.

Local NGO Transparency Maldives has in the past noted the potential for corruption due to institutional weaknesses in the Maldives’ climate governance structures.

“The current projects, being implemented by the World Bank in partnership with the Government of Maldives, focuses specifically on renewable energy solutions, wetlands conservation, rainwater harvesting, coral reef monitoring and solid waste management,” stated the EU today.

A further 22,000 inhabitants are expected to benefit from the new projects in Fuvamulah, Addu, and parts of North Ari Atoll.

“It will enable the Government in implementing a clear strategy for wetland and drainage management, ecotourism and community rainwater harvesting. The project also aims at partnering with tourist resorts for coral reef monitoring and demonstrates the manner in which efficient monitoring can be used as a tool to support decision-making, particularly in the context of coral reef protection and conservation,” read the release.

During the summer, the United States also pledged US$7.2 million for global climate change adaptation project, also including local level capacity building and exploration of further avenues for cooperation on climate change.

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World Bank urges climate change adaptation support for the Maldives

The World Bank has expressed the urgent need for concerted efforts to support the Maldives in adapting to climate change, due to a projected 115 centimetres of sea level rise by 2090.

This, in addition to other climate impacts posing “disastrous consequences” for livelihoods and health, were noted in a recently released scientific report that “demands bold action now”.

The World Bank’s 2012 Turn Down the Heat report concluded a 4 degree Celsius (7.2 degrees Fahrenheit) global temperature increase is expected by the end of the 21st century unless concerted action is taken immediately.

This year’s Turn Down The Heat: Climate Extremes, Regional Impacts, and the Case for Resilience World Bank report, builds upon those findings to illustrate the range of climate change impacts the developing world is currently experiencing and outlines “an alarming scenario for the days and years ahead – what we could face in our lifetime.”

“This second scientific analysis gives us a more detailed look at how the negative impacts of climate change already in motion could create devastating conditions especially for those least able to adapt. The poorest could increasingly be hit the hardest,” stated World Bank Group President Dr Jim Yong Kim, in the report’s foreword.

“We are determined to work with countries to find solutions,” Kim continued. “But, the science is clear. There can be no substitute for aggressive national mitigation targets, and the burden of emissions reductions lies with a few large economies.”

Based on the report’s findings, the World Bank has highlighted the urgent need for concerted efforts to support the Maldives in adapting to climate change.

As one of the lowest-lying countries in the world, with an average elevation of 1.5 meters above sea level, the Maldives is extremely vulnerable to the effects of climate change, such as sea level rise.

“The Maldives is one of the most vulnerable nations to climate change impacts and has set best practice examples in adapting to climate change consequences,” stated Ivan Rossignol, World Bank Acting Country Director for Sri Lanka and the Maldives.

“The World Bank is committed to supporting the government of Maldives. The current situation is beyond intellectual debates on climate change. A concerted effort is needed to act now while we still can make a difference,” said Rossignol.

With the average global temperature increase of 2 degrees Celsius expected “in the next decades”, island economies like the Maldives, will be impacted by extreme weather patterns and rising sea levels, the report determined.

“With South Asia close to the equator, the sub-continent would see much higher rises in sea levels than higher latitudes, with the Maldives confronting the biggest increases of between 100-115 centimetres,” the report warned.

The South Asian region is projected to experience a 115 centimetre sea level rise increase by the 2090s in a 4 degree Celsius world, while a 60-80 centimetre increase is expected to occur with two degrees Celsius of warming.

“[However,] the highest values (up to 10 centimeters more) [are] expected for the Maldives. This is generally around 5–10 percent higher than the global mean.” There is a 66 percent change sea level rise will exceed 50 centimeters by the 2060s, noted the report.

In addition to sea level rise, the compounded impacts of increased temperatures and extremes of heat, increased intensity of extreme weather events (including flooding and tropical cyclones), and changes in the monsoon pattern are already occurring and are anticipated to worsen, according to the study.

This will strain already vulnerable water resources, crop yields, and energy security in the Maldives, as well as the South Asian region, the report highlighted.

“Disturbances to the monsoon system and rising peak temperatures put water and food resources at severe risk. An extreme wet monsoon, which currently has a chance of occurring only once in 100 years, is projected to occur every 10 years by the end of the century,” stated the study.

“The consequences on livelihoods and health [in the Maldives] could be disastrous… Even at present warming of 0.8°C above pre-industrial levels, the observed climate change impacts are serious and indicate how dramatically human activity can alter the natural environment upon which human life depends,” it continues.

“The risks to health associated with inadequate nutrition or unsafe drinking water are significant: childhood stunting, transmission of waterborne diseases, and hypertension and other disorders associated with excess salinity [due to saltwater intrusion from sea level rise],” the report noted. “Other health threats are also associated with flooding, heat waves, tropical cyclones, and other extreme events.”

“[Meanwhile,] dense urban populations [such as the Maldives’ capital Male’] would be especially vulnerable to heat extremes, flooding, and disease,” according to the study’s findings.

The report also warns of the potential “domino effect” climate impacts can create that ultimately affect human development, such as the decimation of coral reefs creating cascading impacts on local livelihoods, and tourism.

Climate change impacts may also increase the likelihood of conflicts occurring, according to the study.

Ultimately, climate change impacts – particularly sea level rise – may force Maldivians to migrate, which “can be seen as a form of adaptation and an appropriate response to a variety of local environmental pressures”.

“The potential for migration, including permanent relocation, is expected to be heightened by climate change, and particularly by sea-level rise and erosion,” the report stated. However, it cautioned that population relocation poses “a whole set of other risks”.

New technological solutions and international cooperation are a must to adapt to and change the current trajectory of climate change impacts on growth and poverty reduction efforts, the study concluded.

“I hope this report will help convince everyone that the benefits of strong, early action on climate change far outweigh the costs,” said World Bank Group President Dr Jim Yong Kim.

“This report demands action. It reinforces the fact that climate change is a fundamental threat to economic development and the fight against poverty,” declared Kim.

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AG slams former government over foreign investment “damage” from alleged lack of financial research

Attorney General Azima Shukoor has accused the previous government of failing to conduct sufficient research before signing several major foreign investment projects, that had now been terminated by the present administration.

Azima was quoted by private broadcaster Villa Televison (VTV) (Dhivehi) as claiming that unspecified “economic damage” currently faced by the state had resulted from a lack of economic and legal research by the administration of former President Mohamed Nasheed.

She was quoted in local media arguing that “damages” to the state had resulted from a number of foreign investment projects signed by Nasheed’s administration, including the US$511 million concession agreement signed with GMR to build and manage a new terminal at Ibrahim Nasir International Airport. Azima also raised over another deal with Malaysia-based Nexbis to manage and operate a border control system in the country.

Both agreements have since been terminated by the administration of President Dr Mohamed Waheed, with the Maldives facing a US$1.4 billion compensation claim from GMR after its contract was suddenly declared void in November. The company was then given a seven day notice period to leave before being evicted by authorities.

Nexbis was last week given 14 days to vacate by the government, which likewise terminated its concession agreement with the company.

However immigration officials last week questioned whether  replacement technology was ready to be implemented, in place of the Nexbis system.

Former government response

Responding today to the attorney general’s criticisms, Mahmood Razee, former economic development minister during the Nasheed administration, stressed that the former government had engaged with the World Bank’s International Finance Corporation (IFC) before moving ahead with the airport privatisation program.

As such, he rejected accusations that no research had been conducted before undertaking such a high profile project.

“Clearly this was not a stab in the dark,” Razee said of the deal. “[The World Bank engagement] determined how best to proceed with the airport development for the benefit of the government and the people. After looking at the revenue streams, it was concluded that it was best to move forward with the public private partnership.”

He claimed that aside from potential financial benefits of agreeing the deal, the consortium consisting of GMR and Malaysia Airports Holdings Berhard (MAHB) had been picked based on the companies’ experience in managing other airport projects.

With the deal now terminated, Razee added that it remained critical to secure development at the airport as soon as possible, claiming the current facilities at INIA did not meet the required standards.

Waheed’s government last year accused the IFC itself of negligence during the bidding process for the development of INIA, charges the World Bank rejected at the time.

By June this year, the Maldives’ Anti-Corruption Commission (ACC) ruled out corruptionin the awarding of a concession agreement in June 2010 to the GMR/MAHB consortium. The government meanwhile continues to insist the sudden termination of the contract was in the national interest.

“Cause and effect”

Former Economic Development Minister Razee said the Maldives would remain reliant on development funding for future development projects, which would cost hundreds of millions of dollars out of reach of the government.

With the country now lacking sufficient rating to obtain credit commercially, Razee argued that development funds remained the only means for a country like the Maldives to secure sizeable finance.

The present government’s decision to cancel two major foreign investments would have a “cause and effect”, he suggested.

Should the MDP be elected to power in the presidential election scheduled for next month, the party would have to consider returning to negotiations with GMR in a bid to avoid huge financial fallout from arbitration proceedings now being conducted in Singapore.

He claimed that the cooperation of international bodies such as the World Bank in securing the GMR deal would likely to be sought in other high-profile investment projects sought under an MDP government.

Economic problems

The Maldives National Chamber of Commerce and Industries (MNCCI) meanwhile last month accused senior politicians under successive governments of trivialising the severity of the country’s economic problems.

MNCCI Vice President Ishmael Asif claimed parties were addressing financial concerns and issues impacting foreign investment with negative slogans rather than actual policies in the run up to September’s election.

While accepting the present “bad shape” of the Maldives economy, the chamber of commerce was particularly critical of what it called negative economic campaigning by senior figures in the last two governments – arguing they had done little to address an ongoing shortage of US dollars and a lack of investment banking opportunities and arbitration legislation in the country.

Asif’s comments were made in response to claims by the government-aligned Progressive Party of Maldives (PPM) that foreign investors were now turning away from the Maldives due to concerns about political stability and safety in the country.

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No waste spill in Thilafushi lagoon: Male’ City Council

The Male’ City Council (MCC) has disputed “inaccurate” local media reports that a large waste spill occurred in the Thilafushi (‘garbage island’) lagoon last night.

Large amounts of garbage were reported to have accumulated in the Thilafushi lagoon due to “spillover” while a barge was off loading waste from the capital Male’, according to Sun Online.

However, MCC Councillor Mohamed Abdul Kareem, the council member responsible for waste management, told Minivan News today (June 29) that local media reports were “not accurate” and that no garbage spill occurred on Thilafushi last night.

“Due to the bad weather this past month the jetty was damaged – half of it was broken and it has been damaged for two weeks – however repairs were completed yesterday,” Kareem explained.

“Earlier this month because of the high winds, some waste was carried into the harbor, but not a big amount,” he added. “There was no spill, it’s not an issue.”

Kareem explained that trash tends to “line the [harbour] area” and moves from one side to the other in relation to the wind, current, and tides, however due to the harbor’s shape does not easily float out into the open sea.

“Thirty vessels dump trash there daily, so there might be something in the area, but it’s a dead end,” said Kareem.

“Items have been floating [in the harbor] over a month, but there was not a big spill or dump,” he noted.

Senior officials from the MCC were sent to inspect Thilafushi last month and confirmed operations were “very organised”, according to Kareem.

“Cleaning [waste that accumulates in the harbor] is ongoing,” said Kareem. “The area is well maintained by the Male’ City Council.”

Thilafushi rehabilitation stalled

Thilafushi management was transferred to the Male’ City Council (MCC) in 2010 as part of the Decentralisation Act. Accordingly, a contract was signed in 2011 with the Indian-based company Tatva Global Renewable Energy to rehabilitate the island, manage garbage generated in Male’, on nearby inhabited islands and resorts, as well as implement a system designed to generate power from recycling waste.

However, President Mohamed Waheed Hassan Manik’s administration announced it was renegotiating the Tatva agreement in December 2012 to reach what Environment Minister Dr Mariyam Shakeela referred to at the time as a “mutually beneficial” agreement.

In response the Male’ City Council (MCC) accused authorities of trying to “sabotage” the deal.

Environmental Protection Agency (EPA) Environment and Social Safeguards Coordinator Ibrahim Mohamed told Minivan News earlier this year that plans to rehabilitate Thilafushi have been stalled due to procedural “hiccups”.

“The World Bank (WB) is not happy, because Thilafushi is not a managed site,” said Mohamed. “There were hiccups in environmental safeguards.”

In order to ensure waste management on Thilafushi adhered to proper environmental safety standards, the government has been seeking assistance to rehabilitate the island.

“During the public private partnership that was [previously] announced, Tatva was contracted to do a proper landfill and incinerator, etc. They were investing US$15 million, but then when the government changed [in February 2012] there were hiccups in all these public private partnership contracts, and they left,” recounted Mohamed.

He explained that Tatva was ultimately brought back to negotiate a new contract.

“First there was the idea of throwing them out, but then [Tatva was] brought [back] in and told to sell some shares to local companies, i.e. water and sewerage. [So] they finally agreed to form a consortium with local companies and invest,” Mohamed continued.

“Within next two years we will see a better, rehabilitated facility [at Thilafushi],” he added.

While Thilafushi waste management remains a contentious issue, other projects are being implemented in Raa and Ari Atolls – funded, respectively, by the World Bank and Climate Change Trust Fund (CCTF) – in an effort to develop alternative processing sites.

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ACC defends report on airport privatisation deal as Sheikh Imran insinuates bribery from GMR

The Anti-Corruption Commission (ACC) has issued a press statement defending its investigative report of the airport privatisation deal signed by the previous government, harshly condemning “false and misleading” remarks by politicians of government-aligned parties.

On June 17, the ACC released a 61-page investigative report concluding that there was no corruption in the awarding of a concession agreement to a consortium of Indian infrastructure giant GMR and Malaysia Airports Holdings Berhad (MAHB) to develop and manage the Ibrahim Nasir International Airport (INIA).

The report was met with strong criticism and bribery allegations from parties in the government coalition.

Insisting that the government’s stand would not change as a result of the ACC findings, President’s Office Spokesperson Masood Imad told the Press Trust of India (PTI) that “if there is a reasonable cause of doubt, this report can be contested by some parties.’’

“Many people say here that the ACC Board is not an unbiased organisation. They say it is politically motivated,” he was quoted as saying.

Religious conservative Adhaalath Party President Sheikh Imran meanwhile described the report as “a slap in the people’s face” while President Dr Mohamed Waheed’s Gaumee Inthihaad Party (GIP) Spokesperson Abbas Adil Riza accused ACC members of corruption.

In an appearance on pro-government private broadcaster DhiTV last night (June 23), Imran insinuated that ACC members accepted bribes from GMR offered through former Indian High Commissioner D M Mulay.

The ACC report was “a highly unprofessional, semi-technical and procedural review” that did not amount to either a proper investigation or an audit, Imran said, calling for “a full-fledged investigation.”

In November 2012, the current administration abruptly terminated the US$500 million contract with the GMR-led consortium, declared the concession agreement ‘void ab initio’ (invalid from the outset), and gave GMR seven days’ notice to leave the country.

The decision followed weeks of protest by a self-titled “National Movement” spearheaded by Sheikh Imran and senior government officials – born out of the unofficial December 23 coalition of eight political parties and an alliance of NGOs that rallied at a mass gathering to “defend Islam” in late 2011 – calling on the government to “reclaim” and nationalise the airport.

Last Friday, GMR filed a claim for US$1.4 billion in compensation from the Maldives at ongoing arbitration proceedings in Singapore over “wrongful termination” of the contract.

Meanwhile, former Attorney General Azima Shukoor, who headed the cabinet committee that advised termination of the contract, contended on DhiTV last week that the ACC report was “incomplete” as the commission had overlooked several key factors.

“Did they omit the factors deliberately or unknowingly or simply just overlooked them? But a lot of factors have been overlooked and omitted from the report. The state will suffer great losses because of it. Especially when the country is tied up in a judicial case,” she was quoted as saying by newspaper Haveeru.

ACC response

ACCIn its press release on Thursday (June 19), the ACC stated that its investigation was “not based on what politicians say at podiums and in the media.”

“Instead, the case was investigated based on relevant information collected for the investigation, documents and statements taken after questioning those involved in the case,” the ACC said, denying the allegations of undue influence on its members or staff.

The ACC statement added that the commission in concluding investigations adhered to article 25 of the Anti-Corruption Commission Act of 2008, and did not reach its conclusions “after considering the wishes of a particular politician.”

The commission noted that it had not responded to any political rhetoric targeting the ACC in the past, adding that all corruption investigations followed criminal justice procedures, the ACC Act and regulations under the law.

The statement explained that article 25(a)(2) of the Act required the commission to submit cases for prosecution if sufficient evidence to secure a conviction was gathered.

In the absence of evidence to prove corrupt dealings, article 25(a)(1) of the Act stipulates that the commission must declare that the case does not involve corruption.

The report made public last week contained information collected for the investigation, observations and the reasoning for reaching the conclusion “without any omissions or additions,” the ACC added.

“This is the first time that an investigative report of a case investigated by the commission has been made public like this,” the statement continued. “It was released that way to provide details of the case to the public as transparently as possible.”

The ACC further noted that in December 2012 the commission submitted a case to the Prosecutor General’s Office (PGO) requesting criminal prosecution over the previous government’s decision to deduct a court-blocked Airport Development Charge (ADC) from concession fees owed to the state.

The ACC asked the PGO to seek reimbursement of MVR 353.8 million (US$22.9 million) from former MACL Chair Ibrahim ‘Bandhu’ Saleem and former Finance Minister Mohamed Shihab over the alleged misuse of authority the commission contended had led to significant financial losses for the state.

Bribery allegations

Responding to remarks in local media last week by an unnamed ACC member alleging that Imran attempted to influence the outcome of the investigation, the Adhaalath Party President admitted on DhiTV last night that he met commission members while the “National Movement” protests were ongoing.

Imran said he met ACC members after learning of efforts by GMR to bribe politicians through the former Indian High Commissioner Mulay.

Mulay also requested meetings with Imran himself on numerous occasions “through some of our ministers and even by directly calling our office,” he claimed.

Upon hearing of meetings between Mulay and ACC members, Imran said the leaders of the “National Movement” met commission members to “advise against accepting bribes.”

“[ACC members] said, ‘how can we go near that? we have sworn an oath,'” Imran said.

He claimed the ACC members told him that “the roots go deep” in the GMR deal and that former President Nasheed “completed the deal in Singapore.”

ACC members informed Imran that bribes from GMR was deposited to bank accounts in countries near Singapore, he claimed, while the commission members provided assurances that “everything would be made clear” once the investigative report was made public.

Imran said he would reveal further details of the “National Movement’s” meeting with ACC members if the commission responded to the allegations.

“In any case, we were working to liberate the airport on behalf of religion and the nation,” he said, adding that the government eventually decided to terminate the agreement without waiting for the ACC report.

As a result of pressure from the protests, he continued, the government was convinced it was not in the national interest to persist with the contract.

Imran also insinuated that the ACC would receive a portion of the US$1.4 billion compensation figure claimed by GMR.

State Minister for Home Affairs Abdulla Mohamed, who was part of the protests against GMR, meanwhile argued that the ACC releasing its report a few days before an arbitration hearing could not be “a coincidence.”

“Do we really have to comply with a court order from a Singaporean court?” he asked.

He contended that the Maldivian government would not have to compensate GMR despite a decision in favour of the consortium at the ongoing arbitration proceedings.

“Also, we can appeal such a judgment in Maldivian courts, can’t we? That’s not prohibited by Maldivian law. There’s no obstacle to that. So this is not something that the public should be concerned about at all,” he said.

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No corruption in GMR airport deal, concludes ACC

The Anti-Corruption Commission (ACC) has ruled out corruption in the awarding of a concession agreement in June 2010 to a consortium of Indian infrastructure giant GMR and Malaysia Airports Holdings Berhard (MAHB) to develop and manage the Ibrahim Nasir International Airport (INIA).

In a 61-page investigative report (Dhivehi) made public yesterday (June 17), the ACC concluded that the bidding process was conducted fairly by the World Bank’s International Finance Corporation (IFC) and that the GMR-MAHB consortium won the contract by proposing the highest net present value of the concession fee.

The ACC further concluded that the awarding of the contract did not contravene amendments brought to the Public Finance Act requiring parliamentary approval for such agreements.

The amendments were published in the government gazette after the concession agreement was signed, the ACC noted.

The concession agreement was signed on June 28, 2010, while the amendments were gazetted on December 13, 2010, following a Supreme Court ruling. The amendments were voted through for a second time in August 2010 following a presidential veto.

On the previous administration’s decision to replace the board of directors at the 100 percent government-owned Maldives Airports Company Ltd (MACL) – after they refused to sign the concession agreement claiming insufficient information – the ACC observed that there was “no legal obstacle” for the move.

The ACC report also concluded that the government would benefit more from privatising the airport.

“Considering the situation (2008, 2009 and 2010) when the decision was made to privatise the Male’ International Airport,” the ACC’s calculations showed that MACL would make a profit of about US$254 million in 25 years if the airport was operated by the government-owned company.

Conversely, the government would receive about US$534 million in the same period from the GMR consortium if the airport was privatised, the ACC found.

The privatisation of the airport by the ousted Maldivian Democratic Party (MDP) government in June 2010 was strongly condemned by opposition parties on nationalistic grounds.

The Dhivehi Rayyithunge Party (DRP), Peoples Alliance (PA), Dhivehi Qaumee Party (DQP) and Jumhooree Party (JP) signed an agreement to work against the privatisation process and launched a media offensive alleging “massive corruption” in the awarding of the contract.

The ACC report this week meanwhile followed a special audit conducted by the Auditor General’s Office with the assistance of a British consultant concerning the airport privatisation deal.

The AG’s report stated that evidence to back allegations of “improper interference” during the technical bidding process “is not conclusive on this point” and deferred the matter to the ACC.

The AG’s report also noted that the IFC’s terms of reference involved “securing the best deal for the government in terms of the concession fee paid to the government and MACL, and did not consider impacts on the Maldivian economy.”

Government stance

In November 2012, the current government – made up of a coalition of parties opposed to the MDP government’s privatisation policy – declared the concession agreement with the GMR-led consortium “void ab initio” (invalid from the outset) and abruptly terminated the contract.

In April this year, the Attorney General’s Office confirmed that arbitration proceedings resulting from the contract cancellation would begin by mid-2014.

Responding to the ACC’s findings yesterday, the government insisted that the report would have no impact on its legal position to declare the GMR concession agreement void, contending that President Dr Mohamed Waheed’s decision had nothing to do with corruption allegations levelled by “some people”.

President’s Office Media Secretary Masood Imad told Minivan News that the contract was declared void from the beginning due to the negative impact on state finances in 2012.

“Back before the government took back control of the airport from GMR, the reason we gave was that the deal was bleeding the country’s economy. We were paying GMR to keep them here,” he explained.

Masood said that despite “speculation from some people” concerning corruption by the former administration in signing the deal, the present government was not responsible for filing a case with the ACC.

He added that the government’s concerns over the deal had been in relation to the imposition of a US$25 Airport Development Charge (ADC) by GMR that was blocked by the Civil Court in 2011 after the then-opposition DQP filed a case on the matter.

The DQP, now part of President Waheed’s coalition government, attempted to block payment of the charge on the grounds that it was effectively a tax not approved by parliament.

In response, the MDP government agreed to deduct the ADC from the concession fees payable, while GMR later offered to exempt Maldives nationals from paying the ADC as it moved to appeal the verdict.

However, former President Mohamed Nasheed resigned under controversial circumstances on February 7, 2012 amidst a violent mutiny by elements of the police and military before the Civil Court verdict was appealed at the High Court.

Consequently, in the first quarter of 2012, Dr Waheed’s 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.

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