Maldives govt lambastes IFC over GMR airport contract

Maldives government Tuesday accused the International Finance Corporation (IFC) of gross incompetence over its advise to hand the contract to India's GMR to develop and operate the archipelago's main airport.

Speaking to reporters after announcing that the government had settled a payout of USD271 million to the Indian infrastructure giant, Attorney General Mohamed highlighted that the contract was awarded to GMR based on the expertise of the World Bank member.

IFC had compiled the agreement drafts and researched the GMR proposal for developing the airport.

The special report released by the cabinet before annulling the agreement with GMR in 2012 stated that while the profit to be received by Maldives Airports Company Limited (MACL) was calculated, there was no assessment of the income loss to the government and that there were no efforts made to factor in the profit that GMR would receive from the deal.

The report also stated that GMR failed the technical evaluation during the bid evaluating process in the presence of IFC, but the fact was ignored after deliberations.

The report also noted the absence of any written advise and expertise provided by IFC to the Maldivian government.

"A short summary of the IFC's work would be that they were incompetent in providing advice to the Maldivian government. They have responsibilities towards the Maldivian government. I think that the Maldives must request for IFC to pay back the damages received by Maldives during this deal," the AG stressed.

Anil also said that Maldives faced many setbacks during the arbitration process, and that the biggest setback was that some important documents were missing from relevant government offices. He also noted that GMR failed to return some documents to the government upon termination of the contract.

Anil also said a former Attorney General and some lawyers had worked for GMR and that some former government officials failed to provide assistance to the government when requested.

The AG refused to rule out action against them saying that the government would decide now that the dispute has been settled. He noted that the current government had reached it's intended target even with all these setbacks.

"The government's target was to settle this issue with the smallest possible damage, and it has been achieved," Anil said.

Anil stated that crucial help was provided by two international lawyers during this case. Legal help was provided to the government by Michael Black, a lawyer from English law firm Black Stone Chamber, and Kenneth Pereira of Singapore's Aldgate Chambers LLC.

"These two and their teams put in a lot of effort and gave us good legal advice which helped us reach our target," Anil said.

Anil also thanked the Fisheries, Tourism and Economic Ministers of Maldives along with the Governor, noting the importance of their efforts in this case.

He also thanked all the government entities responsible for speeding up the process of paying off GMR.

The government had been asked to pay over USD270 million in damages to India's infrastructure giant by an international arbitration tribunal over the abrupt termination of the contract to operate the airport.

The Singapore based tribunal had in February ruled in favour of the GMR group of companies on its dispute with the Maldives government on the airport project.

The government had said the tribunal had ruled that Maldives must pay USD208 million in damages and interest on the figure which finally amounted to USD271 million.

The dispute stems from a 25-year contract to modernize, expand and operate the Maldives’ main international airport that the government entered into with GMR Male International Airport Pvt. Ltd. in 2010.

The mega project worth over USD500 million was awarded to GMR during the tenure of former President Mohamed Nasheed, despite concerns by the then opposition.

Shortly after the controversial resignation of Nasheed, the government kicked out GMR and cancelled its lucrative contract to run the airport.

The government has maintained that the contract was invalid in November 2012 after the parties fell into dispute over a fee GMR imposed on departing passengers, which the government said was contrary to Maldivian law.

The tribunal however, had ruled the original concession agreement was valid and binding and that the Maldives government had unlawfully repudiated it.

Despite GMR winning the arbitration, the government had voiced confidence that the compensation would not exceed USD300 million which it said would be manageable by the present state owned airport operator.

Anil during the press conference said the damages had been paid by the present state owned airport operator Maldives Airports Company Limited (MACL) from its reserve funds. He insisted that the figure had not been paid from state funds.

The AG explained that the funds had been settled quickly as the government faced the danger of ballooning interest.

He also assured the public that the payout would not affect the government's plan to develop the airport.

Anil also said the government would soon submit a statement to the parliament explaining the benefits of cancelling the GMR contract .