Auditor General instructs against compensation to Dheebaja

The Auditor General’s Office has concluded that the State of Maldives is within its rights to terminate the 2010 contract with Dheebaja Private Limited for ferry services in northern Maldives, and that the company is not entitled to monetary compensation.

The Auditor General has advised the State against paying compensation to Dheebaja.

The contract between the State and Dheebaja was signed on February 1, 2010, during former Maldivian President Mohamed Nasheed’s administration. It pertained to the establishment ferry services in four northern provinces (N. Atoll, R. Atoll, B. Atoll, and Lh. Atoll).

The contract was later terminated by the State citing lack of progress in the project on May 30, 2013.

The State’s decision to terminate the contract was deemed unlawful by the Civil Court in 2014, and the court ordered a MVR 348.10 million in compensation to Dheebaja.

Though overturned upon appeal by the High Court, the original ruling by the Civil Court was upheld upon appeal at the Supreme Court in April 2019.

The Board of Dheebaja later asked the Attorney General’s Office for peaceful resolution to the issue, and the case was sent to the Settlement Committee, which recommended a settlement of MVR 174 million.

The decision was later submitted to the Supreme Court following public backlash.

The Auditor General’s Office released its audit report on the ferry transport project this Wednesday.

The Auditor General’s Office found Dheebaja breeched the contract with the State with its failure to establish ferry services as agreed, and found the State had been within its rights to terminate the contract.

“Ferry transport services were interrupted, and transport services were not provided as agreed in the duration provided by the State in a second opportunity to provide transport services. Since it [the termination of the contract] was within the powers awarded to the State to terminate the contract under Section 6.32.1 (d) of the RFP, which is part of the contract, it is instructed not to make any monetary payment as compensation to Dheebja Investment for termination of the transport contract,” reads the special audit report signed by Auditor General Hassan Ziyath.

The Auditor’s Office said in the report that R. Kudakurath was awarded to Dheejaba for development as a tourist property under the contract to subsidize the service, and under the stipulation that the island will be repossessed in the event of a termination of contract.

It has been instructed that no compensation be given to Dheebaja.

“Since it was established that if the island were subleased to another party at the time of termination of the transport contract the government would form a new contract with the party, and since the head lease for the island has been transferred to the party which subleased the island as per the condition on the contract, it is instructed that Dheebaja not been paid any money or monetary compensation in response to the request for compensation for their losses they have made,” reads the report.

The Auditor General’s Office also recommended against offering uninhabited islands for tourism development in exchange for essential services, citing difficulties to the people when the parties which agree to provide essential services fail to honor the agreement once they are awarded the islands, and financial losses to the State.

The Auditor General’s Office also noted that while it was stipulated in the contract that Dheebaja would receive 15 hectors of land from an uninhabited island to develop as a tourist resort or hotel, the company had been awarded 37.6 hectors (including the land and lagoon area) of R. Kudakurath under the lease agreement signed on May 5, 2010.

The Office found it facilitates corruption, and has instructed an investigation.

“An investigation is instructed as the government awarded a more sizable piece of land than agreed, which is an additional benefit outside of the contract, leading to reason to believe it could involve corruption,” reads the report.

The MVR 174 million compensation recommended by the Settlement Court has been put on hold following the decision to petition for a review of the decision with the Supreme Court. While the court has accepted the petition, it has yet to initiate proceedings.