Dheebaja earned massive profits while state incurred losses of MVR 23m

Auditor General Hassan Ziyath has said that the state was obstructed from gaining USD 1.5 million from the agreement made with Dheebaja Investment Pvt Ltd, but rather faced a loss of MVR 115 million due to the easements provided to the company over three years.

Dheebaja was awarded the contract to provide transport services after leasing the island of R. Kudakurathu on February 1, 2010. However, the agreement was terminated during President Waheed’s administration citing that the company was unable to perform the contract and was in breach of it. 

After the termination, Dheebaja claimed against the state and the matter was taken up in court. The Civil Court ruled against the state and ordered it to pay MVR 348 million to the company as compensation for the terminated contract. However, on appeal, the High Court overruled the lower court, only to be overruled by the Supreme Court once again on appeal, which maintained the original ruling of the Civil Court. The Attorney General has since requested a review of the case. 

In a meeting of the Parliament’s Committee on Public Accounts today, an audit report into the matter by the Auditor General’s Office was presented. The Parliament instructed the Auditor General’s Office to form a report into the matter at the end of last year.

The report, issued yesterday, recommended to the state against any payments to Dheebaja. Speaking in today’s meeting, the Auditor General said that there was no evidence from any documents that the state was to pay any compensation.

No country in the world practiced payment for a business not yet in existence, said the Auditor General today. 

Agreement terminated after services were halted for more than a month

Abdulla Zuhury, the special audit manager of the Auditor General’s Office said that the agreement was terminated under the term which provided such termination if services were not provided for five consecutive days. It was terminated after the company was repeatedly provided the opportunity to recommence operations. Records show that services had not been provided for more than a month when the contract was terminated.

“After the ultimatum was issued, 32 days had passed when the agreement was terminated.” Said Zuhury.

Documents also show that the Transport Ministry requested the company to improve its services a number of times and that even met officials from the company for the purpose.

After termination of the agreement, the Ministry received a letter from Dheebaja requesting payment of MVR 156 million on May 30, 2013.

“The letter was not accepted by the Ministry.” Said Zuhury.

Auditor General Ziyath said that inquiries were made to identify the damages the company suffered; however, this was not clarified by the company. No details were also provided in the two-page letter sent to the Ministry by Dheebaja.

“It didn’t include any ferry service revenues or expenses. It gave an estimation of the revenue to be earned by them through the operations of guesthouses, resorts, and ferry terminals for 47 years.” Said Ziyath.

They responded by saying that no documents were kept due to the prolonged time, said Auditor General Ziyath who added that upon inquiring there were no land expenses as well.

Subsidies total MVR 115 million

Details of the audit show that Dheebaja was to make MVR 49 million by providing ferry services three times. The estimation by councils is MVR 30 million. Under a projection made with the advice of MTCC, the audit showed that an estimated MVR 29 million was to be made by the company if ferry services were to be provided for four atolls during a period of three years.

Despite the projection, subsidies provided by the government show that the company was paid MVR 115 million.

“Based on the projected expenses, the company did not make any losses due to the subsidies provided. A total of MVR 115 million was provided as subsidies. The lease acquisition cost of the island leased to Dheebaja is 68 million. The annual rent payment of the island to be developed for tourism is MVR 46 million. MVR 500,000 was also deferred as import costs.” Said Zuhury.

The agreement stated that Dheebaja was to be provided 15 hectares of land from an uninhabited island to develop a tourist resort, however, the audit showed that the island leased to Dheebaja was 37.6 hectares of land including the lagoon and land area. The matter has been provided to the ACC due to the possibility of corruption. 

The government leased the entire island to Dheebaja in violation of the agreement which would incur losses to the government. 

“The government lost the chance to earn USD 1.5 million (MVR 23.1 million) by leasing the remaining area of the island because the entire island was leased to Dheebaja.” Said Zuhury. He also added that initially the island was leased for 35 years, however, this was extended to 50 years after transforming the conditions to a state partaken joint venture.