MVR700m due as interest alonefor BML

While “three big loans” issued by the Bank of Maldives (BML) are not being repaid, the bank’s receivables as interest for these loans are currently at MVR790.76 million.

The Parliament’s Public Accounts Committee said in its report on BML’s Audit Report for 2007, that the shareholders of BML face losses due to delays in the judicial process of the cases filed in relation to the aforementioned loans.

The report refers to letters sent by BML, and notes that the loan of MVR654 million loan issued to Sultans of the Seas, a company in which Dhivehi Rayyithunge Party (DRP) Leader Ahmed Thasmeen Ali has interest, had not been repaid.

While a case on the non-repayment of this loan was filed to Court in 2009, delay in the court process means that MVR383.49 million is currently owed as interest for this loan.

Similarly, interest of MVR406.27million is due for loans taken by Funaddoo Tuna Products, a company linked to the same group of people. This case was filed to Court in March 2009.

According to the report, the letters sent by BML indicate that in addition to delays by courts to deliver a first verdict, cases appealed to High Court and Supreme Court are also often prolonged for years.

The Committee has decided to ask the Chief Justice to establish a system to expedite such cases.

The Committee, in their assessment, focused on four issues noted in the 2007 BML Audit report.

The issues in focus were BML’s politicised system of issuing loans, which encouraged corruption; the provision of loans that exceededthe limit allowed by Maldives Monetary Authority (MMA); theextension of deadlines for loans that were not being repaid; andthe provision of loans without securing mortgages.

The Committee noted that overall, the bank had corrected several of these issues.

For instance, firm action had been taken in collaboration with MMA to solve the problems associated with the loan provision system; and the problem of politicisation of the loan provision process is being investigated by the Anti-Corruption Commission (ACC).

Also, the provision of loans that exceedthe limit allowed by MMA had been regulated by new rules established by MMA, and a Credit Committee had been formed to solve the problem of extension of deadlines for loans that are not being duly repaid.

BML had also made efforts to strengthen the bank’s management team, and set up a separate unit to facilitate the establishment of a mechanism to value mortgages.

“BML and MMA have taken reasonable action to address the problems noted by the Auditor General,” the Public Finance Committee said in its report.

BML made a net profit of MVR519 millionlast year; however, its shareholdersdid not receive any dividend as the net profit was set aside as provision for loans that have no guarantee of repayment.