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GMR seeks over $800 million, Maldives insists on 'forensic' audit

Press Trust of India
Dec 16, 2012 at 04:20pm IST

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Male: Indian infrastructure firm GMR will seek a compensation of over $800 million from Maldives for the termination of its airport deal but Male is insisting on a "forensic audit" as it feels the actual amount would be less than half.

"We have sent a letter to the Maldivian government indicating a number of more than $800 million as compensation amount. This is our initial estimate. The final figure would be based upon various calculations, loss of profit among others," GMR (Airports) CFO Sidharath Kapur said.

The Maldivian government, however, debunked the calculations and insisted on getting a forensic audit done through an international firm.

GMR seeks over $800 million from Maldives

The Maldivian government, however, debunked the calculations and insisted on getting a forensic audit done through an international firm.

"We will go in for a forensic audit as we want to see how much money has poured in to GMR coffers through the Male International Airport and how much actual money has been spent here. As per our information, GMR has cashed in only $150 million of the about $350 loan it had bagged through a bank," Maldives President Mohamed Waheed's press secretary Masood Imad said.

Asked if GMR is open to a forensic audit, Kapur told PTI, "Our books are transparent. The concession agreement signed with Maldives government did not have the clause of forensic audit. Having said that, I must add that we don't have any objection to an audit but it has to come through proper legal process".

Sources in the Maldivian government say that the compensation amount, as per their calculations, should come to about a lower limit of $150 million and an upper limit of $350 million.

"We will present our case before the Singapore Court and let them take the call," a source said.

The $500 million airport project contract awarded to GMR for modernizing and operating the Ibrahim Nasir International Airport (INIA), signed in 2010 during the previous regime of Mohamed Nasheed, was "unilaterally" terminated by the current government on November 27.

The airport was taken over by the Maldives Airports Company Limited after a high-voltage legal tussle in which GMR had initially got a stay order on the termination from the Singapore HC.

However, the Singapore Supreme Court ruled on November 6, a day before the notice period expired, that Maldives has the power to take over the airport on November 6.

Replying to a query if GMR is not welcome in Maldives anymore, Masood said, "We don't have anything against GMR. We had objection to the contract that was signed under dubious conditions. We will in the future initiate a lot of infrastructure projects and GMR is welcome to bid for it."

However, sources in the know said that the "unlawful" termination of the contract sends a "negative signal" to foreign investors, a stand taken by Indian government too.

"It now feels that any contract signed with a particular regime can be scrapped when a new government comes in. It is a risky proposition," a source said.

Asked if Maldives will seek fresh bids for the modernisation and the operations of the airport, Imad said the cabinet has given the nod to set up a new company called Maldives International Airport Limited that will takeover from MACL. However, he added the structure of MIAL is yet to be finalized.

Refuting the allegations that the move to terminate the contract was a political one to whip up emotions before the elections next year, Imad said, "Protests against the contract have been taking place since the first day it was signed by Nasheed. There were regular protests and marches happening".

He added, "We had a set of issues that needed to be looked into after we came to power. We are tackling them one by one and airport issue was one of them. We consulted reputed international law firms and they agreed with us that the contract was not valid. It is only then we terminated".

"The President has not even said if he might or might not run for Presidency. It is completely wrong to say that it was done for political mileage. We are only setting the wrong done by Nasheed right," he added.

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