Business Corruption Crime

Corruption suspected in leasing of Malé eastern waterfront

The Anti-Corruption Commission is investigating suspected graft in the previous administration’s leasing of a large plot from Malé’s eastern waterfront to Strada Pvt Ltd.

Strada’s director Zahid Rameez was a senior member of the ruling Progressive Party of Maldives when a 10,000 square feet area was controversially leased in September 2016 to build a food outlet along with a platform to view the construction of the Sinamalé bridge near the capital’s surf break.

The former government’s decision to pay MVR14.4 million (US$933,852) to Strada as compensation for the relocation of the Chatime beverage shop was an attempt to provide an illegal or undue benefit, the anti-corruption watchdog concluded in a report released Sunday with preliminary findings of an ongoing probe into the compensation.

The commission noted the lack of action taken despite Strada’s failure to pay rent and meet contractual obligations.

  • A three-year lease agreement was signed on September 22, 2016 with a six-month grace period
  • Strada agreed to build a bridge viewing platform with a food outlet and parking area
  • Strada’s proposal included installing LED walls for advertising
  • The agreement did not include developing Chatime but the infrastructure ministry later approved building the shop and authorised Strada to relocate a parking zone in the northernmost area to the west
  • Strada proposed changes to the project, including planting trees on the road and developing a cinema, a football pitch, a large parking area, and an indoor children’s play area
  • In exchange, Strada proposed extending the lease agreement and offered to spend MVR2 million (US$129,700) under corporate social responsibility to provide a service requested by the government
  • Documents showed the bridge viewing platform would be temporary but the amendments “defeated the main purpose of the agreement”
  • When the amended agreement was signed on April 13, 2017, Strada had not completed some of the work previously agreed upon
  • On March 18, 2018, the infrastructure ministry asked Strada to relocate Chatime for expansion of Malé’s outer ring road
  • In response, Strada proposed building a two-storey event complex with a terrace in the space designated for the cinema and lounge. Chatime would be relocated to the ground floor with a parking area, Strada proposed
  • The infrastructure ministry approved the proposal and amended the agreement accordingly
  • Strada was not regularly paying rent when the second amendment was signed on April 18, 2018
  • Rent was last paid in October 2017
  • As of October 29, 2018, Strada owed MVR1.4 million as unpaid rent and fines, according to the Maldives Inland Revenue Authority
  • Strada did not pay the MVR2 million agreed upon as CSR under the first amendment signed in April 2017

In light of the findings, the ACC concluded that Strada was not owed compensation for Chatime aside from the building cost.

While the shop was relocated at the instruction of the infrastructure ministry, “a franchise was brought and a large investment was made at Strada’s own risk.”

But the compensation was based on an estimated net profit for the duration of the agreement instead of a valuation of the property, the ACC noted, which was “not the rule commonly followed in seeking compensation.”

The ACC informed the infrastructure ministry on February 20 that Strada was not owed MVR14 million as compensation.

The Strada deal was scrapped after the new administration took office in November.

A 30-day eviction notice was served after the lease agreement was terminated on March 7. The agreement allowed termination if outstanding rent was not settled before the end of a month.

Last month, the Attorney General’s office sought a court order to clear out Strada’s Newport View restaurant and recover more than MVR1 million owed as unpaid rent and fines.

The case is ongoing after the civil court rejected the state’s request for an eviction order.

Strada failed to pay monthly rent since December 1, according to the AG office.

The new ministry of national planning and infrastructure said Strada was continuing to operate the food outlet illegally and vowed to take measures to vacate the grounds.

In accordance with a plan, Malé’s eastern corner will be developed as “a green area” for public use, it added.

Meanwhile in early April, Strada’s former managing director Zahid was questioned by a presidential commission about death threats he made on social media against slain blogger Yameen Rasheed.

In March, three events – a Samsung phone launch, a caricature art exhibition, and a women’s day fair – that were to be hosted in Newport View were cancelled after public outrage over the death threats and longstanding corruption allegations.

In 2015, the anti-corruption watchdog probed an MVR3.7 million (US$240,00) catering deal awarded to Strada by the president’s office.

But the Prosecutor General’s office declined to prosecute a former presidential affairs minister after the ACC forwarded charges of abuse of power to unlawfully benefit a third party.

Full details are available at the link below:

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Source URL:  Maldives Independent

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