Tuesday, September 23, 2008

MTDC exposed

"The world is full of obvious things which nobody by any chance ever observes" –Sherlock Holmes

One should have smelt a rat the moment MTDC announced a dividend payment of Rf 90 per 100-rufiya share for year 2007. Where on earth would one find a company that returns 90% of the investment back to the investors within one year –that too before serving a single customer? It's fishy to say the least. And now Auditor General Naeem has pulled the lid off the mystery, exposing the dark secrets and ugly skeletons in the MTDC closet.

MTDC was formed in April 2006 to allow the ordinary man to participate in the tourist industry –a lofty aim no doubt, but too high to reach. The graph above tells it all. For year 2007 an ordinary man who bought shares up to the maximum legally allowed limit of 2645 would have received a dividend of about Rf 0.24 million –peanuts compared to Villa group's dividend of Rf 27.8 million and Champa group's Rf 5.2 million. These figures are based on the minimum number of shares controlled by Villa (309,207) and Champa (57,261) as estimated by the audit report, and the actual dividend paid per share –90 rufiyaa.

The audit report says MTDC acquired 10 islands at an average rent of $ 2738 per bed per annum, which is almost 10 times lower than the market value and 3 times lower than even the controlled rent fixed by Tourism Ministry ($6908). The report estimates that because of this low rent the exchequer loses a minimum of $ 11.8 million each year. And that's not all. MTDC has subleased the islands at rents considerably higher than $ 6908. This means the exchequer is losing far more than the $ 11.8 million estimated above. Where did all this money go? Part of the answer is seen in the graph. Part of the answer is the 70 million rufiyaa due to other private investors and the 135 million rufiyaa due to the government for its shares. But for a very important part one will need to investigate the subleases and who got them.

Now the question is, why did all this happen while there was a board of directors with 4 government directors in it to protect the rights of the public? The audit report explains how:

  • Though the company was established for the public, two entities have controlled the company from day one by acquiring far more shares than the allowed maximum;

  • Villa Group controls the board of directors of the company;

  • All major decisions were taken for the company by a temporary board;

  • The company was politicized at all stages in its formation and development;

  • Conflict of interest because Tourism Ministry is both supervisor and regulator of the company;

  • Managing Director is abroad on study leave and other people run the company;

  • Company has dealings with firms where members of the board have interests;

  • Family connections between a member of the board and a senior executive of the company;

  • Inappropriate decision to pay a dividend of Rf 90 per 100 rufiyaa share, which is over and above company profits and reserves;

  • Five persons own shares more than the limit of 2645;

  • Exceeding the Herethere development budget of $ 30 million and spending $ 52 million;

  • Herethere contracts were awarded without bidding;

  • Over payment to Herethere sub contractors;

  • The government has only paid one third of what it has to pay as paid up capital;

    Based on the above findings the Auditor General has recommended dissolution of the company. He has also recommended prosecution of the people responsible for the malpractices.

"Where large sums of money are concerned, it is advisable to trust nobody." –Agatha Christie


Anonymous said...

well... i also wonder why it was so and for all this time....it seems that as the former head of villa has started his race against president maumoon, the unknown secrets are revealing one by one. dont you think so readers???

Anonymous said...

All are puppets of Maumoon.

No suprise that the Auditor General suddenly exposes MTDC at the very critical time when Qasim Ibrahim is campaigning.

Soon we will hear the news that the supreme Court accepts Maumoon's nomination valid and dismisses the case.

We all know Qayyoom and his game. Nothing new.

Anonymous said...

Qayyoom is master minder of these games. he was fully aware of all these. the very beginning of MTDCs life the rumor has spread Qasim and Champa were controlling the shares. but Qayyoom not even bother about the rumor. he was waiting for the right moment. we all know Qayyoom is crook. he puts every effort to disqualify other candidates by hook or crook. good example Dr. Hassan. Maumoon did everything he could to stop Hassan.

Think Again said...

It is simply a pitty game that flaws in our minds that every thing good or evil, we connect Maumoon and his regime!

I would not think it that way, always.

MTDC was formed for the betterment of the general public. Few buisiness tycoons took control illegally and shared the better half among them. and its the truth

Today, we came to know this simply because we have elected a capable, educated AG.

So the main focus here for me is...

Lets select the best and the most educated and the most capable people to run this nation. Let us not select those rich who have so many personal issues to settle in every corner of the world.

Think Again said...

The truth is MTDC was mislead and the nation as well.

Few like Mr. Gasim Ibrahim were among the foul players.

New commers, capable and talented and education has disclosed without fear, the games played.

Dhicritic said...

Let us think optimistically about this. AG is not trying to help Maumoon by exposing Qasim. What we have seen is an independent institution using its newly gained powers and fulfilling its very purpose. At last we are seeing a glimpse of hope and change. Let us also condemn the wicked role played by the business tycoons in depriving the ordinary Maldivians of their every opportunity to be self sufficient. It's not the change we need, Qasim, if you are not giving us the opportunity to involve in tourism investments by pooling our small funds.

Anonymous said...

as for a reply for the last comment i have to say we all would like to be more optimistic n say that we have a very capable AG. well sadly its not as simply as that. having said that other other hand, the business tycoons arent any better. in simple term the whole political arena is a mess n is messing up the governance as well. lets pray for a nice change..