Tuesday, January 20, 2009

Something Rotten in the State of our Public Companies


When Maldives Tourism Development Corporation (MTDC) was launched friends advised me to buy its shares. I refused. From the less-than-respectable history of public corporations in the Maldives I had my doubts. One year later when MTDC paid a dividend nearly equal to the original investment my friends had triumphant smiles. The smiles faded last October when the company’s audit report was released.

With Bank of Maldives I was less cautious. This may partially have been because when the company went for a public issue, it had been apparently running professionally and efficiently for some years –long enough to lull my suspicions. It may partially also have been because I had worked earlier in a bank and was a bit familiar with the internal safeguards that operated in banks. But the audit report released on Sunday indicates that my confidence was misplaced. Probably I’ll lose my investment in the bank. Fortunately my savings are not in Bank of Maldives.

From Qaumee Company to MITE and MTCC to MTDC, the plight of ordinary shareholders has been the same. Forget about getting any profit, they should consider themselves lucky if they manage to get their investment back. These companies were all formed with the lofty goal of giving ordinary people the chance to invest their meager savings. But they all end up with unscrupulous managements fleecing unwary shareholders.

Today there is a Company Law and a Registrar of Companies established under the law. There is a Capital Market Development Authority and a Monetary Authority to regulate the financial sector. But things are only getting worse if any. At least in the 1960s those responsible for swindling Qaumee, Orchid and MITE companies were prosecuted and brought to book. But later those who swindled FPID, MIFCO, MTCC, STO, STELCO and MTDC were not only left scot free, but also given promotions, many to ministerial level.

Taking action against perpetrators of economic crimes is not just a question of recovering stolen money. It’s more a question of reestablishing the moral norms of our society. An entire generation has been brought up believing that corruption is the smart thing to do. If another generation goes that way, the word corruption itself will have no meaning at all. Surely that’s not the good governance we want to establish in the Maldives.

4 comments:

Anonymous said...

yes dr. waheed. as you say those responsible for swindling FPID, MIFCO, MTCC, STO, STELCO and MTDC were not only left scot free, but also given promotions, many to ministerial level. So, what are we saying? We are only encouraging this behaviour. instead of detering them we are rewarding them hugely.

in the case of the treasury loans too the people who were given millions of rufiyaa out of the state coffers and never bothered to repay a single cent are now receiving their rewards. Mr. Hunaif has been appointed as a state minister. Dr. razee as a senior figure in the govt. Saikuraa azee is no getting ready to become our high commissioner in India. In other countries people like them have only one place to go and that is JAIL!

i posted some comments of http://asknaim.blogspot.com/ blog too about the same thing.
keep up the good work, dr. waheed. salam. rashid.

Shiham said...

Spoton! agree 100% especially the part" An entire generation has been brought up believing that corruption is the smart thing to do".+ "Taking action against perpetrators of economic crimes is not just a question of recovering stolen money. It’s more a question of reestablishing the moral norms of our society" very broad subject if we were to discuss.
I want to see the tv channels to discuss abt these with intellectuals and normal ppl on special programms like the rest of the world. create awareness instead of some dhivehi/hindhi songs. These are serious issues that you just can not khatham after the 08 Oclock news. we need an active and responsible media (on another note)
Unfortunately my savings are in the BML if anything happens, but i hope the crisis will be handled. but i can only hope.

Anonymous said...

Our Auditor General is a very very corrupt man.He was involved in trading in gold and other precious metals with Keith ,former Bank of Maldives General Manager.And in the process misusing the Bank. He very conveniently did not shed any light on these shady activities of his with the Bank when he issued the Bank's audit report.When he audited STO he very conveniently did not investigate the biggest embezzlement in the history of the Company which involves his very close friend and first cousin, Sato.(the notorious STO/FPID case.
And after he got appointed Auditor General, he has bee taking Majlis members in the Finance Comittee to Singapore and other countries at Audit Office expense giving them handsome perks and pocket money etc. No wonder his budget was passed as requested by him, with no questions asked! Other ' institutions which did not provide these perks and study tours to MPs ofcourse did not get much money from Majlis.Auditor Naeem has bee recently seen by amny people having coffees with MDP bigshots.No doubt planning the next round of seasonal reports.Thoddoo people will produce water melons for Ramazan. Our auditor can(for the right price) produce Reports to order to coincide with elections.

Anonymous said...

dr. please list one instance of corruption where who you call perpetrators of economic crimes embezzled public funds. and you say, "forget about getting any profit, they should consider themselves lucky if they manage to get their investment back." interesting. mtdc is in a mess not because of who you accuse. but because the authorities have failed to proect the shareholders interests. the auditor general is a sadist whose pleasure is to ruin the economy of this country. and compeletely unprofessional and lacks widsom and foresight.