Utility companies sue to recover millions lost in currency exchange scam

Utility companies sue to recover millions lost in currency exchange scam
January 16 17:15 2017

Two state-owned utility companies have sued a local company to recover millions of rufiyaa lost in an alleged foreign currency exchange scam.

The State Electricity Company and Fenaka Corporation, which provides electricity in Malé and the atolls respectively, sued Sharu Launch Services after dollar cheques issued by the company bounced.

According to the case filed by STELCO in November, the speedboat transfer company was paid more than MVR3 million to buy US$200,000 at the market rate of MVR15.42 per dollar.

Fenaka sued in December to recover MVR17 million (US$1.1 million) that it ostensibly expected to receive in dollars within 30 days. But three dollar cheques made out to the company with an invalid Mauritius Commercial Bank guarantee stamp bounced.

Both the police and the Anti-Corruption Commission launched investigations after local media uncovered the Fenaka scandal in late 2016. In October, the police arrested one of the shareholders of Sharu Launch Services and an official of the Mauritius Commercial Bank. However, both suspects were later released.

Newspaper Mihaaru had alleged the involvement of politicians in the scam but was unable to reveal names due to provisions in the controversial new defamation law.

The local company implicated in the scam also remained unnamed until STELCO’s lawsuit came to light this week.

The trial in STELCO’s case is set to begin after the parties failed to reach an out-of-court settlement. Fenaka’s case is at the dispute resolution stage.

STELCO’s spokesman declined to comment as the case is ongoing.

Fenaka Corporation’s former managing director, Mohamed Nimal, had meanwhile resigned two weeks after the MVR1million scandal broke in the media. He was replaced by former ruling party lawmaker Ahmed Shareef Adam.

Shareef told reporters that Fenaka’s board of directors had approved the transaction because it needed foreign currency for projects.

“The transaction went according to procedures set by the board,” he insisted.

“One of the main challenges to our projects is obtaining dollars. We are unable to proceed with one of our projects because we haven’t been able to obtain US$172,000. The government has pledged to address this.”

In a similar corruption scandal, more than US$6.32 million was stolen from the state-owned Maldives Marketing and Public Relations Corporation through fraudulent currency exchange deals.

A special audit found that the MMPRC obtained rufiyaa from the Maldives Ports Limited to be paid back in dollars. The money was immediately transferred to Millenium Capital Management Pvt Ltd and SOF Pvt Ltd, companies linked to jailed former Vice President Adeeb.

According to the anti-graft watchdog, the MMPRC also obtained a US$1 million loan from the Maldives Tourism Development Corporation in the guise of making an urgent payment to a foreign party and transferred the funds to a company owned by Adeeb’s father.

The embezzled sums are part of nearly US$80 million stolen from the tourism promotion firm in what has come to be known as the country’s biggest ever corruption scandal.