The Maldivian government has paid US$18 million to Malaysia-based security firm Nexbis Solutions as compensation for the termination of a border control project in 2013.

The settlement was ordered by the International Arbitration Court in Singapore, which ruled in November 2016 that the cancellation of the agreement was illegal.

The payout was significantly lower than the US$272 million claimed as damages by Nexbis, but the previous administration decided not to accept the arbitration judgment despite numerous letters, the Attorney General’s office said in a statement last Wednesday.

“As a result, when Nexbis Ltd filed a case at the Singapore High Court seeking to register the [arbitration] award, it was determined that the award could be enforced in Singapore,” the AG office said.

The payment was made to Nexbis on February 5, it added.

As the new administration wants to gain investor confidence and assure security for foreign investments, “it is important to enforce arbitration awards in cases where the government agreed to seek arbitration.”

The concession agreement with Nexbis to install and operate a border control system was signed in 2010 by the government of former president Mohamed Nasheed.

Citing “major losses” to the state, his successor cancelled the agreement and replaced the project with a Personal Identification Secure Comparison and Evaluation System provided free of charge by the US government.

The Nexbis deal was the second high-profile foreign investment scrapped during the tenure of former president Mohamed Waheed.

In November 2016, former president Abdulla Yameen’s government paid Indian infrastructure giant GMR more than US$270 million as compensation for the termination of an agreement to upgrade and manage the international airport.

– Border control –

Nexbis’ border control project was plagued by allegations of corruption in the bidding process as well as court battles and delays that led the IT group to threaten legal action against the Maldivian government.

In December 2012, the parliament voted unanimously to advise the government to terminate the agreement after the Anti-Corruption Commission said the deal would cost the Maldives MVR 2.5 billion (US$162 million) in potential lost revenue over the lifetime of the contract.

The parliament’s public accounts committee also found that the government had agreed to waive taxes for Nexbis despite the executive lacking legal authority for tax exemption.

Under the concession agreement, Nexbis levied a fee of US$2 from passengers in exchange for installing, maintaining and upgrading the country’s immigration system.  The company also agreed upon a fee of US$15 for every work permit card issued under the system.

The anti-corruption watchdog meanwhile sought corruption charges against former immigration controller Ilyas Hussain Ibrahim and finance ministry director general Saamee Ageel, claiming the pair abused their authority for undue financial gain in awarding the deal to Nexbis.

The ACC also accused Nexbis of offering laptops as “bribes” to immigration staff to proceed with the border control system.

But Nexbis emphatically denied allegations of corruption, speculating that “criminal elements supporting human trafficking” sought to sabotage the agreement.