Malaysia-based security firm Nexbis Solutions has won an arbitration award of US$15 million as compensation for the Maldivian government’s termination of a US$39 million border control project.
Deputy Attorney General Ahmed Usham confirmed that the International Arbitration Court in Singapore ruled “a few days ago” that the cancellation of the agreement with Nexbis in August 2013 was illegal.
“The Attorney General’s office is now reviewing the ruling and will decide on what course of action to take,” he told the Maldives Independent.
According to local media, Nexbis sought US$269 million in damages. The details of the arbitration process remain unclear.
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, the next administration 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.
Last month, the government paid Indian infrastructure giant GMR more than US$270 million as compensation for the termination of a concession agreement to upgrade and manage the international airport.
Nexbis’ border control project was meanwhile 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 the Department of Immigration and Emigration’s 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.