Former MPL chairman Mohamed Zaki. Photo/Facebook

Zaki's MVR 544 million compensation claim for Kuredhifushi fails

The judge pointed out that while it was clear that Zaki's responsibilities arose with the signing of the agreement, it was not clear that it had been fulfilled.

30 October 2022

By Aman Haleem

Civil Court has ruled that the government should not compensate for not handing over the island of Kuredhifushi for tourism development as agreed, in return for establishing water and sewerage services in Omadhoo and Kinbidhoo islands in Thaa atoll.

The case was filed against the tourism ministry by former MPL chairman Mohammad Zaki. He requested the court:

  • to declare that the state has violated the agreement

  • to recover USD 35 million (MVR 544 million) as compensation

In the court, Zaki pointed out that the proposal to develop a 100-bed resort in Kuredhifushi was made in return for providing sewerage facilities to two islands under CSR. He said the government agreed to this, sent a letter and signed an agreement to lease the island, but the island was not handed over.

In response, the state said it had agreed to give the island but could not do so as Zaki had not yet paid the due 20% of the lease acquisition cost for the island. 

Initially, the development of a resort in Kuredhifushi was agreed to be done through a CSR agreement, but the government of President Abdulla Yameen Abdul Gayoom changed the CSR portion to acquisition fee.

After converting it to acquisition fee, the government tried to go ahead with the lease of islands by creating a JV owned by the government with 5% stake in the state as part of its policy of leasing out islands without bidding.

Timeline of the Kuredhifushi case:

  • Zaki's CSR proposal was submitted - 20 July 2011

  • The government notified the acceptance of the proposal - 1 December 2011

  • Zaki signed an agreement with the Ministry of Finance on 23 January 2012, to lease out the resort in return for implementing the sewerage network

  • Tourism ministry sent a letter stating that CSR agreement has been converted into acquisition fee - 17 April 2014

  • The JV deal’s draft was sent by the finance ministry on 11 August 2015

  • Regulation reducing acquisition cost of islands were gazetted on 15 August 2015

  • Zaki had written a letter to review the agreement following the change in acquisition cost - 20 December 2016

  • Tourism ministry asked Zaki to pay 20% before signing the agreement - 23 March, 2019

While three governments have dealt with in this case, the incumbent government said the Attorney General's Office has recommended that there is no legal provision that makes it mandatory for the government to lease out the islands without paying the 20 percent of the acquisition cost. 

Judge Fayyaz Shatir in his ruling on Wednesday said that the initial agreement was that the JV company would build and lease out the island once the work required under CSR was initiated.

The judge pointed out that while it was clear that Zaki's responsibilities arose with the signing of the agreement, it was not clear that it had been fulfilled:

  • The finance ministry deal was not scrapped

  • There is no reason for Zaki to ask the tourism ministry to shift from the acquisition cost deal

  • Tourism ministry cannot change a finance ministry agreement

  • The claim has to be filed against the finance ministry