Attorney General Aishath Azima Shakoor has said that the loan guarantee given by the government to GMR was a limitless and sovereign guarantee.
While speaking at the Parliament Public Accounts Committee today, Azima said that while the Maldivian state was not part of the senior finance agreement, it had agreed to act as a guarantor for all loans obtained by GMR under this agreement.
“We [the state] is not part of the senior agreement, thus to act as guarantor for loans obtained by another group – whether this was done with approval or not – would be to give a ‘blanket’ guarantee. I don’t think this can be permitted. I don’t believe that even the Public Accounts Committee would do that,” she said.
She said that guarantees given by the government should have limits, but that agreement, made with the approval of the former Attorney General, stated that the Maldivian government should be responsible for all loans obtained by two other groups.
“Financial guarantees given by the state should have limits. We are signing an agreement allowing future groups to obtain as much money as they want under our guarantee – I don’t believe that this is a valid legal concept,” she said.
Azima said that under the guarantee, Singapore’s Axis bank had permitted GMR to obtain loans worth $386 million; however, GMR had only taken a loan of $165 million.
She said that in the event that GMR fails to repay the loan and the government is required to do so, and the government wants to advocate that it should not have to repay the loan, we see that the former Attorney General had permitted by writing on the official letterhead that signing the agreement should not result in any legal problems. She said that this could result in a bad image for the state, which could in turn mean that it could face difficulties obtaining additional loans.
“When we think about taking legal action in relation to this matter, we see that the head state prosecutor has advised that signing that agreement should not cause any legal problems. So it becomes something the state has to honour,” she said.
Azima said that no copy existed at the office of the agreement to act as a guarantor for loans obtained by GMR, and that the only document available is the AG’s advice that signing that agreement should not result in any legal problems. She said that the additional information that exists now, was collected by requesting Axis bank for it.
In addition to this, Azima also said that under the Public Finance Act, the government cannot act as a guarantor without the parliament’s approval, which was not obtained. She said that the government has strong legal arguments in relation to the loan issue that they can use in court.
She said that it is not known if GMR had taken any loan other than the one from Axis bank, and that discussions with Axis bank with regard to the loan will commence next week.