Yusuf Naeem: First case in MMPRC scandal where bribery charges were proven

The Criminal Court has ruled that bribery was involved in the lease transaction of developing a resort in Vaavu atoll, Aarah. The Maldives Marketing & Public Relations Corporation (MMPRC) money laundering case is one of the biggest scams that shook the nation to date.

The Criminal Court on Tuesday convicted former President Abdulla Yameen of bribery and money laundering in the Vaavu atoll Aarah case. He was charged with accepting USD 1 million in bribes and laundering said money.

Former MP Yousuf Naeem was charged with bribery in the case.

While Yameen was sentenced to 11-years in prison, Naeem was sentenced to three-years and two-months in jail for bribery.

This is the first case in which bribery charges were proven in the MMPRC scandal.

Aarah, opened in 2019, is already an operational resort under the name Cinnamon Valley Maldives. The resort has 90 rooms and is one of the best visited resorts in Vaavu atoll with occupancy averaging between 70 and 80 percent.

With the court's ruling that an island was acquired through bribery, legal experts have raised questions about the legitimacy of operating a resort on the island. Questions were also raised about whether to let the resort developed on the island remain operational.

While some legal experts say there is no reason why the agreement between the subleasing party and the Yusuf Naeem-owned company cannot be accepted, others say all subsequent agreements will be null and void as they contain illegal provisions to begin with.

How Yousuf Naeem acquired Aarah

Aarah is a small uninhabited island located near Vaavu atoll, Thinadhoo. The island, which was under Ministry of Fisheries Marine Resources and Agriculture at the time, was handed over to the Ministry of Tourism by the order of the then President. In the letter, President Yameen directed the Economic and Youth Council to use the island for tourism development.

On August 25, 2015, the island was handed over to the Ministry of Tourism and on September 9, it was handed over to MMPRC. On the same day, the MMPRC sent a letter to Tourism Ministry and granted the leasehold rights of Aarah to 2G Pvt Ltd, a company in which Yusuf Naeem holds a 99 percent stake.

2G Pvt Ltd was registered as a company on August 13, just 12-days before the presidential decision. The USD 2 million transaction and other agreements for the lease of Aarah were also signed by 2G and MMPRC on the same day.

Yusuf Naeem, Roberto Sulas and Marco Mangoli have stakes in 2G Pvt Ltd. The two foreigners are shareholders of the company operating Vaavu atoll, Dhiggiri and Alimatha resorts.

Aarah was under the fisheries ministry till August 25, 2015. However, 2G Private Limited, in its Board Resolution dated August 22, 2015, had approved the submission of a letter expressing interest in developing the Aarah as a tourist resort. The resolution was signed by Yusuf Naeem and Asma Abdul Razzaq.

This shows that 2G Pvt Ltd was aware beforehand that Aarah would be used for tourism development while the island was under the Ministry of Fisheries.

On September 9, the day the Aarah was handed over to 2G, Yusuf Naeem reduced his stake to 10 percent and transferred the other 90 percent to a company; L.A. Resorts. The previous one percent stakeholder had transferred this stake to Yusuf Naeem. This was the reason for L.A. Resorts giving the USD 1 million cheques to MMPRC and Yusuf Naeem on the day MMPRC handed over the island to 2G.

Following this change, on April 5, 2016, 2G Pvt Ltd had changed its name to "Aarah Investment". On the other hand, Yousuf Naeem had filled the position of Company Secretary of L.A. Resort's since November 21, 2007.

According to information available in the public domain of the Economic Ministry, Yusuf Naeem is still among the three shareholders of Aarah Investment Pvt Ltd along the two foreigners. The company also registered addition two company's "Aarah Veli Lagoon Pvt Ltd" and "Nakai Resorts" under it. While resorts are operational under these companies, Yusuf Naeem will continue to profit off of them.

A judgement alone will not solve the problem

Former Deputy Attorney General and Villimalé MP Ahmed Usham said the state should stop Yusuf Naeem from benefiting from the island and recover the profits he had obtained from Aarah in the past.

Usham said the biggest basis in the MMPRC case is the loss caused to the state by giving islands for the benefit of certain people. Therefore, a judgment alone will not solve the problem, he said.

“If [Yusuf Naeem] is benefiting from an act of corruption, a civil suit must be filed against him to seize these gains,” he said.

He said that in addition to the profits, acquisition costs paid by the party should be evaluated whether it met the market value at the time of acquisition, and if not, the money has to be recovered by the state.

Usham said there were “innocent parties” involved in the MMPRC cases and legal proceedings against such persons need to carried out. He said the price paid by the innocent parties involved in the case should be looked at and a solution should be found.

Another lawyer, who spoke to Mihaaru on condition of anonymity, said the government came to power to fight against corruption and establish justice and putting one particular person in jail for the MMPRC case will not permanently solve this issue.

Should the state seize all islands involved in the case?

All the islands involved in the MMPRC case are alleged to have been allocated to certain groups through corruption or using their positional influence although many of these cases have not yet been proven in court.

A lawyer told Mihaaru that the core issue of the case is the transaction between the MMPRC and Yusuf Naeem causing subsequent transactions to be invalid.

"The Contract Act also says acts carried out in accordance with the law will remain valid," he said.

He said that the transaction of an island which is obtained through illegal means, even if subleased will remain illegal.

In this case, if the transactions of Aarah involve “innocent” or non-criminal persons in the subleasing situation, the agreement with such persons should be proceeded with, first of all, after recovering the loss to the state, he said.

Usham said it was not easy to seize islands given to parties as innocent people are involved in the business and such acts could violate their rights.

"Foreign parties have come and made huge investments. It is not easy to go and seize the island. We have to work to find a better solution for the whole problem," he said.

This case cannot be resolved with passing a judgement on the nature of the Aarah lease transaction alone. In case of loss of state property and money, a clear guideline should be formulated to recover losses through the legal system. Otherwise, there will never be a middle ground in such high profile cases.