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TMA refutes leaked special audit report as “extremely misleading”

Ali Shareef
22 January 2020, MVT 22:13
Trans Maldivian Airways, TMA, is the largest seaplane operator in the world. Photo: Mihaaru
Ali Shareef
22 January 2020, MVT 22:13

Trans Maldivian Airways (TMA), on Tuesday, responded to recent news reports regarding Maldives Airport Company Limited (MACL)’s handover of its new seaplane terminal to TMA, refuting the leaked special Audit Report, claiming its calculations and projections were “grossly incorrect” and therefore “extremely misleading.”

In a press statement, TMA discredited the audit report, declaring that its findings are not based on facts, but rather on “faulty assumptions that are unrealistic”, and makes exaggerations on projected revenue by "at least 8 times.”

The special audit report was commissioned by the Parliament Public Finance committee in August 2019, after ruling Maldivian Democratic Party (MDP) MP Yaugoob Abdulla raised alarm over MACL handing exclusive operation rights of the new seaplane terminal to TMA, but is yet to be publicly disclosed.

The audit report, however, was leaked in December 2019 and revealed that MACL is likely to record an income of $47 million (MVR 729 million) per year if they were to operate the terminal itself and that the airports company will forgo a yearly profit of over $41 million (MVR 632 million) if they were to hand over the seaplane terminal operations to TMA.

This figure widely quoted in the news media, allegedly faulty as per TMA’s calculations, they argued prompted pushback from the general public and politicians alike, with calls for MACL to pull out from the deal.

However, TMA does not provide details of their calculations nor how the audit report exaggerated its projected revenue calculations by at least 8 times as they claimed.

TMA further contended that if MACL were to cancel its agreement with TMA, it would not only disrupt TMA’s operations but hurt the Maldive’s tourism industry.

In the press statement, TMA noted that the audit report fails to mention the fact that the TMA is “forced to abandon” its existing facility towards which the company has invested around US$18 million, for MACL to be able to start using the newly built runway as per airport development plans.

TMA went on to note that the report was extremely misleading, and accused the report of creating an inaccurate impression that MACL could make a substantial profit only if it were to manage the terminal by itself.

However, the leaked special audit report does offer an alternative plan of action for MACL, having taken into account the cost of relocation to TMA.

As per the alternative plan, as reported by local news media Mihaaru, 5,382 square meters of lounge plots are to be leased to TMA at the currently agreed rate of $23.44, while the remaining 9,860 square meters of the allotment is to be leased at the market rate of $252. Even if areas designated for office plots and other uses are leased at the market rate of $41.5 per square meter, MACL will generate in income a $2.8 million (MVR 43 million) a month, and a $33.7 million (MVR 520 million) yearly, the report estimates.

The statement went on to clarify that, contrary to recent media reports, ‘Champa’ Hussain Afeef is no longer a shareholder of TMA.

However, Afeef, one of the biggest tourism tycoons and TMA's majority shareholder when Blackstone acquired the company in 2013 remains a member of TMA’s board of directors to date.

His business partner, Ibrahim Noordeen, with whom he runs Meeru Island Resort, sits on MACL’s board of directors along with Moosa Solih, Ibrahim Mahfooz, Mohamed Abdul Sattar, and its Chairman, Umar Manik (MU).

A consortium led by US-based Bain Capital and a Chinese tourism conglomerate, Tempus Group, on 19 December 2017 acquired the Maldives’ main seaplane operator Trans Maldivian Airways from Blackstone for approximately USD550 million.

According to foreign media, Bain Capital and Tempus Group proposed to buy 80 percent of TMA’s shares for USD 550 million (MVR 8.4 billion), making it the largest business acquisition in the Maldives to date.

At the time of the acquisition, foreign media reported that other minority shareholders and local founders were staying on with a small stake.