SunFront case: State completed appeal before recommendation

It has been revealed that while the report released by the Auditor General's Office (AGO) yesterday recommended that the state should appeal the Civil Court's rule that the state must pay SunFront over MVR 20 million in compensation for damages, the state had already gone to the Attorney General's (AG) office to appeal the case.

In June last year, the Civil Court ordered the state to pay over MVR 20.8 million to SunFront as compensation. This ruling stemmed from a case where the government failed to hand over land to the company, which had paid for the land in the Southwest Harbour area of Malé in 2010, and failed to return the money.

Even though the AGO's report stated that the Civil Court ruled that the state should pay MVR 20.8 million in damages to SunFront, calculations showed that the state should only pay MVR 10.7 million in compensation to the company. Auditor General Hussain Niyazy's recommendation in the report read that the case should be appealed at the High Court.

However, the High Court's registry shows that the AG's office had appealed the Civil Court's sentence at the High Court in July. The case has been registered at the High Court as well.

In 2014, the Civil Court had previously ordered the state to return the MVR 26.9 million paid for the land and ruled that SunFront retained the right to file a separate claim for damages.

The report released today by the Auditor General's Office, regarding the Civil Court's ruling to pay MVR 20.8 million in damages, noted that the calculations used by SunFront to claim damages due to the delayed return of their payment were based on estimates.

The AGO report, signed by Auditor General Hussain Niyazy, states that the most accurate standard for calculating the company's loss is to use the actual figures from the company's financial statements to calculate the net profit margin and determine the commercial profit.

Using this methodology, the report concludes that the state should only pay MVR 10.7 million in compensation to the company.

The audit report also mentioned that although SunFront had initially sought MVR 20 million in compensation, the company later agreed in court to reduce the compensation amount to MVR 10.7 million, following the state's argument that the higher figure was incorrect.