Minivan Daily
By Shauna Aminath in Malé
September 29, 2008
Attorney general Azima Shukoor has described the Capital Markets Development Authority (CMDA) as “irresponsible” over a 28 September decision to resume trading of shares in public tourism firm the Maldives Tourism Development Corporation (MTDC).
Trading had been suspended on 23 September after a report by the auditor general found two key groups of companies in the Maldives “controlled” large proportions of the shares.
But the Republican (Jumhooree) Party said the report was politically motivated after it appeared to point the finger at their presidential candidate, Gasim Ibrahim.
Under the Securities Act “it is a legal obligation” and “not an option” for the CMDA to take action over MTDC share trading, Azima told Minivan News.
However Fathimath Shafeega, CEO of CMDA, said “We are not avoiding our responsibility...CMDA is quiet for a reason.”
“Irresponsible”
Auditor general Ibrahim Naeem called for an immediate freeze on trading of MTDC shares, liquidation of the company and a criminal prosecution in his 22 September report on the company.
Azima told Minivan News on Sunday night that “the regulator [CMDA] is being very irresponsible” in advising the Stock Exchange to resume the trade of MTDC shares on Sunday, though the CMDA says it is still investigating.
The Securities Act says the objective of CMDA is to “take measures to prevent unconscionable conduct in relation to dealings in securities and loss of confidence in the securities market.”
Under the Act, the CMDA has the authority to take measures against unlawful practices. It can also give directions to the independent Stock Exchange Company over the securities market.
Speaking to Minivan News, Makhzoom Saleem, manager of CMDA, said the decision to suspend the trade of shares was to “disseminate information in the market.”
“It is very important people know. Participants in the market would know something had happened...If people lack information, the participants in the market will take advantage,” he added.
“Action Taken”
Makhzoom said the CMDA “has taken action at different stages... we advised MTDC on share trading in the beginning, at the initial public offering in mid-2006.”
He said the CMDA “publicly announced people should not buy shares on behalf of others.”
The operating license of Aariya Securities, the most active firm on the Maldives stock exchange, was suspended by the CMDA in August for failing to provide full documentation and information to clients.
An investigation by Minivan News at that time showed relatives and companies of presidential candidate Gasim Ibrahim were using proxies to buy up shares in MTDC, often without those proxies understanding their own position.
“Aariya Securities was suspended because they violated the Regulation on Conduct of Securities Business,” said Makhzoom.
Shafeega said, “We are carrying out an investigation...This does not mean we are supporting and protecting a certain person...We have been doing what we are bound to do. We are not hesitant to take action.”
Criminal?
The auditor general’s report found Villa companies, headed by minister Gasim Ibrahim, held “not less than 27 per cent of shares” in MTDC, whilst Champa – assumed to refer to Champa Brothers – held five per cent. Both were accused of share buying through proxies.
When the auditor general’s report was published, Azima described the companies’ actions as “corporate fraud” and said criminal activity had taken place.
But Republican spokesperson Dr Hussein Rasheed Hassan said the report was politically motivated, as Gasim is now contesting incumbent President Maumoon Abdul Gayoom in elections on 8 October.
Corporate fraud is not clearly defined in the Maldivian law, though the section 132 of the penal code sets out punishments for those involved in “theft, misappropriation, and criminal breach of trust”.
Meanwhile Article 61 of the constitution states no person can be subjected to any punishment except under regulations backed by a law which defines the criminal offence.
A conviction for fraud is grounds to bar an individual from the presidency under the constitution.
Prosecutor General
Information on MTDC share trades has now been sent by the Attorney General’s Office to prosecutor general Ahmed Muiz. A criminal investigation may now be conducted at his discretion, but it appears unlikely the case will be resolved ahead of elections.
Muiz told Minivan News, “We are investigating to confirm crime involved in it...We have not yet entirely reviewed the report.”
“I cannot say if the company or an individual will be prosecuted following the report,” he added.
The Prosecutor General’s Office was created in early September, and according to Muiz, has inherited over 800 pending cases from the Attorney General’s Office, which previously dealt with criminal prosecutions.
It would be “unfair” to expedite this particular case over others, Muiz said.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment