UMET given additional MVR 23.2 mil as damages over Kuredhdhoo harbor project

An audit report has revealed the contractor of Lh. Kuredhdhoo harbor development project, UMET Construction received an additional of MVR 23.2 million on top of the court-ordered compensation.

Government owed damages to the developer following a contract termination.

The Ministry of Housing initially contracted the project to Works Corporation Limited, which had then subcontracted several project components to UMET Investment Private Limited on January 27, 2011, under a joint-venture agreement for MVR 14.9 million.

After this and on October 30, 2011, the project scope was revised and subsequently the subcontract value was bumped from MVR 14.9 million to MVR 21.1 million.

The government later on March 10, 2013, repudiated its Works Corporation-UMET joint venture agreement.

The auditor general’s report revealed that the Economic Council established during former President Ibrahim Mohamed Solih’s administration in April 2023, decided to award damages to UMET Construction owing to the contractual termination.

The report further noted that while the actual damages awarded stood at MVR 2.8 million, the Economic Council decided to award a total of MVR 26 million, which was an additional MVR 23.2 million from the actual compensatory amount.

The audit report also noted that the compensation was awarded to UMET despite the courts held there were no legal grounds to award damages. Civil Court, in the same matter, had only ordered for the settlement of an outstanding MVR 13.4 million, but the decision was overturned by the High Court citing that a settlement cannot be award since the contract was not unlawfully repudiated. The first appellate court also held that the claimant failed to prove the outstanding amount was money owed for work completed.

The case was appealed at the Supreme Court, which upheld High Court’s decision but reverted the first appellate court’s decision to overturn Civil Court’s order.

The audit report highlighted that the decision of the apex court was not factored in when the state awarded the compensation to UMET.

The report further recommended claiming the additional MVR 23.2 million and take necessary action against any culpable parties for misuse of state funds in extending unscrupulous benefits.