KUALA LUMPUR, July 14 — A company owned by the Maldives government has said it would comply with an adjudicator’s decision that ordered it to pay more than US$22 million (RM93.8 million) owed to Malaysian contractor WZR Property Sdn Bhd.
Maldives state-owned Housing Development Corporation (HDC) also said it would be seeking the Maldives government’s finance ministry’s aid to resolve the issue.
“HDC honors the adjudicator’s decision and will be moving forward to settle the payment amounts concluded by the adjudicator.
“Furthermore, HDC is acquiring the assistance of the Ministry of Finance and other relevant authorities to resolve the matter in the most viable manner,” it said in a statement dated July 12 on its website.
Earlier in the statement, HDC said that the Maldives’ Ministry of Finance had on March 1, 2016 signed a contract with Malaysian contractor WZR for the construction of a 25-storey office building in Maldives capital Malé.
But following the previous Maldives government’s decision to relocate the project to the reclaimed island Hulhumalé, a new contract called a novation agreement was signed between HDC and WZR on March 7, 2017 with the contract transferring all contractual obligations to HDC, the statement said.
HDC said that the impromptu transfer of the project which was outside the scope of its business plan meant that the necessary capital for the project was not arranged then, adding that this comprised the viability of the project for HDC with the project cost included as an additional loan to its balance sheet.
HDC said WZR had — after signing the novation agreement in 2017 — issued an invoice to claim for payment for construction work done, noting however that HDC had disputed the figure payable after a site survey of the project.
“Following this dispute, a payment claim was made to the adjudication by the contractor which was later settled among both parties with a ruling of a reduction in the payment claim,” it said, before concluding by saying it would honour the adjudicator’s decision.
As part of the process to seek payment from HDC after the Maldives firm ran into difficulties in securing financing for the project, WZR had in September 2019 asked the Asian International Arbitration Centre (AIAC) to appoint an adjudicator to settle the dispute.
On July 5, the AIAC’s adjudicator John Wright ruled in favour of WZR, saying that the Malaysian company was entitled to seek payment from HDC for the sums due under the May 2018 invoice, while also noting that HDC could not avoid paying WZR for works done as the Malaysian firm had fulfilled its contractual obligations.
Among other things, the adjudicator ordered HDC to pay US$22,823,432.68 (or RM97.36 million by today’s exchange rates) to WZR within seven days of the July 5 decision.
The adjudicator also ordered HDC to pay within seven days to WZR the interest at a rate of 6.5 per cent per annum for several different sums based on different periods, namely interest on US$19,461,805 (December 1, 2018 to October 28, 2019), US$16,461,805 (October 29, 2019 to March 31, 2020) and US$22,823,432.68 (April 1, 2020 to the date of payment).
WZR executive director Wan Nadzir Wan Mohamad had previously told Malay Mail that the company will be seeking help from Wisma Putra as well as Foreign Minister Datuk Seri Hishammuddin Hussein to ensure that the company is paid by the Maldives state-owned company, in line with the July 5 adjudication decision.
Wan Nadzir had also confirmed that the Malaysian company WZR had stopped work on the project since it started pursuing the resolution of the payment dispute at the AIAC last year, but also confirmed that the Maldives government has not cancelled the project.
Previously, HDC was reported to have said in a July 8 statement that it was not feasible to terminate the project, and that it was seeking a way to continue with the project and to obtain financing for it.