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News National News Shangri-la Used Front Company To Rig Male' Hotel Bid | Shangri-la Used Front Company To Rig Male' Hotel Bid |
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Handiwork Investment Limited, the company initially awarded the contract to build Malé’s luxury hotel, was a front company used to ensure Shangri-la Maldives won the lucrative deal at the lowest possible cost, Minivan News can reveal. Shangri-la and Handiwork, both subsidiaries of the Kouk Company, offered the Government $5 million and $8 million advance rent respectively to build the hotel. When no other companies tendered for the project, Handiwork withdrew its bid, to allow Shangri-la to win the contract at the massively reduced price. Tourism Minister Dr Shaugee has denied he knew the two companies were linked, but said it would “not be unusual” practice. Two Companies, One Owner The Government announced plans to develop a luxury hotel in Malé on 24 August. The tendering process was opened two days later, and closed on 16 September. Shangri-la and Handiwork were the only two bidders. Last week the Government offered Handiwork the contract at $8,200 per bed per year. But yesterday the Tourism Ministry announced the contract had been handed to Shangri-la at only $5,100 per bed, after Handiwork pulled out of the deal. Handiwork rejected the contract because the Government had reduced the plot of land available for the hotel, Tourism Ministry official Mohamed Waheed said today. But Shangri-la Maldives' General Manager admitted to Minivan News Handiwork is actually owned by Shangri-law's parent company, Kouk. Two separate bids were submitted to "increase the odds of success," Moesker Jens said. "We were unaware originally there would be no other bidders. When that became obvious, we decided Handiwork would step aside, allowing Shangri-la Maldives to take up the contract." Tourism Minister Mahmood Shaugee said he was not aware the two companies were linked, but said it would "not be unusual,” if they are. Tourism industry insiders confirmed companies regularly register second bids for Maldives Government contracts in the name of phantom companies established only for that purpose. Rogue Company? There is no evidence that Handiwork is a functioning construction company with the ability to build a 500 bed hotel. The Handiwork office is registered in British Virgin Islands, according to Jens. But he did not have their contact details, and could not name any previous development projects. Shangri-la Asia PR Director Elizabeth Demonte said she had "never heard" of Handiwork. A Minivan News reporter who scoured the internet for Handiwork did find a floor-lamp exporter, a China-based glass apple exporter, and a company that promises beanbags and "plush toys," but no construction company. In August Tourism industry lobby, MATI, criticised the Government for awarding resort and hotel contracts to companies without any proof of finance or ability to construct. But Tourism Minister Shaugee said today he is not concerned about rogue bidders undermining bid transparency. “All that is important is that companies are legitimately registered," he told Minivan News. Revenue Raising The Government decision to build a hotel on one of the last remaining open spaces in Malé, the most crowded city in the world, has been condemned by many local residents. A luxury hotel for the capital has been floated for several years, but the August tender came out of the blue, surprising even Government insiders. Several senior officials opposed to the hotel development told Minivan News the snap decision was taken to inject much needed foreign currency into the country’s depleted public finances. The Government took a $30 million dollar commercial loan from HSBC last month. It is expected to go back to international markets to raise up to $100 million before the year end, as construction delays scuppered budgeted revenue from the lease of regional airports and resorts. Shangri-La Maldives is required to give the Government US$ 5 million dollars advance rental within seven days. The company is far behind schedule on its only other contract with the Maldives Government to build a resort on Addu atoll Villingili, which was awarded in 2005.
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