Creation of Maldivian Tourism Development Corporation (MDTC) is supposed to be the ‘Great Leap’ of our economy. With government been so generous with its offers and public been so eager for the industry shares, even the sky should be no limit in this tourist heaven. However, it seems that the giant has already lost its direction and is way away from its right track. The ‘savior of the poor’, as politicians sounded like, seems to follow a contradictory approach. There are many questions that are looming around and the top executives have so far failed to provide reasonable explanations.
If MTDC’s formation has anything to do with providing investment opportunities for the poor, I believe, this has been crooked right from the beginning. I will take few points to justify my view:
1. The first and far most objective of the corporation as stated in its website is to “meet the need for a profitable company in which the general public could invest and share in the rewards of the fastest growing sector of the economy.”
This statement seems to emphasize the company’s goal as to provide investment opportunity for the poor. However let’s see what the company’s Memorandum of Association says about the objectives of the corporation (Extract- 1).
Surprisingly, there is no mention of the interest of the poor or the general public anywhere within the objectives in the Memorandum of Association. Not even once.
So what’s that all fuss in the media; in the state TV, radio and all controlled newspapers? Where in the company are the promises of the government ministers? Isn’t it too lame not to find a single ingredient for the taste of poor in this broth? As per me, I get it. That’s how they cook their books. MTDC’s legal documents are designed not to be in conflict with the elite. This is the starting point of the political stunt. Common people would hardly understand the far reaching consequences of the corporation’s objectives set in its memorandum. They lack the required knowledge. They would rather believe in the figments of top government authorities. On the other hand, rich individuals who are fully equipped with the knowledge and experience in the area can figure out these consequences and play the moves in their heads beforehand. This is exactly the application of game theory as James D. Miller calls it. In our case, the result is astonishing. Government authorities and people behind the project achieve full support from both parties. Common people are manipulated in the open while the rich are reached underneath with secret notations. Resistance is fully eliminated.
2. The reinforcement for the above point is very clear when MTDC do not have a clause restricting the maximum number of shares a single person can hold in the company. Ibra’s attempt in the parliament to draw such a clause has been kicked out.
Neverthless, the pressure built up due to the cunning deals of some individuals to acquire large amounts of share capital. They tried to circumvent the share offer which put maximum amount of shares an individual can purchase (Only a restriction in the share offer; not a restriction to hold any number of shares). The people behind these schemes nearly got away with their shares. It was the pelting criticism from the public that the executives could not withstand. At last, they gave away.
But it should be born in our minds that the company’s Articles of Association does not still restrict the amount of shares a single person can hold. It’s a temporary lock open to manipulation. (Look at the extract of the Articles of Association in Extract- 2).What will happen when the secondary markets are open is really hard to predict.
3. MTDC has taken little interest to market its shares to the general public. In a place where equity market is in its infant stage and private saving is so low, people would understandably need more time and information. In the first round, there was hardly any time given for the lower income earners. Second round, I would say, gave sometime. Still the whole process was made quite tough for the people living in the islands and students studying overseas. A much simpler procedure would have resulted in a higher degree of response.
When the managing director was questioned whether the poor sales is a result of poor marketing, he gave (reported in Haveeru) the most bemusing answer. Nobody would expect such an answer from a top corporate executive with so much experience in the area. He held the view that marketing is not the best way to promote the shares in given circumstance and that everybody has to buy shares with full willingness. What does he mean? Is marketing forceful sales? I never knew that.
What I know is, if MTDC take less effort in marketing and spread fewer information of the benefit of its shares, poor common people’s purchase would be most affected. As discussed earlier, rich are equipped with the knowledge and would require little awareness.
4. MTDC seems to have a unique feature that is exclusive to the company. In all other companies, everywhere in the world, shareholders are the real owners of the company. The course of the company is always compatible with the interest of the shareholders and no third party can have the right to turmoil this, by electing Members of the Board. But MTDC is beyond this. It has been ten months since the company is incorporated and awarded the authority to commence trading. 1146137 shares have been sold to the general public, each carrying one vote right. However these rights are merely written down to fool the public. The shareholders are not yet given a chance to use their voting rights. Not to elect the Board, not in any other matter. So far so much strategic decisions are taken: a loan has been taken from BML, invitations sent and applications received to form joint ventures, etc. Plenty of these decisions are irreversible.
The core idea is not to give the general public shareholders the chance to steer the organization. The helm should always be with the few elites. So postpone the general meeting as far as possible, make the strategic decisions while the control lies. This is the strategy. (I’m glad that MTDC is hearing some warnings from CMD, though these warnings are a jumble of formal and informal.)
5. The hostile approach adopted by some executives towards a shareholder, who brought a legal case to stop the company going for the 51- 49 model, clearly illustrates how feeble is the vested interest to protect the shareholders. (Unfortunately, though the intention f the case was to stop the company going for 51 - 49 model, it was poorly constructed). Nazeeha brought a case clearly in the best interest of shareholders. Even a student with a slight knowledge of corporations would understand her motives. A decision, on which much of the future profits of the company depend, should never be left to third party not elected by shareholders. Article 73 (a) of the Maldivian Company Law states clearly that “A member of the company or members of the company may apply for a court order if a right of a member or members in adversely affected or if there is a prejudice to the harmony of the members or the affairs of the company is managed in a manner detrimental to right of a member or members or part of the members.”
Nevertheless, she was accused of trying to ruin the company which would bring prosperity to the general public. She was attacked and degraded in the public media by some executives (pardon me, but I have watched ‘insider’ very recently), before her case was rejected. I do not discuss the validity of the decision by the court but I ask why the executives showed so much rivalry towards the shareholder. If the decision to form the 51 - 49 model company is in the best interest of the shareholders, they should convince the shareholders through proper dialogue. Humiliating the shareholder who brought the case is something I cannot digest, unless of course MTDC has a higher stakeholder than its shareholders.
All the above reasons prevent me in believing that MTDC is a savior of the poor. I rather believe the corporation seeds disparity between the rich and the poor. They created a vehicle for the rich and elite. Top government authorities, of course, cracked a big political joke as they always do.
However I could be proved wrong!
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References:
Memorandum of Association, MTDC, p-1
Articles of Association, MTDC, section 37 (a) p-10
Maldives Companies Act, Ministry of Economic Development and Trade, section 73 (a): http://www.trademin.gov.mv/
Haveeru Online
