The Maldives' strongest financial pillar has been turned into a political tool for President Mohamed Muizzu. Never before in the 47-year-long history of the Bank of Maldives (BML) have we seen such "murky" scenes. It is now a political wing for Muizzu and was deliberately put on that risky path.
This opinion is backed by the fact that the army and police chief's accusation one year ago, that the Maldives' most powerful financial institution was trying to bring about a financial coup, was a baseless accusation.
The allegations of a financial coup began when the BML board of directors decided on August 21, 2024, to ban dollar transactions in Rufiyaa accounts. When the decision made headlines on August 24, 2024, Muizzu was unhappy and accused the bank of trying to bring about a financial coup. This was despite the government having a majority on the BML board.
A criminal investigation was launched into the case, accusing the bank of attempting to overthrow the regime. However, the accusation has turned out to be baseless, without a grain of truth to it, more than a year after police began investigations. Now, the investigation has become a taboo topic for the police.
After the financial coup allegation, the government changed the BML board. Former Managing Director Karl Stumke was pushed to resign for the sake of the bank's rights, reputation and dignity. He gave up the post to Mohamed Shareef.
Shareef was allegedly involved in depositing stolen state funds through the Maldives Marketing and Public Relations Corporation (MMPRC) to the bank during the regime of former President Abdulla Yameen from 2013 to 2018. He denies the allegations. The BML's current trajectory and how its name is being tarnished prove that Shareef likes to dance to the beats of political leaders.
Some of BML's decisions are now announced by the President of the Maldives, who seems to be acting as a spokesperson for the bank. It is not the duty or responsibility of the President to make decisions, announcements, open ATMs, or announce loan schemes for the bank. However, the political nature of BML's decisions and announcements seems to indicate that corporate governance has failed.
So far, BML has opened more than 200 ATMs. However, it has always been a corporate event for the bank to mark the inaugurations. The bank's Chairperson, MD, and senior officials do not attend these events. Neither is it a colourful affair that costs millions. That is, until Muizzu became President.
However, now, the President must be present at every single ATM opening. The President also announces the islands where the dollar ATMs will be opened. The bank's bright red colour fills President Muizzu's political trips to the islands.
BML is also fulfilling President Muizzu's presidential pledges. The recently announced content creator loans, housing loans with 5 percent equity and finance for the MVR 631 million project to build council offices are arranged through BML.
The case of the RCC being awarded the contract for the construction of the council buildings is now being probed by the anti-corruption watchdog.. It is a waste of people's money, a project at an inflated rate, funded through the national bank, because the government was unable to raise funds for development projects. Financing such a project is similar to participating in an act of corruption.
Content creator loans and housing loans at 5 percent equity are not financial relief. The bank announced the loans as the opposition party prepared to rally in Male' on October 3 due to economic hardships and deteriorating human rights situation in the country.
The fact of the matter is that both the content creators' loans and low-equity housing loans are a debt trap. Content creators get loans if they earn a monthly salary or regular income.
SME Bank, a subsidiary of BML, offered loans of MVR 150,000 without any collateral at 9.5 percent.
However, unsecured loans are offered at an interest rate of 15 percent to the bank's long-time loyal customers and those who deposit their income with BML.
This shows that BML's lending decisions are now based on politics, not sound financial principles. When loans are issued at special rates to certain people, it shows that BML's foundation as a bank of the people has been shaken for political purposes.
The bank fell to such lows because the BML board did not pay attention to the rules emphasised in the Corporate Governance Code. If loans are issued for political purposes, there is negligence on the part of the bank's board.
If BML operates for the needs of the President rather than the corporate interests of the bank, this means it is on a risky path. If this policy continues, the outcome will be dire. The national bank’s credibility will fade and erode.
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This article was first written in Dhivehi by Saaif Shiyad.
