Auditor General report claims Heavy Load project violated state finance regulation

The Auditor General has published an audit report on the Kumundhoo Harbor Project that was contracted to Maldivian Democratic Party (MDP) Chairperson ‘Reeko’ Moosa Manik’s Heavy Load company by the Housing Ministry.

The Auditor General in his report noted that the work was assigned to Heavy Load in violation of article 8.25 of the State Finance Regulation.

‘’Article 8.25 of the Finance Regulation states that any work that costs more than Rf1.5 million (US$100,000) should be assigned to a party by the Tender Evaluation Board in an open bid, and that the interested parties should submit details of the work,’’ Auditor General said in the report. ‘’But the Kumundhoo Harbor Project was not assigned to the party accordingly.’’

According to the report, the project that was supposed to be finished in six months was finished in 31 months, and the government had to pay Rf 22.2 Million for a project originally budgeted at Rf 10.3 million project.

The project was assigned to Heavy Load on 21 November 2007, but the physical work of the project was started on 10 March 2008, according to the audit report.

While the project was going on, Heavy Load reported to the government that there were hard areas that excavators could not dig and the work came to a halt. The ministry then inspected the area and found that the area required explosives to continue the project.

‘’It is to be noted that hard areas can be identified with a diving inspection and that this type of inspection was not done before the work started,’’ the Auditor General said in the report.

The Auditor General’s report said that Rf 4.7 million (US$307,000) was paid to Heavy Load for the days they had to wait without work in return for keeping their equipment and staff on the island, adding that all the days that the party was paid for ‘Idle Time’ could not be considered as such because there was other work the contractor could have been completing.

Heavy Load was paid different rates for the time the company had to wait without work, the Auditor General’s report said. The ministry’s determined rate was Rf23845.77 based on the total amount of the project.

‘’But for the 49 days the contractor had to wait without work from 12 June 2008 to 30 July 2008, Heavy Load was paid Rf27,197.80 per day and for the days between 19 September 2008 and 18 October 2008 the contractor was paid Rf24,299.33,’’ the Audit Report said, adding that the contractor received extra Rf 177,856.17 in total.

The Auditor General also noted that the contractor was given an extra 195 days to complete the project after failing to complete it by the original due date, but after the 195 days only 45 percent of the work was completed.

According to the ‘Appendix to Tender’ agreement made between the ministry and contractor, if the contractor failed to complete the project in the time allocated, the contractor was to be fined 0.1 percent of the total cost of the project for each day.

‘’But after the contractor failed to finish the project, it was given extra five months without any fines,’’ the Audit Report noted. ‘’While the government had paid the contractor Rf 4.7 Million to recover any losses contractor might suffer for idle time, the contractor was not fined for the days the project was delayed due to the contractor’s negligence. The government had not cited the loss for the government and islanders of Kumundhoo, and all the benefit was given to the contractor.’’

The Auditor General also noted that an advance payment was paid to the contractor in violation to the Finance Regulation.

‘’The Finance Regulation article 8.23 states that the highest amount that can be paid in advance is 15 percent of the total cost of the project, but the contractor was paid Rf 5 Million which is 38 percent of the total cost of the project,’’ the Audit Report noted.

The Auditor General’s report said that the Auditor General’s Office did not receive the ‘Defects Liabilities Inspection Report’ done by the ministry.

The contractor was told many times to correct issues and not to continue work without correcting them, but the contractor had not acted as instructed and finished the harbor and handed it to the ministry, and the ministry had fully paid the contractor, the Auditor General noted.

The report also noted that the harbor was completed with a lot of faults, and that huge damages had been caused to some boats that had entered the harbor.

Minivan News attempted to contact Reeko Moosa for comment, but his phone was switched off at time of press.

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