With additional reporting by Daniel Bosley and Ismail Humaam Hamid
Splitting the Maldives Industrial Fisheries Company Limited (MIFCO) into three competing companies was a “mistreatment of state resources”, says a report from the auditor general.
MIFCO was divided into three companies in 2010, with the introduction of Kooddoo Fisheries Maldives Limited and Felivaru Fisheries Maldives, before President Abdulla Yameen reversed the decision last year.
“Even after the split the main business of these three companies [MIFCO, Felivaru and Koodoo] was the buying and selling of fish which resulted in competition amongst each other,” the audit report read.
With regards to the financial impact of the move, the report’s figures suggest that the overall profits of the state-owned fisheries business was not significantly affected.
“After the split in 2010, MIFCO’s losses amounted to 4.1 million rufiyaa [US$265,888] in 2011 and 2012 and Felivaru Fisheries Maldives operated at a loss of 19.26 million rufiyaa [US$1.2 million],” the audit report read.
“However, Koodoo Fisheries had a profit of 88.8 million rufiyaa [US$5.7 million] in this period,” it continued.
Founded by the state in 1993 for the purposes of buying and selling fish, MIFCO had made a net accumulated loss of MVR317.4 before the split, while all three companies were seen to have a total profit of MVR65.4 million in 2011 and 2012.
The audit report said that numerous faults had occurred in the splitting of MIFCO, citing several mistakes made by the Ministry of Finance and Treasury.
“While not providing an alternative to conduct business [Finance Ministry demanded] MIFCO pay the entire overdraft, which amounts to 70.56 million rufiyaa. The National Planning Council had planned how to divide MIFCO’s fleets amongst the three companies, but the finance ministry did not follow,” the report stated.
The dividing of physical assets between the three companies was not carried out properly, resulting in financial losses and even the breaking down of some equipment, read the report.
Auditor General Hassan Ziyaath recommended that the transfer of physical assets between companies be done according to “accounting principles”, and that a more thorough analysis of the impact on stakeholders be made before any similar decisions in the future
Ziyath concluded by saying that the restructuring of a company’s physical assets should be accompanied by a report demonstrating the potential impact on state income.
Fish exports make up the 98 percent of the Maldives’ exports, of which MIFCO is the leading exporter.