The Auditor General’s report on government expenses for the 17th SAARC Summit held in Addu City and Fuvahmulah in 2010 has revealed several financial discrepancies including an overspend of more than MVR 430 million (US$27.9 million) on the event’s allocated budget.
According to the report (Dhivehi), former President Mohamed Nasheed’s government spent MVR 667,874,870.84 (US$ 43.3 million), on the summit – 188.82 percent more than the MVR 231,240,000 (US$14.99 million) budget passed by parliament.
The report was compiled through audits of expenditure by the Ministry of Housing, the Ministry of Foreign Affairs, the President’s Office and the Maldives National Defense Force (MNDF).
The report also made several recommendations including the recovery of money spent, as well as action against those found responsible for the expenses.
The release of the report comes at a time when former President Nasheed – who headed the Maldivian delegation at the summit – is campaigning for a second term in the upcoming 2013 election as the opposition Maldivian Democratic Party (MDP) presidential candidate.
More than a year after the summit, Nasheed was ousted from government in what his party described as a “bloodless coup d’état”, amid a mutiny by sections of the police and military. His controversial resignation followed weeks of anti-government protests that began in January 2012 after the detention of the Chief Judge of Criminal Court Abdulla Mohamed over allegations he posed a threat to national security.
Progressive Party of Maldives (PPM) presidential candidate Abdulla Yameen Abdul Gayoom condemned the financial discrepancies highlighted in the report, prior to its release.
“Until the end of March 2013, excluding the grant aid and projects, a sum of MVR 667,874,870.84 (US$43.3 million) was spent. This figure is MVR 436,634,870 (US$ 28.5 million) or 188.82 percent more than the budget passed by the parliament to conduct the SAARC summit. The figure that was passed by parliament was MVR 231,240,000. No parliamentary consent as required by Article 96(c) of the constitution was obtained in spending the sum,” read the Auditor General’s report.
Other discrepancies pointed out in the report included an additional MVR 61.8 million (US$4 million) being paid for the construction of the Equatorial Convention Centre built for the summit.
The report stated that the initial cost of the project proposed by the contractor Ameen Construction Private Limited stood at MVR 210.4 million (US$13.7 million). However, after negotiations and changes to the materials being used and the overall design of the structure, a figure of MVR 150 million (US$9.7 million) was agreed between the contractor and the Ministry of Housing and Environment.
“However, due to changes brought to the plan by the government, the cost of completing the convention centre stood at MVR 211,852,834.84 (US$13.8 million). [This was] MVR 61,852,834.84 (US$4 million) or 41 percent excess of the amount that was agreed,” the report claimed.
The report noted the cost, which was more than the initial proposition from contractor, resulted from failure in properly planning the project and frequent changes brought to the agreed design in a non ad-hoc manner.
Apart from the costs, due to a delay in depositing the advance guarantee, the government claimed that the SAARC Convention centre needed to be built as quickly as possible, an advance payment of MVR 30 million (US$ 1.9 million) was paid to the contractor. The report added that the advance guarantee, which included both the advance payment and performance guarantee, had not been deposited.
The advance payment of MVR 30 million was given by the government after converting the retention money taken from the same contractor on a different government contract as the payment guarantee of the convention centre project.
This conversion, the report said, could be perceived as an attempt by the government to financially support a specific party contravening existing laws, since other companies who had proposed their bid did not have any retention money owed by the government and could not therefore enjoy the same privileges.
The Auditor General’s findings said that the advance MVR 30 million payment was made in contrast to section 8.23 of Public Finance Regulation, which states that any such advance payment should not exceed 15 percent of total costs. The MVR 30 million advance stands at around 20 percent of the cost, the report added.
Other discrepancies highlighted in the report included financial losses incurred by the government, violations of Public Finance Act and Public Finance Regulation and wasteful spending.
Former ruling party MDP Spokesperson Hamid Abdul Ghafoor described the report as “naive” and “misguided political posturing”, while challenging its credibility.
“What we are saying is that after an audit report is released, the litigation based on the findings must begin as soon as possible. The longer time between the release of the report and start of litigation means such reports are open for political manipulation,” he said.
Ghafoor claimed that MDP came out to reform the country, which included fighting against corruption.
“It is not possible for the MDP-led government to be involved in blatant corruption. Because we came with a plan and strategy for reforms,” Ghafoor contended.
He also said that the public will judge the audit reports and will know how politically motivated the report is.
“Looking at perspective of development and progress, we see this report as just ‘petty accusations’. The report lacked due procedure, impartiality and transparency. It may have been possibly influenced by the political vibe in the country,” Ghafoor alleged.
Auditor General Niyaz Ibrahim meanwhile disputed in local media that the timing of the audit report before the election was political, stating that information contained in such reports was necessary for people to make informed decisions.