A large portion of the national budget had been “managed through the cash flow” of the State Trading Organisation (STO), the Auditor General’s Office has said, revealing the state-owned enterprise is owed MVR 1.45 billion (US$94 million) in overdue bills from government companies and state institutions.
In his professional opinion (Dhivehi) on the proposed 2013 budget submitted to parliament’s Budget Review Committee and made public this week, Auditor General Niyaz Ibrahim stated that the “state’s cash flow was being managed through STO”.
“This shows that state expenditure is managed outside of the state budget, that this is an ‘off balance sheet’ finance arrangement and that the actual deficit will be much higher than stated in the state budget,” the Auditor General’s report to parliament stated.
The Auditor General stated that the practice was “worrying” and recommended changes to current treasury management “to put an end to depending on a government-owned company to manage the state’s cash flow.”
STO is a public company with an 81.6 percent stake owned by the government. The company was set up in 1964 to import and supply staple foodstuffs and fuel at controlled prices.
In its report to parliament, the Auditor General’s Office revealed that STO was owed MVR 398 million (US$25.8 million) in overdue payments from state institutions and government companies for goods released on credit.
Of the outstanding amount for items purchased on credit, the Finance Ministry owed MVR 388.1 million (US$25.1 million), according to the findings.
In addition, the Male’ Health Corporation (MHC) owes MVR99.4 million (US$6.4 million), Gan Airport Company owes MVR 61.8 million (US$4 million), Southern Utilities Ltd owes MVR 75.6 million (US$4.9 million), the State Electricity Company (STELCO) owes MVR 53 million (US$3.4 million) and the Works Corporation owes MVR 10.1 million (US$654,993).
Moreover, Fuel Supply Maldives, a subsidiary of STO, was owed MVR 186.2 million (US$12 million) for oil released on credit, mainly from government utility companies, the report added.
As a consequence, STO was owed a total of MVR 1.45 billion (US$94 million) in overdue bills, including outstanding bills worth MVR 289 million (US$18 million) from 2011 and MVR 8.2 million (US$531,776) from 2010 and earlier.
A total of MVR 1.15 billion (US$74 million) is owed to STO from overdue bills in 2012, according to a statement shared by the Finance Ministry showing STO’s receivables.
The government’s health insurance company ‘Aasandha’ meanwhile owed STO MVR 18 million (US$1.1 million) in overdue bills, the report noted.
The figures also showed that state institutions and government companies were “heavily dependent on STO’s working capital” to function.
“And as a result of not receiving millions of rufiyaa owed to STO from the state, STO has not paid any dividends to the Ministry of Finance and Treasury since 2009,” the Auditor General revealed.
In November 2011, the government sold five plots of land measuring 87,155.2 square feet to STO for MVR 522.9 million (US$33.9 million) and deducted the amount from monies owed to STO.
“This was carried out by the Ministry of Finance and Treasury following deliberations by the cabinet and based on the advice of the cabinet,” the Auditor General noted.
The Auditor General contended that the sale was in violation of amendments brought to the Public Finance Act in 2010, which stipulated that state assets and property must be sold in accordance with a law passed by parliament.
The plots were sold to STO in the absence of a law governing the sale of state properties.
“Therefore, we note that it is important to further investigate how this transpired and that the Ministry of Finance and Treasury’s plans to settle payments owed to STO from the government must be clarified before the budget is passed,” the Auditor General recommended.
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The majority is due because of the illicit paper companies and cooperations Nasheed's administrations made to waste the government budget to take their copper of corrupt deals.
still this will be blamed to the current government.
Anni was never a good leader and he was always a good activist and need to remain as an activitist.
This guy does not have any knowledge of economics and he does not know and want to listen to the people who know economy and his arrogance has ruined his political life.
But he also smart in robbing and giving money to his friends and associates where he get the money to his accounts in directly.
To be added :
$800 MILLION oil money robbed by Gayoom;
$147 Millions for palace of Gayoom
$3.2 Million spent on gold for family Gayoom;
$300 million take by coup govt through BML.
$73 million loans to Thasmeen and family
$800 million to be paid to GMR
$125 million to be paid Malaysia for GMR
$235 tax waive to resort owners
200 million to Anni
100 million to Razi
150 million to zaki
650 million to MDP anni loyalist
100 million Tax waived to Anni family member run resorts
What about the rents due to the STATE from the several prime real estate plots in Male' and other islands.(eg. STO super market building, STO Home improvement,FSM filling stations,various go-downs and STO head office)
The island of Funadu alone is worth ($$$ millions) if the fuel storage can be changed to Hulhu-Male' and a five star resort developed on Funadu.(what a waste!!!)
Also take into consideration the monopoly enjoyed by STO on essential drugs and medical supplies. The private sector would benefit if this monopoly can be abolished.