Ambassador to EU illegally paid US$17,000 as allowance in 2011, reveals audit report

The former Maldives Ambassador to the European Union (EU) was paid US$17,000 as a special allowance from September to December 2011 in violation of regulations governing allowances and benefits for employees at diplomatic missions, auditors have revealed.

The audit (Dhivehi) of the Foreign Ministry for 2011 has found that the Maldives embassy in the EU was instructed by Foreign Minister Ahmed Naseem in August 2011 to pay former ambassador Ali Hussain Didi US$3,500 a month as a ‘special representational grant.’

As the allowance was not given to other ambassadors, Auditor General Niyaz Ibrahim recommended recovering the funds from the responsible officials.

The report noted that allowances and benefits for staff at overseas diplomatic missions were specified in regulations enacted by the President’s Office and that the foreign minister did not have the power to authorise such payments.

Auditors also discovered that the former ambassador withdrew the US$3,500 allowance twice in October 2011.

Additionally, €7,566 was deposited to the ambassador’s bank account as a representational grant.

The regulations state that representational grants should be provided as reimbursement once bills of expenses incurred in the performance of diplomatic duties are submitted, the report explained.

However, the report noted that the ambassador did not submit bills for €7,566 worth of expenses.

Former ambassador Didi resigned from the post in July 2012 after 32 years of service.

The audit report also flagged discrepancies between the Foreign Ministry’s annual financial statement and its general ledger at the Finance Ministry, which were not reconciled.

While MVR145 million (US$9 million) was included in the general ledger as bilateral grants, officials at the ministry informed auditors that they were unaware of the inclusion.

Auditors discovered that the Finance Ministry transferred MVR138 million (US$8.9 million) of the grant aid to various state institutions, leaving MVR6.4 million (US$415,045) unaccounted for.

Other cases

The auditor general recommended an investigation by the Anti-Corruption Commission into the hiring of a British national as a senior advisor at the Maldives mission to the EU in March 2010.

Auditors discovered that two employment contracts were signed with the advisor in March 2010 by the foreign minister and state minister respectively, noting that auditors could not confirm which of the two agreements was valid.

While the agreement signed by the foreign minister stipulated that the advisor must be given six months notice before termination of the contract, the agreement signed by the state minister stipulated a four month notice period.

The advisor was paid €25,992 as salary and health insurance for six months when the contract was terminated in June 2011.

Among other cases flagged in the report, auditors found that MVR52,122 (US$3,380) was spent on business class plane tickets for the deputy high commissioner to the UK and his wife to travel to the Maldives in late 2011 in violation of the regulations, which state that only the high commissioner could travel on business class.

A total of MVR64,080 (US$4,155) was meanwhile spent in 2011 to celebrate the ministry’s 78th anniversary in violation of regulations.

The report also noted that the state-owned residence in London – Rosemont Avenue number 10 – had fallen into disrepair as a result of poor maintenance.

While the residence was transferred under the care of the Education Ministry in mid-2011, the report noted that it was not fit for use.

The audit report further revealed that the Maldivian Ambassador to Saudi Arabia as well as the embassy’s counsellor were paid allowances for periods when the pair were away on official trips and vacations.

As 13,957 Saudi riyals and 11,568 Saudi riyals respectively should have been deducted from the allowances in accordance with the regulations, the auditor general recommended recovering the money either from the pair or the officials at the Foreign Ministry responsible for the oversight.

The auditor general also recommended recovering MVR137,676 (US$8,928) spent out of the ministry’s budget to pay mobile phone bills for the foreign minister in 2011 as a phone allowance for ministers had not been approved by parliament.

Moreover, MVR192,416 (US$12,478) was spent to settle mobile phone bills of foreign ministry staff in violation of rules set by the Finance Ministry and Civil Service Commission.

The ministry’s audit report for 2010 had revealed that MVR235,001 (US$15,240) was spent to pay the minister’s phone bills.


Transport Minister requests audits of commercial harbours following fatal accident

The Minister of Transport Ameen Ibrahim has requested audits of the infrastructure and operations of all commercial harbours in the Maldives, following the  fatal accident at Malé’s main port on Monday (April 7).

According to local media, Ameen sent a memo requesting to conduct audits of all commercial harbours in the country within three months, and to take measures without delay to address issues based on recommendations in the audit reports.

The minister also asked Transport Authority to carry out a thorough investigation of the accident and send the investigation report as soon as possible.

Last night (April 8) Vice President Dr Mohamed Jameel Ahmed met with the families of the two men who died in the accident.

The government has decided to pay the salaries of the deceased to their families until the children turn 18, as well as giving MVR 50,000 to each of the families as compensation.


“Poor financial record keeping” poses challenges to audit state enterprises: AG

The Auditor General Niyaz Ibrahim has expressed concern over poor record keeping at State Owned Enterprises (SOEs), and said the public is entitled to know how much the state makes from an enterprise it owns or if the enterprise is making a profit or loss.

Speaking to Minivan News today, Niyaz said the independent audit office faces severe challenges in auditing SOEs, especially those in which the state is a minority share holder.

In some cases, even when a company is liquidated, there are no financial statements or audits, he said.

“As you know, there are over 80 companies in which the government owns shares, including minority share holding enterprises. While we don’t have adequate legal authority to appoint external auditors to the companies in which the state is a minority share-holder, the Audit Act allows us to do so with majority State-owned enterprises,” Niyaz explained.

It was the norm of the board of directors to appoint an external auditor, inhibiting the auditor’s work as they are bound to follow instructions from and report to the company’s board. However. starting in 2011 the Auditor General’s Office (AGO) has begun appointing external auditors to SOEs, thereby giving auditors more protection and independence.

The AGO will have auditors at all SOE’s except for Island Aviation for the 2013 accounts, Niyaz said.

Annual audits

The Company Act mandates audits be conducted annually, however there is no way to see how many SOEs are faring as they do not even produce financial statements, Niyaz said.

“Many of the companies which have been formed recently are in this very poor state of financial record keeping,” he continued. Even while some of these companies are now to be liquidated, there is no record of financial statements, nor has there been any audits. This is state resources we are speaking of. The people have a right to know what is being done with this money. Usually, public listed companies get more attention as they sell shares to people. How we see it, though, is that every citizen has ownership of state enterprises, and thereby public interest is much higher in such companies,” he said.

SOE’s must be far more transparent and accountable than listed companies, Niyaz stressed

The AGO has now commenced work on preparing a report documenting the status of all SOEs, he added.

“The public is entitled to get the basic information as to how much the state makes from an enterprise it owns, whether the enterprise is making profit or loss, whether it is accountable and transparent.”

Unexplained share-holding

Niyaz said there were many unexplained cases where the state owned minority shares, especially in the tourism industry.

“There is room to suspect that the legal provision within tourism laws of special provisions in the assignment of islands for tourism sector if the state owns some shares of the company or island is being abused,” Niyaz alleged.

Challenges in auditing state enterprises

Niyaz said that the Auditor General’s office has a practice of submitting a detailed work plan of all programs planned for the upcoming year with their budget proposal, and that the special audit of state-owned enterprises has not been included in the submitted proposal.

He said that his office will need to find means to fund the process in other ways, as plans for this were made after the budget proposal had already been submitted in late October.

Niyaz further noted the lack of cooperation extended to external auditors from the management and board of some state owned companies.

“Jobs for politicians”

The management of SOEs need to be strengthened, especially that of the board of directors, Niyaz said. SOEs must not be formed to create jobs for politicians, Niyaz said.

“As evident, if the top management of a company, enterprise or even an institution keeps being changed every now and then, it proves to be a strategical loss to that entity. Each of these management will have plans for its development, but if this keeps changing frequently, there will be no stability there. Therefore, there really needs to be a change in how the state runs the enterprises it holds shares in or owns,” he continued.

The state must end the appointment of individuals to management level jobs at SOEs on the basis of their political affiliation, Niyaz said.

“Even the board must consist of financially literate people who understand what it means to run a business, if the company’s governance is to be improved. I will give you an example of the level some current board members have, and this doesn’t change no matter which government is in place. A team from my office met with a company’s board members recently, after multiple attempts to meet them previously. For purposes of auditing, they asked the board for the financial statement. Members of the board then said at my staff members, ‘who do you think you are to come here and question us? We don’t have to give you any financial statements’ and then threatened to throw them out of a window. This is the calibre of some appointees to the boards of state enterprises. It is way beyond their authority to speak in that manner to a team of auditors who are their to fulfill legally stipulated duties,” Niyaz said.

Parliament initiative to run audits

Parliament’s Public Accounts Committee Chair Abdulla Jabir told Minivan News today that the committee has rescheduled the initial debate on the matter from Sunday to Tuesday, for which both the Auditor General and Attorney General Mohamed Anil will be summoned.

According to Jabir, the objectives of conducting a special audit are to have all state companies operating under a single holding company and to find a way to liquidate companies that fail to make profit.

Attorney General Mohamed Anil was not responding to calls at the time of press.


Public Accounts Committee considers conducting “special audit” of state companies

Parliament’s Public Accounts Committee is to deliberate on conducting “special audits” of all state share-owned public companies. The committee has scheduled debates on the matter for Sunday.

According to the Committee’s Chair Abdulla Jabir, the objectives are to have all state companies operating under the same umbrella group and to find means of liquidating companies that fail to make profit.

“We proposed the audit to bring down costs and strengthen the management of public companies. Members of the committee believe that the audit should study company performances in the past five years,” Jabir is quoted as saying in local media.

“We will be looking into whether there is a feasible way of conducting a “special audit” of such companies. Today, state companies need to be restructured and rebranded. We want to liquidate all companies that do not make any profit, and to place all other companies under a holding company that will then be established,” he continued.

Public Accounts Committee has further decided to summon Auditor General Niyaz Ibrahim and Attorney General Mohamed Anil to Sunday’s meeting.


Funds for essential state projects “trapped” in parliament

Essential state projects are suffering from a lack of funds due to an excessive annual budget assigned for parliament, a 2011 audit report has revealed.

The audit report of the parliament states that MVR 35.4 million and MVR 20.7 million from the parliament budget was unused at the end of 2010 and 2009 respectively.

In 2010, MVR 89.2 million out of MVR 124.5 million was spent from the budget assigned for parliament.

The report states that: “Lack of proper studies in this regard results in money necessary for other state projects being trapped in the parliament.”

In 2009, only MVR 68.5 million out of MVR 241.6 million was spent from the budget assigned for parliament.

MVR 70.1 million and MVR 54.3 million went on the salaries of parliament employees in 2010 and 2009 respectively, and parliament travel expenses took up MVR 3.3 million and MVR 2.1 million in 2010 and 2009 respectively.

The parliament spent MVR 302,169 on phone bills, MVR 1.5 million on electricity, and MVR 3.8 million on insurance.

The audit report recommended the parliament to conduct proper studies, and determine planned activities when preparing the budget.


STO, BML and MTDC fined over financial statements

The Capital Market Development Authority (CMDA) has fined three public companies including the Bank of Maldives (BML), State Trading Organisation (STO) and the Maldives Tourism Development Corporation up to Rf120,000 (US$7782) for failing to publish quarterly reports and financial statements.

According to the CMDA, companies – including BML, STO and MTDC – listed under under the Securities (Continuing Disclosure Obligations of Issuers) Regulations must produce a quarterly report after every three months, within the following 30 days.

However, CMDA noted that both STO and MTDC had failed to produce first quarterly report for 2012 within the given 30 day period and therefore each company was fined upto Rf30,000 (US$2000).

Meanwhile, MTDC and the BML were each fined up to Rf30,000 for failing to publish annual financial statements as stipulated under the regulations. The statistics must be published within four months after the end of a financial year.

The companies had requested for deadline extension citing difficulties in producing the report within the given time frame, CMDA said. However the extension was not granted as the reasons provided were not acceptable, the authority claimed.

All the companies have been instructed to publish the reports by May 15.

BML was fined up to Rf10,000 (US$648) in January, after the bank failed to publish the quarterly report for the last three months of 2011 before the requested due date.

The bank said at the time that the report was delayed due to a pending audit.

“The fourth quarterly report requires more work as it must be published with annual figures that must be audited prior to publication,” BML said.


Tiny Hearts raises US$46,437 for CHD efforts, announces audit plans

A month-long fundraising campaign by local NGO Tiny Hearts has raised Rf594,394 (US$46,437) to aid its efforts in working with children suffering from Congenital Heart Defects (CHD).

At a press conference earlier today, the charity said that the money raised from ‘11708’ campaign – which culminated in last weekend’s ultimately unsuccessful attempt to try and gather 11,708 people in the shape of a giant heart – would be divided and allocated to recipients affected by CHD on the basis of the NGO’s advisory committee.

Along with raising the funding, the NGO has also pledged to undertake an audit over the next few months with a full report to be unveiled at Tiny Heart’s next annual general assembly.

Earlier this week, a spokesperson for the NGO said the charity was not presently planning to renew its attempts to break into the record books, but rather focusing on fundraising measures.

“Right now, we are trying to minimise costs in looking for events for funding,” the spokesperson said. “At present one surgery [for a local child] costs US$5,000, this does not include additional charges for transportation abroad. People affected by CHD are increasing all the time in a country. We have more than 200 children registered with the charity and there are likely to be an even larger number unregistered.”


Fees paid “in full and complete compliance with the concession agreement”: GMR

GMR Male International Airport (GMIAL) today sought to clarify the payment of the airport service charges, fuel re-export royalty and concession fees to the government, following reports in newspaper Haveeru that it was undergoing a tax audit due to “inconsistencies”.

Commissioner General of Taxation Yazeed Mohamed was reported in Haveeru as saying that the Maldives Inland Revenue Authority (MIRA) was conducting an audit of the payments as “we looked into the speculations and found that there are some issues with the amounts paid.”

Yesterday, Haveeru reported the Managing Director of the Maldives Airports Company Limited (MACL) Mohamed Ibrahim as saying that the concession fee GMR had paid was US$2.6 million less than predicted.

“The payment was made in the first week of this month. We have informed the company that the amount does not match our estimations. The Finance Ministry has also informed the company that the actual amount would be more than that,” Ibrahim was reported as saying.

GMIAL issued a statement today claiming that concession fees up until March 31 had been paid “in full and complete compliance with the concession agreement.”

“MACL had certain observations to which GMIAL responded on April 11. MACL has not approached GMIAL with any further comments on the issue,” the statement read.

GMIAL further claimed the airport service charge was collected from airlines on behalf of the government until March 31 and paid to the MIRA on April 24, while the fuel re-export royalty was paid to MIRA on April 24 “as per the terms of the fuel re-export agreement.”

“GMIAL has not received any official communication from MIRA, other than acknowledgement of receipt, in relation to the above,” the statement concluded.

Speaking to Minivan News today, MIRA’s Director of Assessment and Audit Aiman Ibrahim said that the audit was “routine, as conducted for all tax types” and that the only inconsistency was that the airport service charge payment “was lower than our forecast.”

“Our forecast for the first three months, based on arrival and departures and factored into our 2011 budget, was that the airport service charge revenue would be US$4 million. The payment for November 25 to March 31 was US$3.9 million, so either there has been an underpayment or our forecasts were optimistic,” Ibrahim said.

The confusion was complicated, he said, “by an administration failure on behalf of the government. The Ministry of Finance was not aware it was supposed to be receiving the money. There is also conflict in the concession agreement: the agreement itself states that the [airport service charge] is to be paid monthly, but an annex in the agreement says payments are to be made on a quarterly basis. GMR had been keeping the money in a separate bank account.”

MIRA had not formally notified GMIAL that it was being audited, he said, as it was a routine audit and no notification was required unless further documentation from GMIAL was required.

GMR had met with MIRA today, Rasheed added, “and were very cooperative. They were concerned about the negative publicity.”

Indian infrastructure giant GMR, in consortium with Malaysia Airports Holdings Berhad (MAHB), last year won a bid to develop and manage Male’ International Airport under a 25 year concession agreement which includes a spend of almost US$400 million on a new terminal.

Under the agreement the consortium paid the government US$78 million upfront, and will pay one percent of its profits and 15 percent of fuel trade revenue until 2014. From 2015 it will pay the government 10 percent of airport profits and 27 percent of the fuel trade until 2035.

The agreement has been a major point of contention with the political opposition in the Maldives, which opposed it on nationalistic grounds.