The Maldives Road Development Corporation (MRDC) purchased material worth MVR2.2 million (US$142,671) without a bidding process, the 2011 audit report (Dhivehi) of the 100 percent government-owned company made public last week has revealed.
Noting that the MRDC has not formulated procurement rules to date, Auditor General Niyaz Ibrahim recommended drafting regulations in consultation with the Finance Ministry within a period of one month.
“As a large amount of the company’s money had been spent for various purpose without establishing sound rules, and as we believe the company’s board members have been negligent in carrying out their responsibility of protecting the company’s resources, action should be taken against [the board members] to hold them accountable,” the auditor general recommended.
The MRDC was formed in August 2010 by the administration of former President Mohamed Nasheed to facilitate road construction under a sustainable business model.
As the company failed to compile its financial statement for 2011, the audit was based on a review of a sample of the MRDC’s business transactions as well as “problems related to performance and governance.”
In the absence of the financial statement, the report stated that the auditor general’s office was unable to assess the company’s financial health, assets, and the results achieved during the year.
The report further noted the lack of a mechanism to collect information required to compile the financial statement, adding that “basic documentation” of business transactions was not properly maintained.
The audit office recommended legal action against the officials responsible for failing to submit the financial statement for auditing as mandated by the company’s charter and the Company’s Act.
Moreover, as the MRDC had not maintained an updated registry of its assets, the report stated that auditors could not verify whether all assets purchased for the company’s purposes remained in its inventory.
The absence of an updated registry leaves open the opportunity to sell off the MRDC’s assets, the report noted.
The auditor general also recommended establishing a sound accounting system to record daily financial transactions.
While MVR175,039 (US$11,351) was spent in 2011 as overtime payments for staff, the report noted that auditors could not verify whether the payments were made for services received.
Moreover, upon scrutinising available financial records, auditors discovered that bills and invoices of materials sold by MRDC did not include purchase orders from customers while quotations sent to businesses were not authorised by senior officials.
The MRDC audit came on the heels of a damning report on the Works Corporations, which concluded that the government-owned corporation was mismanaged and had not served its purpose.
Of the 34 infrastructure projects awarded to the company, the report noted that only one had been completed.
Meanwhile, the audit report of the state-owned Waste Management Company released in December revealed that a board member had embezzled MVR610,000 (US$ 39,354) by doctoring cheques.
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