Tag: audit report

Defence Ministry audit reveals MVR6.78 million worth unlawful purchases

The Ministry of Defence and National Security audit report for the year 2011 has revealed that the ministry unlawfully purchased goods worth MVR6.78 million through Maldives National Defence Force’s (MNDF) cooperative society SIFCO.

The report states that MVR4.7 million worth goods were purchased through SIFCO, contrary to article 8.14 of state finance regulation which states that goods and services below MVR25,000 should be purchased only after reviewing proposals from at least three interested parties, and with an official written justification for the choice made.

It also said MVR2 million worth goods were purchased against article 8.15 of the regulation, which states goods and services above MVR25,000 should be purchased through a publicly announced competitive bidding process.

The auditor general (AG) recommended action against responsible persons as per the Public Finance Act

The report also highlighted that MVR1,200,324 was paid to military personnel on leave, particularly to those studying overseas, against relevant rules and regulations.

Salary and allowances worth MVR344,299  was said to have been paid to a defense adviser posted at the Maldivian High Commission in India for days without any record of attending work.

The AG’s opinion given in the report said the ministry’s 2011 budget was not spent within the set limits set, nor was it spent to fulfill the given activities and objectives.

The AG also questioned the validity of financial statements declared by the ministry, stating that the “statement of liabilities” and “statement of assets” declared “does not truthfully reflect” the actual assets and liabilities of the ministry.

The ministry’s figures were MVR39.8 million as assets and MVR29.8 million as liabilities for the year 2011.

The document highlighted that resources donated for the SAARC summit, which can be considered as tangible assets, were were not valued and included in the financial statements, and that special military equipment which could be considered the same were also not included in the statements.

In addition to that MVR122.7 million which should be included in capital expenditure were included as recurrent expenditure (as spent on seminars and meetings).

The final budget for the ministry in 2011 was MVR834 million, of which MVR789.47 million was spent within the year.

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Government guarantee for GMR, Heavy Load illegal

The government issued a guarantee for Indian infrastructure giant GMR in 2011 and Heavy-Load Maldives Pvt Ltd in 2010 against the Public Finance Act, the Audit General’s Report on Statement of Government Guarantees has revealed.

GMR was granted a US$ 511 million contract to develop the Ibrahim Nasir International Airport (INIA) in 2011 under President Mohamed Nasheed, but President Dr Mohamed Waheed Hassan declared the contract void ab initio in 2012 and gave the company seven days to leave the country.

Heavy Load is owned by opposition Maldivian Democratic Party’s (MDP) chairperson and MP ‘Reeko’ Moosa Manik.

According to Auditor General Niyaz Ibrahim, the Ministry of Finance and Treasury issued a guarantee for a US$ 358 million loan from a Singaporean bank without any prior assessments the guarantee may have on the economy or the president’s permission.

Regarding the Heavy Load guarantee, the report said the Finance Ministry issued a ‘no objection letter’ the State Bank of India (SBI) concerning a Letter of Credit (LC) opened for Heavy-load.

The LC, amounting to USD 206, 400 (MVR 2,652,240) was issued from a USD 50 million  provided by the government of India and managed by the State Bank of India (SBI) Male’ branch.

The arrangement was for SBI to provide US Dollar LCs for for imports from India when the importers deposited the equivalent amount upfront in Maldivian Rufiya.

The ‘no objection letter’ sent by MOFT to SBI concerning Heavy-Load stated that company would settle the MVR equivalent when their LC expired.

The Auditor General’s report noted that the letter was in contravention to Public Finance Act and that the State Minister who signed the said letter did not have the authority to provide such a guarantee on behalf of the Ministry and, as required by the act, prior approval from the President was not sought in issuing it.

The report stated that both guarantees were not declared in the Statement of Guarantees, despite the Public Finance Act requiring all such guarantees be recorded.

It also said when the company had defaulted in settling the LC, SBI made the Finance Ministry liable as the guarantor, but the Ministry failed to recover the MVR equivalent proceeds of the LC (MVR 2,652, 240) from Heavy-Load.

The Ministry was recommended in the report to take “appropriate steps including legal action if required” against Heavy-load to recover the defaulted payment on the LC.

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Audit of Waste Management Company uncovers embezzlement, “wasteful” expenditure

An audit of the government owned Waste Management Company has uncovered severe mismanagement and embezzlement.

Former President Mohamed Nasheed had established the company by presidential decree on 15 December 2008 with assets worth MVR 1.5 billion (US$ 97 million).

However, “Since its inception, the company has done nothing to achieve its aims,” Auditor General Niyaz Ibrahim has said in a new report.

The company’s sole expenditure in the period 2009- 2011 was on wages, the report notes, adding “state expenditure on the Waste Management Corporation Ltd did not bring any benefit and was completely wasteful.”

With the election of island and atoll councils, the Finance Ministry had recommended the company be dissolved in 2011 as the Local Government Act charged local government with waste management. However, the President’s Office advised against the dissolution, the report said.

In 2010, a European Union and World Bank funded “South Ari-Atoll Regional Waste Management” Project to establish a waste management systems in Alif Dhaal Atoll Bodukaashihuraa was transferred from the Ministry of Housing and Environment to the Waste Management Company on President Nasheed’s orders.

But to this day, the Waste Management Company has not done any work on the project, the report found.

Further, an unnamed board member had embezzled MVR610,000 (US$ 39,354) by doctoring cheques, the report said. The board member was the sole employee in charge of the company’s finances.

The Auditor General’s Office was unable to carry out a full financial audit because the company had failed to submit its annual financial report, the report said.

Moreover, the company had failed to keep proper documentation of its expenditure and revenue or minutes of its board meetings or an asset register.

Expenditure on travel abroad was not documented, while employees were not registered with the pensions scheme as mandated by the Pensions Act, the report said.

Niyaz has recommended criminal charges be filed against all parties who participated in, were accomplice to,and/or were negligent in the embezzlement and wastage of state funds.

He has further called on the government to decide on the company’s future as soon as possible.

Governance NGO Transparency Maldives released a report last week revealed that 83 percent of people surveyed felt corruption had increased or stayed the same during the past two years.

Speaking at the event to launch the Global Corruption Barometer (GCB) report, President of the Anti-Corruption Commission Hussain Luthfy urged more transparency within government companies in order to foster an atmosphere in which corruption can be addressed proactively.

He suggested that government owned companies often pass resolutions to obstruct the ACC’s investigations.

Transparency Maldives, the local chapter of Transparency International (TI) describes the GCB as one of the tools it uses to better understand corruption.

The group’s most widely used indicator – the Corruption Perceptions Index  – was released last week. For the second consecutive year the Maldives was not ranked after TI was unable to gather the necessary data.

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SAARC Audit report failed to account for grant aid: MDP

The opposition Maldivian Democratic Party (MDP) has slammed an audit report on the expenses of the 2011 SAARC Summit released recently by the Auditor General, alleging the report was factually inaccurate and had based its findings on erroneous information.

The report (Dhivehi) –  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) – revealed several financial discrepancies by then MDP-led government including an overspend of more than MVR 430 million (US$27.9 million) on the event’s allocated budget.

The report claimed that 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.

Others inconsistencies included payment of MVR 61.8 million (US$4 million) more the amount agreed for the construction of the Equatorial Convention Centre built for the summit, financial losses incurred by the government, violations of Public Finance Act and Public Finance Regulation and wasteful spending.

The Auditor General in the report also made several recommendations including the recovery of money spent, as well as urging action against those found responsible for the expenses.

Former President Mohamed Nasheed previously dismissed the political bickering by his opponents regarding the findings, contending that his government had not embezzled state funds but admitting it was possible money had been spent contrary to the Public Finance Act.

“Since the ratification of the 2008 constitution, and since the beginning of word to word enforcement of laws that came after the ratification, it is quite possible that there may be certain things carried out in contrast with the public finance act. This is because senior officials of the government wanted things to get done quickly,” Nasheed said at the time.

In a press conference held last Monday evening, MDP government’s Housing Minister Mohamed Aslam slammed the Auditor General over the findings, claiming he had been “negligent” and “irresponsible” in compiling the report.

He said that a state institution releasing such reports ahead of the presidential elections implicating a specific political group was “highly concerning”.

However despite the claims, Auditor General Niyaz Ibrahim has disputed the claim that the timing of the audit report before the election was politically motivated, stating that the information contained in such reports was necessary for people to make informed decisions.

“Some fundamental elements have been disregarded as false information in the report. Some have even been labelled as unlawful [spending]. Other expenses have been presented in a very misleading manner. We have highlighted these issues to the Auditor General in a meeting held today,” Aslam said.

Responding to the Auditor General’s claim that the former government had overspent more than MVR 430 million (US$27.9 million), Aslam said the Indian government had provided grant aid of MVR 267 million (US$17.3 million), the South Korean government had given up to MVR 3 million (US$194,552.53) in grant aid, while an additional MVR 2 million (US$129,701.69) was given from a trust fund.

According to the former Minister, when the grant aid was accounted for the deficit stood at MVR 167 million (US$10.83 million), which had been settled by government’s contingency budget.

“The Auditor General is doing the math and arithmetic without taking these key figures into account. You simply can’t count apples and oranges and decide the total sum of both in apples. We see his findings something similar to counting apples in this manner,” Aslam said.

He also claimed that MVR 64 million (US$4.15 million) spent on building roads in both Addu City and Fuvahmulah was directed to improve the capacity of Southern Utilities Company Limited (SUL) because other companies who proposed to construct the road, including the government’s Maldives Transport and Construction Company (MTCC), were too expensive.

“The Auditor General claimed the government incurred financial losses by giving the project to SUL, and that the Maldives National Defense Force (MNDF) was actively involved in the construction work. And that government had paid SUL for the voluntary work carried out by the military personnel. What we are highlighting here is that if mathematically calculated, the amount spent on the project did not result in financial losses to the government,” Aslam said.

He acknowledged that MNDF officers “had a role” in constructing of the roads, but said that since Nasheed’s ousting in 2012 the work was not being carried out, and therefore there was nothing to pay.

He also questioned as to how the Auditor General came to the conclusion that the MNDF had contributed to 60 percent of the total work carried out to hold the SAARC Summit, stating that there was no justification given for the figure.

MDP MP and Lawyer Ahmed Hamza said he believed a possible reason for the report’s alleged inaccuracy was that the government had withheld certain financial records from the Auditor General, which would otherwise have substantiated the MDP’s account.

Auditor General responds

Responding to the allegations by the MDP, Auditor General Niyaz Ibrahim told local media that the party’s allegations did not carry any weight and that it was “not the fault of the Auditor General if the government did not share certain documents with the auditors”.

“The allegations levelled against the Auditor General’s office do not carry any weight. Our reports are based on information received from government agencies and authorities. Likewise, the report on SAARC summit was compiled in a similar manner,” Niyaz said.

“The [MDP] is alleging that the current government was witholding information from us. We can’t do anything about that. We base our reports based on the  information we receive.”

Niyaz also said that if the MDP were having doubts over the accuracy of the reports – due to government’s failure to share of information – the matter should be raised with the relevant parliamentary oversight committees.

The reason behind allegations made against the audit reports by politicians were, Niyaz said, due to the lack of knowledge regarding how government finances were handled. He also expressed concern over attempts made by politicians to mislead the public.

The Auditor General also claimed that he had not released the reports with the intention to “bombard” a certain political camp, and contested that the mandate of his office was not to attack politicians.

“We execute our responsibilities and try to complete our work as soon as possible to hold governments accountable,” Niyaz said.

“Our job is to hold the government accountable. To ensure that the government strictly follows the law and due procedure in handling the finances of the state. I believe the parliament has a central role in enforcing the recommendations made in the audit reports. We have released almost 200 audit reports. But parliament has only decided to act on just two,” he noted.

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SAARC Summit ran US$28 million over budget: Auditor General

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.

Discrepancies

“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.

MDP response

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.

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Auditor General’s Office to verify disputed figures in finance ministry audit report

The Auditor General’s Office has said it is verifying whether Vimla Construction Pvt Ltd was in fact given an advance payment of MVR 198.1 million (US$12.8 million) in February 2009 as flagged in the finance ministry’s 2011 audit report.

In a press release last week, the Auditor General’s Office said it was in the process of “further checking and verifying” the disputed figure stated in the audit report (Dhivehi) released earlier this month following questions raised in the media over its authenticity.

The case highlighted in the report concerned a large advance payment for delivery of construction materials for a tsunami-related housing project in Gaaf Alif Atoll.

Vimla has claimed in local media that the company received MVR 5 million (US$324,254).

“The audit report did not state that the advance payment to Vimla Construction for the Gaaf Alif housing project was made in violation of the law and regulations,” the press release stressed, adding that the audit office did not make any recommendations concerning the advance payment.

The case was uncovered during auditing of the finance ministry records, the press release added, and the figures were based on information collected from the ministry for its 2011 audit.

Auditors met with senior officials of the finance ministry on February 24, 2013 to verify the figures stated in the audit report and invited feedback from the ministry in a letter sent on March 19, 2013, the press release revealed.

“However, as a result of not receiving comments for the Ministry of Finance and Treasury’s 2011 audit report as of its publication date, this office believes that errors in the figures concerning the cases highlighted in the report are possible,” the Auditor General’s Office conceded.

The press release added that the Auditor General’s Office regretted “any difficulties” or “diminished name or reputation” caused by inaccuracies contained in its audit reports.

The press statement concluded by providing assurances to the public on the professionalism and impartiality of the audits conducted by the office.

The case flagged in the finance ministry’s audit report for 2011 concerned payments made on February 18, 2009 – just over three months after the Maldivian Democratic Party (MDP) administration took office.

However, following the controversial transfer of presidential power on February 7, 2012, President Dr Mohamed Waheed appointed members of then-opposition parties to cabinet and senior government posts.

Current Finance Minister Abdulla Jihad was also the finance minister during the last year of former President Maumoon Abdul Gayoom’s 30-year reign.

Auditor General Niyaz Ibrahim meanwhile told newspaper Haveeru last week that the office has uncovered a number of issues in the tsunami-related reconstruction projects commenced by the Gayoom government in Gaaf Alif atoll.

Niyaz told the local daily that the finance ministry’s audit report for 2011 was published after a long period awaiting comments from the ministry.

“There could be a mistake since they have not said whether there is anything they object to or not,” he was quoted as saying.

Tsunami reconstruction

Niyaz also revealed that the Auditor General’s Office was in the process of completing a special audit of the tsunami reconstruction projects, which would also shed light on the disputed advance payment made to Vimla Construction.

According to the section of the audit report dealing with the advance payment, the “Reconstruction and Development of Gaaf Alif Atoll Project” was to be undertaken with loan assistance from the Saudi Fund.

However, in 2011, the finance ministry spent MVR 17.6 million (US$1.1 million) out of its special budget to transport material needed for the project from the Hithadhoo Regional Port in Addu City to Gaaf Alif atoll.

While Vimla was contracted for the project and given an advance payment, the report explained that a foreign company named Performance Builders was contracted under a “deeds of assignment” on March 25, 2010 to replace Vimla on the project as the local company had been unable to complete the contracted work.

According to local media, the project was eventually awarded to the Maldives Transport and Contracting Company (MTCC) after Performance Builders also failed to complete the work. The government-owned company reportedly faced a loss of MVR 17 million (US$1 million) due to nonpayment.

The case is currently the subject of an inquiry by parliament’s Finance Committee.

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Cancelled agreement to develop IGMH cost US$150,000, reveals audit

The termination of an agreement between the Ministry of Health and Family with Indian company Apollo Hospitals Enterprises to manage and develop the Indira Gandhi Memorial Hospital (IGMH) cost the government US$150,000, the Ministry of Finance and Treasury’s audit report for 2010 has revealed.

The audit report (Dhivehi) made public on Thursday (June 6) flagged an advance payment of US$ 150,000 from the finance ministry’s special budget to Apollo Hospitals as 20 percent of a transition management fee under the “management and development agreement” (MDA) signed on January 23, 2010.

Auditor General Niyaz Ibrahim contended that the payment was made by the finance ministry in violation of budgetary rules and accounting principles, adding that expenses of another office or institution should not be included in the finance ministry’s financial statement.

Moreover, the privatisation of the government hospital was not overseen by the privatisation committee as stipulated in public finance regulations amended in late 2009, the audit report noted.

The secretariat of the privatisation committee, which functioned under the Ministry of Economic Development, informed auditors that interested parties were invited to submit detailed proposals for developing IGMH in a public-private partnership deal in January 2009.

However, none of the detailed bids met the criteria set by the health ministry and the privatisation project was scrapped.

Following a visit by then-President Mohamed Nasheed to India, Health Minister Dr Aminath Jameel told the press on January 25, 2010 that Apollo was awarded the project because none of the bidders fit the criteria.

Apollo was chosen following consultation with the Indian government and based on legal advice, she added.

However, in August 2010, the Male’ Health Services Corporation – which operated IGMH – advised the health ministry against proceeding with the privatisation deal as Apollo’s proposal was not financially feasible for the government-owned health corporation.

On September 30, 2010, the health ministry informed Apollo that the government has decided to scrap the project since the necessary financial capital had not been arranged.

The audit report also noted that a transition management agreement and an operation management agreement that was required under the MDA was not signed in the stipulated 180-day period.

“Therefore, the US$ 150,000 paid to Apollo Hospitals under the MoU [Memorandum of Understanding] signed with IGMH in 2010 was a waste of funds with no benefit to the state,” the audit report stated.

It added that the loss was incurred as a result of “inadequate planning” before hastily signing the MoU without obtaining legal advice, considering the financial burden on the state and determining a source of capital.

The Auditor General recommended asking the Anti-Corruption Commission (ACC) to determine whether any state official abused their authority in awarding the project to Apollo Hospitals without a bidding process.

Other cases

Among eight other cases highlighted in the report where expenses were made ostensibly in violation of public finance law, the audit revealed that in 2007 the government incurred a loss of MVR 30.8 million (US$1.9 million) after paying for 150,000 copies of the Quran Dhivehi translation with numerous errors.

The audit report noted that the project was awarded to Novelty Printers without a bidding process through the tender evaluation board.

Moreover, an advance payment of 85 percent of the contracted amount was made to Novelty Printers in violation of existing regulations, the audit discovered.

In June 2010, the Fiqh Academy decided to destroy the copies printed in 2007 as the errors could not be easily corrected. The decision was made following a year-long review by scholars of the academy.

The audit discovered that the errors in the final version were not present in the proofed copy approved by the President’s Office in 2007 – during the final years of former President Maumoon Abdul Gayoom’s reign – suggesting that Novelty was responsible for the errors.

Novelty Printers wrote to the President’s Office in November 2008 apologising for the printing errors, which they explained occurred due to a problem in the computer file used to make the printing plates.

The audit also discovered that Novelty was paid the remaining 15 percent of the contracted amount in May 2010 after a state minister at the finance ministry approved the payment.

The state minister sent a memo to the budget section falsely claiming that the government had received all 150,000 copies, the audit report noted.

The Auditor General recommended that the ACC should investigate the culpable official for alleged corruption and that the state should either recover the MVR 30 million paid to Novelty or demand 150,000 copies without errors.

The audit report also noted that the government was ordered by the Civil Court in January 2010 to pay US$119,616 as compensation for a former deputy general manager of the Maldives National Shipping Line (MNSL) for unlawful termination in 2002.

The Auditor General recommended legal action against the government officials responsible for incurring the financial loss by unlawfully sacking the MNSL deputy manager in 2002.

The audit further revealed that in 2009 and 2010 the finance ministry paid US$ 4 million to two American companies under a “settlement agreement” while arbitration proceedings were ongoing in Singapore.

In 2006, a consortium formed by the International Medical Group and Sirius International Insurance Corporation was awarded a contract to provide health insurance for government employees.

The companies sought arbitration in Singapore following a contract dispute with the now-defunct Ministry of Higher Education, Employment and Social Security. However, the US$4 million settlement was reached out of arbitration in May 2009 by the new government that took office in November 2008.

The settlement was paid out of the finance ministry’s special budget in 2009 and 2010.

The Auditor General recommended “a thorough investigation” to recover the financial loss incurred by the government as a result of the contract.

The audit report also contended that the finance ministry had not undertaken “adequate efforts” to recover MVR 51.4 million (US$3.3 million) owed to the government as loan repayments as of December 2010.

The loans worth a total of MVR 69.4 million (US$4.5 million) were provided to select individuals by the President’s Office from 1992 to 2006 under special privileges afforded to then-President Gayoom.

The loans were given with a six percent interest rate to be paid back within two to five years, the report found, noting that the repayment period would have lapsed in 2011 for the most recent loans.

However, in a letter sent to the finance ministry on November 6, 2008 – five days before Gayoom left office – the repayment period was extended to five years.

As the loans were given to senior officials of the outgoing government, the audit report contended that the decision to extend the repayment period amounted to corruption.

The Auditor General therefore asked for an investigation by the ACC into the extension and recommended that the finance ministry file court cases to recover the unpaid amounts.

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Nine parties submit audit reports within Elections Commission deadline

Nine political parties have submitted their annual audit reports to the Elections Commission (EC) by a deadline that expired yesterday (May 14), local media has reported.

Under EC rules, all political parties wishing to receive state funds are required to submit their annual audits reports by a specific deadline.

EC Secretary General Asim Abdul Sattar was today quoted by Sun Online as confirming that a total of nine parties had met the deadline to submit the reports. He declined to identify the nine parties at present.

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Deputy Speaker Nazim “mastermind” of scam to defraud atolls ministry: state prosecutors

Deputy Speaker of Parliament Ahmed Nazim was the “mastermind” of a scam to defraud the now-defunct Ministry of Atolls Development, state prosecutors told the High Court today.

Attorneys from the Prosecutor General (PG’s) Office claimed at today’s appeal hearing that Namira Engineering Private Limited – of which Nazim was a former board director – had won bids from the atolls ministry with fraudulent documents and paper companies.

The prosecutors argued that the MP for Meemu Atoll Dhiggaru, as a board director, was ultimately responsible for any corrupt dealings involving the company.

Contacted by Minivan News for comment today, Deputy Speaker Ahmed Nazim said he was “too busy to comment on the matter”.

In February 2012, the Criminal Court dismissed four corruption charges against Nazim. The decisions came just days after the controversial transfer of power on February 7 that brought President Dr Mohamed Waheed to office, with the court ruling that Nazim’s “acts were not enough to criminalise him.”

The Prosecutor General’s Office (PG) however appealed the rulings at the High Court in June 2012.

The appeal

During the first hearing of the appeal today – concerning Nazim’s Namira Engineering Private Limited winning a bid to provide 15,000 national flags – state prosecutors accused the defendant of setting up paper companies for the scam.

The bogus businesses were then used to win bids for projects worth several hundred thousand dollars, the state prosecutors argued.

State Prosecutor Abdulla Raabiu contended that board directors of a company should be liable for criminal transactions carried out in the name of a company under the Companies Act of Maldives.

Raabiu also asserted that Nazim was the “mastermind” behind the fraud and had fully benefited from the deal.

Highlighting apparent lapses during the previous trial against Nazim, Raabiu alleged that the Criminal Court had refused to hear witnesses produced by the state, referring instead to previous statements they had given to the police.

Furthermore, he stated that the court had dismissed the state’s witnesses as suspects of the same crime.

Raabiu argued that it was a familiar practice for the prosecution to withhold charges against suspects with lesser degrees of criminal liability in order to ensure successful prosecution of a prime suspect in a criminal case.

The prosecution said it believed the prime suspect would have a greater degree of criminal liability in the same case.

The state prosecutor also alleged that the case had been decided based solely on Nazim’s word and that the court had refused to give the opportunity to the state to prove its case against the defendant.

Requesting an order for a retrial, Raabiu claimed that the case was concluded in violation of the constitutional stipulation demanding equity in hearing both sides of a case.

The defence

Responding to the allegations by the state, Nazim’s defence counsel Aishath Shizleen contended that it should not be Nazim, but those involved in drafting the bid documents that should be held liable.

Instead of prosecuting the real wrong-doers, she argued, the state had produced them as witnesses against Nazim even when the investigation had clearly found the witnesses had themselves produced the fake documents.

Furthermore, Nazim’s lawyer argued that a witness needed to have certain standards as per a Supreme Court ruling, which had explicitly stated that evidence given by a witness who had even the slightest involvement in a crime could not be accepted to the court.

The lawyer said that the stipulation was also prescribed in the Quran.

This, she said, was the reason for which the Criminal Court had decided to reject the witnesses produced by the state. Nazim’s defense counsel requested the High Court to declare that the decision reached by the Criminal Court was valid and that no retrial was required.

Scam allegations

Along with Deputy Speaker Nazim, MP Ahmed “Redwave” Saleem (then-finance director at the ministry) and Abdulla Hameed, former Atolls Minister and half brother of former President Maumoon Abdul Gayoom, were charged in late 2009 on multiple counts of conspiracy to defraud the Atolls Ministry.

The scam – first flagged in an audit report released in early 2009 – involved paper companies allegedly set up by the defendants to win bids for projects worth several hundred thousand dollars, including the fraudulent purchase of harbour lights, national flags and mosque sound systems.

According to the report, the documents of Malegam Tailors, the company which won the bid, showed that it shared the same phone number as Namira. Fast Tailors, another company that applied, also shared a different phone number registered under Namira.

The other company Needlework Tailors, which submitted the bid had an employee of Namira sign the documents under the title of general manager, while the fourth company named ‘Seaview Maldives Private Maldives’ did not have any record of its existence, according to the report.

However, the auditors had noted that the Seaview bid documents had an exact date error also found on Fast Tailors documents.  According to the auditors, the error was sufficient to prove the same party had prepared both company’s bids.

The prosecution began in late 2009, after police uncovered evidence that implicated Hameed, Saleem and Nazim in a number of fraudulent transactions.

At a press conference in August 2009, police exhibited numerous quotations, agreements, tender documents, receipts, bank statements and forged cheques showing that Nazim received over US$400,000 in the scam.

A hard disk seized during a raid of Nazim’s office in May 2009 allegedly contained copies of forged documents and bogus letterheads. Police alleged that money was channeled through the scam to Nazim, who then laundered cash through Namira Engineering and unregistered companies.

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