Tag: auditor general

Division of MIFCO “mistreatment of state resources”, says Auditor General

With additional reporting by Daniel Bosley and Ismail Humaam Hamid

Splitting the Maldives Industrial Fisheries Company Limited (MIFCO) into three competing companies was  a “mistreatment of state resources”, says a report from the auditor general.

MIFCO was divided into three companies in 2010, with the introduction of Kooddoo Fisheries Maldives Limited and Felivaru Fisheries Maldives, before President Abdulla Yameen reversed the decision last year.

“Even after the split the main business of these three companies [MIFCO, Felivaru and Koodoo] was the buying and selling of fish which resulted in competition amongst each other,” the audit report read.

With regards to the financial impact of the move, the report’s figures suggest that the overall profits of the state-owned fisheries business was not significantly affected.

“After the split in 2010, MIFCO’s losses amounted to 4.1 million rufiyaa [US$265,888] in 2011 and 2012 and Felivaru Fisheries Maldives operated at a loss of 19.26 million rufiyaa [US$1.2 million],” the audit report read.

“However, Koodoo Fisheries had a profit of 88.8 million rufiyaa [US$5.7 million] in this period,” it continued.

Founded by the  state in 1993 for the purposes of buying and selling fish, MIFCO had made a net accumulated loss of MVR317.4 before the split, while all three companies were seen to have a total profit of MVR65.4 million in 2011 and 2012.

The audit report said that numerous faults had occurred in the splitting of MIFCO, citing several mistakes made by the Ministry of Finance and Treasury.

“While not providing an alternative to conduct business [Finance Ministry demanded] MIFCO pay the entire overdraft, which amounts to 70.56 million rufiyaa. The National Planning Council had planned how to divide MIFCO’s fleets amongst the three companies, but the finance ministry did not follow,” the report stated.

The dividing of physical assets between the three companies was not carried out properly, resulting in financial losses and even the breaking down of some equipment, read the report.

Auditor General Hassan Ziyaath recommended that the transfer of physical assets between companies be done according to “accounting principles”, and that a more thorough analysis of the impact on stakeholders be made before any similar decisions in the future

Ziyath concluded by saying that the restructuring of a company’s physical assets should be accompanied by a report demonstrating the potential impact on state income.

Fish exports make up the 98 percent of the Maldives’ exports, of which MIFCO is the leading exporter.

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Transparency Maldives notes “grave concern” over undemocratic trends

Transparency Maldives (TM) has called upon the state and political parties to operate within the Constitution, and to respect democratic norms and principles.

“Transparency Maldives notes with grave concern the increasing trend of undermining democratic practices and institutions by the State,” read a statement from the NGO today.

TM cited the attempts to reduce the number of judges in the Supreme Court, the sudden removal of the auditor general by the parliament, and the resolution  of the opposition Maldivian Democratic Party (MDP) calling for the presidency to be handed over to Jumhooree Party (JP) leader Gasim Ibrahim.

The MDP, private lawyers, and civil society groups have also heavily criticised the – now successful – attempts to remove Chief Justice Ahmed Faiz and Justice Muthasim Adnan from the Supreme Court.

In a statement released prior to the Majlis decision to remove the pair, TM argued that their removal would further undermine the independence of the judiciary.

“The impartiality and independence of the Supreme Court is not solely decided by the number of Supreme Court Justices but rather by the upholding of judicial integrity and principles,” argued the anti-corruption NGO.

TM said the decision to dismiss the pair without publicising the criteria used to deem them guilty of gross misconduct or gross incompetence – as required in Article 154 of the Constitution – raised questions about the fairness of the process.

“The criteria used must be objective, based on merit, transparent and well-publicised so that any public concerns about the process may be addressed.

The NGO suggested that amendments to the Judicature Act also denied the judges in question the right to defend themselves prior to their dismissal – a point also made today by the Maldivian Democracy Network.

Auditor General removal

Similarly, Auditor General Niyaz Ibrahim was removed from his post in October after pro-government MPs introduced amendments to the Audit Act.

“TM notes that the recent amendment to the Audit Act which abruptly ended the tenure of the sitting Auditor General, before the Constitutionally mandated seven-year term serves to undermine the independence of the Auditor General’s Office,” said today’s statement.

The press release further noted that the removal of the auditor general is only constitutionally allowed for proven misconduct, incapacity, or incompetence.

Niyaz’s removal was justified on the grounds that the Audit Act predated the 2008 Constitution and thereby did not include the current responsibilities, powers, mandate, qualifications, and ethical standards required for the post holder.

Niyaz chose not to stand again for the post, requesting the High Court to place an injunction against the new amendment – though his replacement was sworn in on November 24, within on hour of his approval by the Majlis.

“It must be noted that the passing of the amendment and the consequent removal of the Auditor General coincided with the release of an incriminating audit report against a Government Minister.”

The same day the Majlis authorised Niyaz’ removal, Niyaz had signed an audit report which implicated Minister of Tourism Ahmed Adeeb in a US$6million corruption scandal.

Adeeb – also Progressive Party of Maldives deputy leader – was quick to dismiss the report as politically motivated, while the government appears to have taken no further action in the case – despite pre-election pledges to root out corruption.

“TM calls on state authorities to ensure that heads of independent state institutions are given the autonomy to do their mandated work free from insecurity.”

MDP Gasim decree

Finally, TM denounced the MDP’s resolution which called on President Abdulla Yameen to hand power to JP leader Gasim Ibrahim.

The position taken by the party’s national council last week was condemned by TM as an “attempt to destabilize the elected government and infers overriding the electoral processes stipulated in the Constitution.”

The MDP leadership suggested that growing gang violence – which has resulted in four murders in the capital this year – coupled with the water crisis meant the president should step down.

“The president is not fulfilling presidential duties and ruling in absentia. So it is better for him to handover governance to Gasim Ibrahim,” said former President Nasheed during the meeting.

“TM reminds that any change in government should only be brought by a vote of the people and calls on state parties to not undermine the electoral processes of the country.”

The PPM responded to the resolution last week by accusing the MDP of attempting to disturb peace and unity during the water shortage.

The PPM also characterised the national council decision as an “undemocratic and uncivilised” attempt to topple a legitimately elected government.


Related to this story

Majlis removes Chief Justice Ahmed Faiz, Justice Muthasim Adnan from Supreme Court

Majlis passes amendment allowing president to reappoint auditor general

MDP calls on the government to hand power to JP leader Gasim

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Brother of official implicated in MMPRC corruption scandal nominated for Auditor General

President Abdulla Yameen has nominated a family member of a state official implicated in corrupt transactions worth US$6million for the post of Auditor General (AG).

Nominee Hassan Ziyath is the brother of Managing Director of state-owned Maldives Marketing and Public Relations Corporation (MMPRC), Abdullah Ziyath.

In a damning audit report on October 29, incumbent AG Niyaz Ibrahim accused Abdulla Ziyath of illegally pushing through a US$6million loan from state funds to two private companies.

The report was released a day after ruling Progressive Party of the Maldives (PPM) MPs brought a surprise amendment to the Audit Act requiring the reappointment of Auditor General within 30 days. The President’s Office opened up applications for the position immediately.

Niyaz has only served three years of his seven-year term.

The PPM holds a majority in parliament with 43 of the total 85 MPs, while coalition partner Maldives Development Alliance controls five seats.

Hassan Ziyath is currently the chairman of the Housing Development Corporation (HDC). He contested in March’s parliamentary elections for Malé’s Hulhuhenveiru constituency on the PPM ticket.

The MMPRC audit also implicated Tourism Minister Ahmed Adeeb of involvement in the corrupt transactions and said the loans were issued to companies owned by Adeeb’s family members.

Adeeb has condemned the report as politically motivated, and accused Niyaz of colluding with MP and former Deputy Speaker of Majlis Ahmed Nazim to discredit him after he refused to back Nazim for the Majlis Speakership in May.

In an interview with newspaper Haveeru, Niyaz dismissed Adeeb’s claims and accused Adeeb of threats and harassment following the Auditor General’s decision to look into the case.

The independent AG position was created in 2008 and vested with the power to audit all state offices, institutions funded by the state, and companies in which the state owns shares.

The auditor general’s position receives a salary equivalent to the president’s salary, currently MVR100,000.

The country’s first independent Auditor General Ibrahim Naeem was sacked by former President Maumoon Abdul Gayoom’s former party Dhivehi Rayyithunge Party (DRP) in 2010 for allegedly using state funds to buy a tie and visit Baa Atoll Thulhadhoo Island. Gayoom currently heads the PPM.

During the multiparty elections of 2008, Naeem had published several audit reports revealing high levels of corruption within Gayoom’s government.

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Four applicants for auditor general’s job

President’s Office Spokesperson Ibrahim Muaz has told local media that applications from four individuals have been received for post of auditor general.

While the application deadline ended on Monday, Muaz stated that the applications are currently being processed. He declined from providing any information regarding the applicants other than saying that none were females.

On October 29, the parliament approved an amendment proposed by ruling Progressive Party of Maldives (PPM) MP Ahmed Thoriq to the Audit Act enabling the president to reappoint the auditor general, four years before the end of the incumbent Auditor General Niyaz Ibrahim’s seven year term.

The recent amendment stipulates that the president must submit a nomination for the post to the parliament 30 days from the ratification of the act.

The amendment was passed despite the opposition Maldivian Democratic Party (MDP) members’ argument that it should not have been put to a vote as it allows the discharging of the incumbent without following the constitutional provisions for impeachment.

The amendment came into effect on the same day that the Auditor General signed a damning report into an alleged US$6 milllion corruption scandal involving PPM Deputy Leader and Minister of Tourism Ahmed Adeeb – a report Adeeb claimed was politically motivated.

Earlier in November, Niyaz Ibrahim told local media that he will not be reapplying for the post, and that instead he intends to challenge the constitutionality of the amendment in court.

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Auditor general’s position opened for applications

The President’s Office has this morning called for applications for the auditor general’s post after controversial changes to the Audit Act last week.

Incumbent Niyaz Ibrahim has told local media he will not be applying for the post, intending instead to challenge the constitutionality of the amendments which require the president to reappoint an auditor within one month.

The announcement was published in the government gazette today and will be open until 3pm on Monday, November 10. Forms are available on the President’s Office website.

The opposition Maldivian Democratic Party is also considering challenging the legality of the amendment, introduced as part of changes to legislation bringing statutes in line with the 2008 Constitution.

Proposing the motion, Progressive Party of Maldives (PPM) MP Ahmed Thoriq noted that the Audit Act was passed in 2007 before the ratification of the current Constitution and did not specify the responsibilities, mandate, qualification and ethical standards of the auditor general.

The amendment was passed last week, the same day the auditor general signed a damning report into an alleged US$6 million corruption scandal involving Minister of Tourism and PPM deputy leader Ahmed Adeeb.

Adeeb has labelled the report political motivated, suggesting an attempt to defame him by his political opponents.

Minivan News understands former Deputy Speaker and PPM MP Ahmed Nazim was involved in leaking documents related to the case to online news outlet CNM, which first broke the story of the Anti-Corruption Commission investigating the transactions.

In an interview with Haveeru yesterday, Niyaz denied being influenced by the Dhiggary MP Nazim, stating that their relationship during Nazim’d time as head of the Majlis’ financial committee was not in any way unusual.

Both Niyaz and his family have received death threat since the release of the report.

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Transparency Maldives concerned over “stagnation of democratic consolidation”

An assessment of the effectiveness of Maldivian institutions in preventing and fighting corruption points to a “stagnation in democratic consolidation and a reversal in democratic gains,” anti-corruption NGO Transparency Maldives (TM) has said.

Institutions of the National Integrity System (NIS) – consisting of the three branches of the state, public sector agencies, and non-government actors – were evaluated on their resources and independence, mechanisms to ensure transparency, accountability and integrity, and extent to which each institution fulfilled their assigned role in preventing corruption.

The Elections Commission (EC), the Anti- Corruption Commission (ACC) and the Auditor General’s Office were ranked the strongest pillars, while political parties and civil society received the lowest scores.

“The findings show that most institutions do not fully adhere to the legal framework, meaning there is a gap between practices and mandates afforded by the law, and that oversight mechanisms are not working as intended,” TM’s Advocacy and Communications Manager Aiman Rasheed said.

Noting the erosion of the separation of powers and the judicial attempts to undermine the independence of the EC and the ACC, Aiman said he was concerned over the lack of public outcry in instances where the powers of key democratic institutions are undermined.

“What is most worrying is the culture of impunity in the Maldives. There is no outcry from civil society, meaning those who undermine democratic consolidation can get away with almost anything,” he said.

A strong and functioning NIS serves as a bulwark against corruption and as a guarantor of accountability, while a weak system harbors systemic corruption and produces a myriad of governance failures, the report said.

Politicisation

Although the 2008 constitution established a mechanism for separation of powers, the period between 2008 and 2013 saw the legislature and judiciary curbing the powers of the executive and independent institutions, the report noted.

It specifically cited an amendment to the Public Finance Act in 2010, which curtailed the powers of the executive with regard to public finance management and state assets. The revision allows an opposition-dominated parliament to prevent the exercise of governmental policy.

A Supreme Court in September 2012 also limited the ACC’s powers to halt projects or issue binding orders and injunctions, it noted.

‘The verdict has made the commission toothless. We believe the ACC must at the very least have the power to suspend actions perceived as corrupt,” Aiman said.

He also said the 16-point guideline imposed by the Supreme Court on the EC in October is a blow to the commission’s independence.

“There are questions on how much authority the commission has in making decisions on electoral processes and the conduct of elections. The events of the past cycle of elections had had a tremendous negative impact on the Election Commission’s independence,” he said.

Systemic failure

Political parties associated with powerful individuals dominate the People’s Majlis, and their self-serving political practices have constrained the legislature’s ability to function with independence, the report noted.

Although there are provisions to hold the executive in check through budget review, appointment of cabinet, and questioning ministers on policies, in practice, the extent to which the executive was held accountable depended on the level of support the president’s political party enjoyed in the Majlis.

Meanwhile, allegations of political influence within the judiciary, and concerns over the qualifications and suitability of serving judges have raised questions over the independence of the judiciary, the report said.

But key oversight institutions, such as civil society organisations and the media, lack adequate resources and the professionalism necessary to effectively influence government policy for the betterment of society, the report continued.

Systemic weakness in upholding democratic institutionalism was demonstrated by the controversial transfer of power in February 2012, the report said, arguing that former President Mohamed Nasheed’s resignation under questionable circumstances created doubts over the political system’s ability to guarantee democratic governance.

“Although the Constitution of 2008 created a democratic Constitutional Government, the traditionally transmitted undemocratic political practices are also embedded in the new politico-institutional framework, thus weakening the overall institutional framework, and leaving room for misgovernance and political malpractices,” a press statement accompanying the report said.

Recommendations

The report recommended the enforcement of a comprehensive code of conduct for MPs, political appointees, and judges, with penalties for non-compliance.

MPs and political appointees must declare their assets and business interests, and legislation that limits party cross-over in the Majlis must be established, it said.

The executive must be granted more independence in determining public spending, albeit with strong measures to ensure integrity and transparency in decision-making.

Qualification and experience requirements of judges stipulated in legislation need to be enforced and the Supreme Court must exercise greater judicial restraint in interpreting its powers, it said.

The report also called on greater powers to be granted the ACC, Police Integrity Commission, and said that financial and human resources must be provided for the efficient functioning of all political, economic and social institutions.

Read the report here

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MPL refused to cooperate in Tourism Minister corruption investigation, says auditor general

Board members of Maldives Ports Limited (MPL) have refused to cooperate with an investigation into corruption allegations against Tourism Minister Ahmed Adeeb, the Auditor General has said.

Adeeb is accused of abusing his position to obtain MVR77.1 million (US$5 million) from the MPL and US$1 million from Maldives Tourism Development Corporation (MTDC), and loaning the money to companies owned by relatives and friends via state-owned tourism promotion company the Maldives Marketing and Public Relations Corporation (MMPRC).

Case documents show the MPL board approved the payment to MMPRC.

Auditor General Ibrahim Niyaz said a preliminary report into the case could only be completed with input from MPL board members, but some had refused to answer summons.

“The MPL board did not cooperate with us. Some of them did not answer our summons for investigation,” Niyaz said.

The MPL did, however, provide required documentation, he noted.

MPL CEO Mahdi Imad told news agency Haveeru that he was unaware of summons. He denied any wrongdoing in the transaction, claiming MMPRC was using the rufiyaa to buy dollars for MPL.

“Our company has engaged in buying dollars before. There is nothing to hide in this case,” Mahdi said

Meanwhile, the Anti Corruption Commission (ACC) has said the auditor general’s report was required before the commission could initiate a probe.

Adeeb has not denied involvement in the transaction, but said such transactions were routine between state owned companies in order to avoid purchasing dollars on the black market.

As Tourism Minister he had also helped the state’s primary wholesaler State Trading Organisation (STO) obtain dollars to import goods, he told Minivan News.

“The problem here is that I am being singled out and targeted,” he said, suggesting the unfair “defamation attempt” was linked to his refusal to support certain individuals for the position of speaker of the 18th People’s Majlis.

“There is absolutely no room for anyone to say that I fled with the MMPRC’s coffers,” he continued.

The minister confirmed cheques had bounced, but said the MTDC’s US$1 million had been reimbursed, while MPL had been paid one- third of the owed amount in dollars. The remaining two thirds are due in June, he added.

The individual who lodged the complaint questioned the MPL and MMPRC’s justification, claiming: “The MMPRC is run on state funds, and as the company does not earn in dollars, it is highly questionable that the MPL gave the company money to buy dollars,”

MPL had also transferred rufiyaa to the MMPRC at a time when the company had failed to pay dividends to the government. The company had argued it did not have money in its accounts, the complainant said.

They further alleged the MMPRC Managing Director Abdulla Ziyath personally went to MPL with the company’s seal to collect the cheques, demonstrating “the act was a planned act, for personal gain by the leaders of MPL and MMPRC.”

“When one company’s MD personally goes to receive funds from another company, it is evident this act is committed in secrecy, behind the company’s employees’ backs.”

As soon as the MMPRC obtained the money, it was transferred in two installments to a company owned by Adeeb’s friend called Millennium Capital Management without any bank checks or security procedures, the complainant said.

The US$1 million obtained from MTDC was loaned to a company owned by Adeeb’s father called Montillion International Pvt Ltd. Adeeb used to own majority of the shares in the company, but on becoming tourism minister in 2012, transferred all of his shares to his father Abdul Ghafoor Adam.

The complainant does not appear to have submitted any supporting evidence for the transfer of funds from MMPRC to the two companies.

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Corruption allegations a political attempt at defamation, says Tourism Minister

Tourism Minister Ahmed Adeeb has denounced corruption allegations publicised by local media as a “political attack” aimed to defame him.

A case filed at the Anti Corruption Commission (ACC) last week alleged Adeeb abused his position of power to obtain MVR 77.1 million (US$5 million) from Maldives Ports Limited and US$1 million from Maldives Tourism Development Corporation (MTDC).

It is alleged that Adeeb subsequently loaned the funds to relatives and friends via state-owned tourism promotion company the Maldives Marketing and Public Relations Corporation (MMPRC).

The complainant claimed the MMPRC had obtained Maldivian Rufiyaa from the MPL in the guise of buying dollars with a promise to reimburse the amount four months later. However, two repayment cheques dated May 10 and 15 bounced due to insufficient funds.

The US$1 million reimbursement dated check for MTDC also bounced, they added.

Speaking to Minivan News today, Adeeb did not deny involvement in the transfer but said such transactions were routine between state owned companies in order to avoid purchasing dollars on the black market.

“The problem here is that I am being singled out and targeted,” he said, suggesting the unfair “defamation attempt” was linked to his refusal to support certain individuals for the position of speaker of the 18th People’s Majlis.

“There is absolutely no room for anyone to say that I fled with the MMPRC’s coffers,” he continued.

The minister confirmed cheques had bounced, but said the MTDC’s US$1 million had been reimbursed, while MPL had been paid one- third of the owed amount in dollars. The remaining two thirds are due in June, he added.

The ACC and the auditor general have confirmed they are investigating the case.

Suspicious transactions

Leaked documents filed at the ACC include an MMPRC letter to MPL CEO Mahdi Imad on February 24, in which the company’s Managing Director Abdulla Ziyath asked the MPL for the rufiyaa equivalent of US$5 million. The amount was to be paid back in dollars in four months through dated checks.

“Reference is made to the meeting held between the Tourism Minister Ahmed Adeeb and Maldives Ports Limited CEO Mahdi Imad,” the letter said

“An agreement is to be drafted by MPL for this transaction whose purpose is to provide foreign currency support to MPL through other government companies,” it read.

The complainant, however, questioned the justification, claiming: “The MMPRC is run on state funds, and as the company does not earn in dollars, it is highly questionable that the MPL gave the company money to buy dollars,”

MPL had also transferred rufiyaa to MMPRC at a time when the company had failed to pay dividends to the government. The company had argued it did not have money in its accounts, the complainant said.

They further alleged the MMPRC Managing Director Abdulla Ziyath personally went to MPL with the company’s seal to collect the cheques, demonstrating “the act was a planned act, for personal gain by the leaders of MPL and MMPRC.”

“When one company’s MD personally goes to receive funds from another company, it is evident this act is committed in secrecy, behind the company’s employees’ backs.”

The accuser also questioned why a company set up for tourism promotion was engaging in dollar sales. They also said it was against procedures for the MPL to release the money without any security measures.

In response, Adeeb said that as Tourism Minister he had also helped the state’s primary wholesaler State Trading Organisation (STO) obtain dollars to import goods.

He further pointed out the transactions took place between the companies via board resolutions and official letters, not through documents he had signed. He claimed the MPL needed dollars to buy equipment such as barges.

MPL’s Mahdi Imad was not responding at the time of press and an MMPRC official said Abdulla Ziyath was on leave today.

Loans to relatives

The complainant said as soon as the MMPRC obtained the money, it was transferred in two installments to a company owned by Adeeb’s friend called Millennium Capital Management without any bank checks or security procedures.

The US$1 million obtained from MTDC was loaned to a company owned by Adeeb’s father called Montillion International Pvt Ltd. Adeeb used to own majority of the shares in the company, but on becoming tourism minister in 2012, transferred all of his shares to his father Abdul Ghafoor Adam.

The complainant does not appear to have submitted any supporting evidence for the transfer of funds from MMPRC to the two companies.

When asked if the MMPRC had indeed transferred the funds to companies owned by his friends and relatives, Adeeb did not deny the claim and said he does not hold any business interests and is not a board member of any company.

“If you look at a 360 degrees, the case is very clear,” he said claiming the media was very “judgmental.”

Adeeb has previously been accused of involvement with an infamous pair of Armenian brothers linked with drug trafficking, money laundering, raids on media outlets and other serious crimes in Kenya.

Photos of the Arturs in the company of Adeeb and Minister of Defense Mohamed Nazim Maldivian ministers emerged on social media in April 2013, apparently taken during the Piston Motor Racing Challenge held on Hulhumalé between January 25 and 26.

One photo showed Artur Sargsyan next to Adeeb and Nazim, while another has him apparently starting one of the motorcycle races at the event, which was organised by the Maldivian National Defence Force (MNDF). Another image showed Sargsyan at the red carpet opening for the Olympus Cinema.

Adeeb acknowledged meeting the brothers during the event, but said he had no personal links with them, saying the brothers had come to see him over a business dispute with members of the opposition Maldivian Democratic Party (MDP).

He had asked the brothers to leave “for the good of the country.”

However, letter from the Tourism Ministry to immigration authorities requesting a residency visa for Margaryan and Sargayan Artur – dated January 27 and signed by Adeeb – was subsequently leaked on social media.

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Over 380 government institutions did not submit annual report to Auditor General

The Auditor General’s Office has revealed a list of government institutions that did not submit the annual report as stated in the Finance Act.

The full list was published on Auditor General’s Office website and it states that this information had been forwarded to President and Speaker of parliament as stipulated in Finance Act 36(b).

The list includes High Court, Criminal Court, Family Court, Juvenile Court, Elections Commission, Human Rights Commission of the Maldives, Anti-Corruption Commission, Prosecutor General’s Office, Police Integrity Commission, Maldives Pension Administrative Office, Employment Tribunal, Maldives Inland Revenue Authority, Maldives Broadcasting Commission, Tax Appeal Tribunal, and the Maldives National Defence Force.

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