Termination of misappropriated state funds investigation cost government MVR66 million

The termination of an agreement to investigate the alleged misappropriation of state funds by the regime of former President Maumoon Abdul Gayoom cost the government MVR66.17 million (US$4.2 million), a special audit report of the defunct presidential commission has revealed.

The report released last month explained that UK-based firm Grant Thornton dissolved the ‘asset tracing, recovery and repatriation’ agreement on April 30, 2012, after the Attorney General’s (AG) Office failed to respond to eight emails seeking instructions on how to proceed following the controversial transfer of presidential power on February 7, 2012.

The report noted that a settlement agreement was reached following a mediation process in March 2013 for the government to pay the forensic accountancy firm MVR64.61 million (US$4.1 million).

The government also paid MVR1.56 million (US$101,167) for legal counsel – to Eversheds LLP – employed for the arbitration process.

Following full payment of the settlement claim, the report revealed that Grant Thornton handed over all documents and information related to its investigation as well as minutes of meetings and expert findings on November 13, 2013.

The AG’s Office shared the documents with the Anti-Corruption Commission (ACC).

“As the agreement was brought to an end before Grant Thornton’s investigation was fully concluded and because the presidential commission’s investigations had noted a number of cases of suspected corruption and embezzlement when its work came to a halt, this office believes that the investigations should be completed,” the audit report stated.

The Auditor General’s Office recommended the ACC conclude the investigations commenced by Grant Thornton.

Oil trade

Former President Mohamed Nasheed formed the presidential commission in May 2009 to investigate alleged corruption during his predecessor’s 30-year reign.

The audit report noted that the commission’s investigations were mainly conducted through Grant Thornton, which included the alleged illegal oil trade involving the State Trading Organisation’s (STO) Singapore branch, the 2007 audit report of the Bank of Maldives, and asset tracing of senior government officials.

Nasheed’s vice-president, former President Dr Mohamed Waheed Hassan Manik, dissolved the presidential commission shortly after assuming office on February 7, 2012.

A week before the transfer of power, the presidential commission forwarded for prosecution a case against then-opposition MP Abdulla Yameen for his involvement in the alleged oil trade during his time as chairman of the STO.

The allegations first appeared in February 2011 in India’s The Week magazine, which described Yameen as “the kingpin” of a scheme to buy subsidised oil through STO’s branch in Singapore and sell it through a joint venture called ‘Mocom Trading’ to the Burmese military junta, at a black market premium price.

The article drew heavily on an investigation report by Grant Thornton, which obtained three hard drives containing financial information detailing transactions from 2002 to 2008.

Investigators learned that Mocom Trading was set up in February 2004 as a joint venture between STO Singapore and a Malaysian company called ‘Mocom Corporation Sdn Bhd’, with a potentially lucrative deal of selling oil to Myanmar and an authorised capital of US$1 million, it acted as a front for an international money laundering racket.

The presidential commission sought criminal charges against Yameen and two other shareholders of STO Singapore – former Managing Director of STO Mohamed Manik and former Managing Director of STO Singapore Ahmed Muneez – and asked the AG’s Office to pursue civil compensation suits.

Yameen has dismissed the allegations on several occasions and disputed the illegality of the oil trade.

“It’s perfectly legitimate. I was a perfectly clean minister while in Gayoom’s cabinet. They have nothing on me,” he told Minivan News in February 2011.

Moreover, grilled by parliament’s national security committee in November 2011, he denied any involvement in “micro-management” of STO subsidiary companies. Upon assuming office in November, President Yameen called on the ACC to investigate the allegations.

Presidential commission audit

The audit report noted that the commission tasked Grant Thornton with investigating the finances of 12 associates and relatives of former President Gayoom.

If the amount of funds or assets recovered by Grant Thornton reached £1.5 million after deducting investigating costs, the government agreed to pay 25 percent as a fee and 35 percent if the figure exceeded £1.5 million.

In July 2010, the agreement with Grant Thornton was transferred from the audit office to the AG’s Office, the report noted.

Under revised terms of the agreement, the government agreed to pay Grant Thornton 2.5 times the cost of investigation if the agreement was terminated. Additionally, consultancy fees and rates were also raised.

Auditors calculated that the government had to pay MVR20.3 million (US$1.3 million) as a result of the modification.

Among other issues highlighted in the report, the audit office noted that the commission’s expenses were not monitored either by the President’s Office or other state institutions.

Moreover, emailed invoices and bills from Grant Thornton were paid without supporting documents, the report noted.

From May 2009 t0 February 2012, auditors found that the commission spent MVR36.02 million (US$2.3 million) for its investigations.


Auditor General questions valuation of assets of state-owned enterprises

The Auditor General’s Office has questioned the valuation of assets of the Thilafushi Corporation Ltd (TCL) and State Electricity Company (STELCO) in audit reports of the state-owned enterprises for 2013.

The TCL audit report released last week explained that the Finance Ministry transferred land and buildings on Thilafushi Industrial Island to the corporation at a value of MVR12 billion (US$778 million).

“The consideration for such transfer had been made by the issue of 150,000,000 equity shares of MVR10 each issued at a premium of MVR74.13 to Ministry of Finance and Treasury,” the report stated.

Following valuation of the island and property therein by a professionally qualified party “on the basis of capitalised lease rentals to perpetuity,” the leased land was valued at MVR5,725 (US$371) per square foot.

Additionally, “land pending reclamation and lease at the time” was valued at MVR1,200 per square foot, “the reasonableness of which cannot be readily established.”

The report noted that the transaction took place between TCL and the Finance Ministry, “its sole shareholder.”

Moreover, in the “absence of a valuation adopting alternative approaches in the context that this is the first purchase of land transaction at Thilafushi,” the Auditor General’s Office was “unable to conclude whether the rates per square foot derived above are reasonable.”

The report stated that auditors were “unable to satisfy ourselves whether the land and buildings thereon and share premium shown in the balance at MVR12,618, 789,042 and MVR11,118,789,042 [US$713 million] respectively are fairly stated.”

Work in progress

The report also noted that MVR33 million (US$2 million) was paid to Heavy Load Maldives for land reclamation, which was stated in the balance sheet as capital work in progress.

However, in 2011, the company incurred a further MVR23 million (US$1.4 million) for the project, increasing the total capital work-in-progress amount to MVR61 million (US$3.9 million).

Auditors found that the MVR23 million had been “capitalised by transferring the amount from capital work-in-progress to land towards the industrial zone reclamation,” while the remaining amount had not been capitalised.

“In the absence of evidences supporting the work done for the remaining amount of MVR38,889,767, we are unable to conclude whether the company has received value for the amount paid and therefore whether the capital work-in-progress has been fairly stated,” the report concluded.

In January 2013, local media reported that TCL incurred MVR650 million (US$42 million) worth of losses as a result of Heavy Load not reclaiming the agreed 152 hectares of land within the granted six month period.

As a result of the issues flagged in the report, the audit office was “unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion,” and subsequently did not express an opinion on TCL’s financial statement.


In the audit report of STELCO for 2013, the audit office noted that while the company’s financial statements gave “a true and fair view” of its financial position, performance and cash flow as of December 31, 2013, Auditor General Niyaz Ibrahim qualified his opinion due to questions over the valuation of assets.

The report explained that the government-owned company’s property, plant and equipment were revalued by an external valuer during 2011.

“Accordingly, the assets having net book value of MVR434,455,893 [US$28 million] as at 31 December 2011 were revalued for MVR847,932,997 [US$54 million] and a revaluation surplus of MVR413,477,104 was recognised in the books of account,” the report revealed.

However, it added, assets worth MVR26 million (US$1.6 million) were excluded from the revaluation report and “the company accounted these assets at their respective net book values based on historical cost,” which was in violation of international accounting standards.

Consequently, “in the absence of valuation of these assets,” auditors were unable to conclude that MVR15 million (US$972,762) included in the property, plant and equipment of MVR1.5 billion (US97 million) as well as a revaluation reserve of MVR314 million (US$20 million) in the balance sheet was “fairly stated.”

Meanwhile, the audit report of the Maldives Ports Ltd (MPL) for 2013 noted that the company was owed MVR13 million (US$8 million) from the dissolved Maldives National Shipping Ltd, which was a receivable that has been “outstanding for more than four years and therefore, doubtful of recovery.”

As a result, the report noted, auditors were unable to conclude “whether the amount shown under related party receivables in the statement of financial position is recoverable and [whether] the results for the year and receivables were are fairly stated.”

Auditors also found that MVR24 million (US$1.5 million) was “incurred on the construction of a tug boat for harbour operations.”

However, the construction had been discontinued since 2010 “due to a dispute with the constructor,” auditors found.

“Further, we were not allowed to access the premises of the tug boat. Hence, we are unable to satisfy ourselves regarding the physical existence and recoverability of the asset,” the report stated.


Audit reports released in first quarter revealed illegal expenditure worth MVR2.2 billion

Audit reports released in the first quarter of 2014 reveal financial transactions worth MVR2.2 billion (US$142 million) were conducted illegally by state institutions and corporations, according to the quarterly report (Dhivehi) of the audit office made public yesterday (April 29).

In the 14 audit reports released between January and March, the auditor general recommended recovering MVR294 million (US$19 million) from the officials responsible for the illegal expenditure.

These included MVR256.9 million (US$16.6 million) worth of unpaid dividends owed by state-owned corporations, MVR1.2 million (US$77,821) paid out as allowances to soldiers studying in the Maldives and overseas in addition to their basic salary, MVR166,324 (US$10,786) owed by an atoll councillor for residing in the atoll house free of charge, MVR23,927 (US$1,551) spent on plane tickets for a minister, and several millions owed by the Works Corporation.

The 14 reports covered the financial years 2011 and 2012 for a number of government ministries and companies, including the Defence Ministry, Finance Ministry, Civil Aviation Ministry and the Works Corporation.

The quarterly report noted that the auditor general also recommended that the Anti-Corruption Commission (ACC) investigate several cases of alleged corruption and embezzlement flagged in the 14 audits, which uncovered 163 instances of illegal expenditure or violations of public finance regulations.

In an appearance on state broadcaster Television Maldives in January, Auditor General Niyaz Ibrahim asserted that releasing audit reports was “futile” as the accountability process has so far failed.

While the audit office’s role was to conduct audits and review financial statements, Niyaz noted that the office was not legally empowered to file cases at court to recover funds or hold officials accountable for lapses.

Niyaz insisted that there was no political motive behind the timing of damaging audit reports, noting that the audit office adheres to a timetable or schedule shared with a parliamentary committee.

He also assured the public that the audit office was free of undue influence from any state official.


Audit uncovers corruption in MNBC sales agent agreement with BIG

A special audit of the defunct Maldives National Broadcasting Corporation (MNBC) has uncovered corruption in a deal designating Business Image Group Pvt Ltd (BIG) the former state broadcaster’s exclusive sales agent with a 15 percent commission from the main income items.

The audit report (Dhivehi) made public on Thursday (April 17) revealed that an agreement was signed with BIG on March 7, 2010 to formulate a business plan and provide marketing consultancy.

In addition to making BIG the exclusive sales agent for a five-year period, MNBC agreed to pay the company a monthly fee of MVR25,000 (US$1,621) as well as 15 percent of all income generated through BIG.

Auditors found that the contract was awarded to BIG without a transparent and competitive bidding process.

While an announcement seeking a marketing consultant was made on January 3, 2010, the audit report noted that it made no mention of either an exclusive sales agent or a sales commission.

“Therefore, the bidding process was carried out in a way to facilitate undue benefit to a particular party,” the report stated.

The report further noted that MNBC did not share any documentation from the bidding and evaluation processes with the audit office.

In the absence of any documentation with the exception of the MNBC board’s decision to make BIG the exclusive sales agent, the report stated that auditors were unable to ascertain whether a cost-benefit analysis was carried out.

While MNBC’s income increased in 2010 and 2011, the report explained that there was no measure to evaluate BIG’s performance or assess the company’s contribution to the revenue growth.

MNBC was formed in January 2009 as a 100 percent government-owned corporation by the administration of former President Mohamed Nasheed.

The television and radio channels operated by the company were handed over to the Maldives Broadcasting Corporation (MBC) – created by an act of parliament in June 2010 – in the wake of the controversial transfer of presidential power on February, 7, 2012, during which the state broadcaster was stormed by mutinying police and soldiers.

The audit meanwhile revealed that as of August 2012 BIG was paid a total of MVR5.78 million (US$374,837) as sales commission.

Auditors were unable to verify from the available documentation – payment vouchers and invoices submitted by the company – that the commission was provided from additional income generated as a result of BIG’s work.

Moreover, BIG sought a further MVR6.7 million (US$439,040) in October 2012. The release of the funds was however halted on instruction from the Anti-Corruption Commission (ACC) pending the completion of an investigation.

Auditors concluded that BIG was not owed a commission from income generated from public announcements, SMS, my tones, advertisements, and airtime sales.

Based on the findings, Auditor General Niyaz Ibrahim recommended that the case should be investigated by the ACC and that action should be taken against the officials responsible for drawing up the agreement in a manner detrimental to the interests of MNBC.

Meanwhile, in March this year, three pro-government Malé City councillors alleged corruption in the awarding of the ‘Clean Green Malé’ project to BIG by the opposition Maldivian Democratic Party-majority (MDP) council. The allegations by the ruling Progressive Party of Maldives councillors were denied by those of the opposition party.

Other cases

The special audit also flagged four other cases of ostensibly corrupt practices at MNBC.

In January 2011, the Finance Ministry arranged a MVR47.8 million (US$3 million) loan from the State Bank of India to settle unpaid bills and develop an uplink system.

However, the uplink system project was halted after imported equipment was not paid for, auditors found. Of the US$3 million loan provided to MNBC, only US$127,000 was spent on the project for an advance payment and bank charges.

After paying an upfront fee, management fee, and interest payments, the report noted that the rest of the loan was used to pay salaries for MNBC staff and cover other recurrent expenditure.

As 85 percent of the loan was used for recurrent expenditures, the audit concluded that the purpose for which the loan was obtained was not served.

Moreover, as a result of MNBC’s failure to repay the loan in monthly installments at the end of the grace period in February 2012, the report noted that the State Bank of India liquidated the deposit kept at the bank by the Finance Ministry.

In another case, auditors found that MNBC provided MVR1.5 million to an individual in September 2011 to exchange for US$100,000.

While the individual was not licensed to exchange foreign currency, the state broadcaster has not received either the dollars or the rufiyaa as of the report’s publication.

As MNBC asked police to investigate the matter five months after the dollars were due, the audit office concluded that the corporation’s senior officials and board members were negligent and responsible for the loss.

The auditor general recommended an ACC investigation of the case and action against responsible officials.

In a third case highlighted in the report, auditors discovered that MNBC was owed MVR10 million (US$648,508) as of March 2012 for sales as well as services rendered.

As MNBC has since been dissolved, the report noted that no efforts were underway to recover the money owed.

Lastly, auditors found that the Finance Ministry provided MVR10 million to MNBC ahead of the 17th SAARC summit held in Addu City in November 2011 after the state broadcaster informed the ministry that it lacked funds in the budget to cover the summit.

In order to arrange the funds, the report revealed that the Finance Ministry decided to take MVR15 million (US$972,762) as dividends from the state-owned Kooddoo Fisheries Maldives Ltd.

A MVR10 million cheque sent to the ministry by Kooddoo was given to MNBC without depositing the funds in the public bank account as required by the Public Finance Act, the report revealed.


EC disputes claims in audit report

Elections Commission (EC) Chair Fuad Thaufeeq has disputed the Auditor General’s Office’s contention in the commission’s audit report for 2012 that recommendations in previous audit reports have not been implemented.

Fuad Thaufeeq told local media yesterday (June 30) that efforts were made to follow through on the recommendations, including the recovery of mobile phones provided to staff and clearing up issues involving funds sent to the atolls dating back from before the EC was set up as an independent institution under the new constitution.

In the case of mobile phones, Fuad said, the commission has either recovered the phones or received compensation from staff, including former Elections Commissioner ‘Kaaf Dhaal’ Ahmed Manik.

Staff responsible for lost laptops have also been told to settle the cost of the lost items in two years, he added.

With regard to MVR50,438 (US$3,270) of additional expenditure on overseas trips by commission members incurred as a result of extending the duration of stays, Fuad said the EC was unable to determine which members or which overseas trips the Auditor General was referring to and had asked for clarification.

On awarding a contract worth MVR 4.9 million (US$317,769) to a local company to print ballot papers without going through the tender evaluation board, Fuad explained that there was no time after candidates had applied to “send it to the Finance [Ministry’s] bid committee for a decision.”

Fuad told newspaper Haveeru that it was “regrettable” that the audit report did not acknowledge the corrective measures taken by the commission.

“We cannot correct what is unclear to us. That is why I am saying there are illegitimate claims in this report. I will prove that anywhere I have to,” he was quoted as saying.

Fuad contended that such reports should not raise unwarranted doubts among the public concerning the commission’s integrity.

While the 2011 audit report had flagged 20 cases of ostensible violations of public finance laws, the 2012 report highlighted two cases and stated that the commission’s expenditures were for the most part in line with the public finance law and regulations and the budget approved by parliament.

Auditor General Niyaz Ibrahim however dismissed the claims and insisting that all the information presented in the report was valid.

He however observed that government ministries and independent institutions were “slowly coming round to accepting what is in these reports.”

“These things will happen in the early days. But it will get better,” he was quoted as saying.


Recommendations on 13 cases not implemented by Elections Commission: 2012 audit report

The Elections Commission (EC) has not followed through on recommendations of the Auditor General’s Office by taking corrective measures concerning 13 cases flagged in the commission’s audit reports for 2010 and 2011, according to the EC’s audit report for 2012.

The 2012 audit report (Dhivehi) made public on Thursday (June 27) listed 10 cases from 2011 and three cases from 2010 where the Auditor General’s recommendations to hold the responsible officials accountable for illegal expenses were not implemented.

Among the cases highlighted in the 2011 report were expenditure on overseas trips exceeding approved funds after commission members extended their stays, MVR 334,700 (US$21,705) paid to a company contracted to provide sea transportation during the 2011 local council elections for trips not included in the agreement and awarding a contract worth MVR 4.9 million (US$317,769) to a local company to print ballot papers without going through the tender evaluation board.

The 2011 audit revealed that the cost of the extending the duration of official overseas trips between January 2010 and April 2012 amounted to MVR50,438 (US$3,270) for food, incidentals and pocket money.

Other cases from 2011 included MVR 183,238 (US11,883) spent to hire temporary staff and vehicles during the council elections without formal agreements, not seeking quotations or estimates from three parties as required by regulations for procurements amounting to MVR 251,148 (US$16,287), failure to collect or file court cases to recover MVR 469,500 (US$30,447) owed as fines and deposits and MVR 12,999 (US$843) paid to staff in excess of their salaries and allowances.

The cases from 2010 meanwhile included MVR 248,790 (US$16,134) spent to buy 30 mobile phones for senior staff, 13 mobile phones given to select staff as personal property and a senior staff not returning a mobile phone worth MVR 14,195 (US$920) bought in 2008 when he or she left the commission

“In addition to the 13 mobile phones that were given to employees according to documentation at the commission, the records showed that five mobile phones worth MVR 49,135 (US$3,186) were lost,” the 2011 report stated, adding that no employees were held responsible and “compensation in any form was not sought” for the losses.

The 2012 report noted that of the 15 mobile phones given to staff, five have been returned to the commission while the price of one phone was reimbursed by the staff member.

While letters were sent in October 2012 asking staff to return the other nine phones, the audit report noted that the letters had not been replied to as of the report’s publication.

Moreover, of five phones believed to have been lost, the audit report noted that the EC was informed by staff that two were lost while the remaining three were unaccounted for.

Lastly, on a recommendation to identify how nine laptops were lost and to hold responsible staff accountable, the audit report noted that the EC sent letters to two employees in November 2012 without reply, after which no action was taken.

“On June 10, 2012, one employee to whom a laptop was given returned it to the commission’s stock. No action has been taken to seek compensation for the remaining six laptops,” the report stated.

The 2011 audit report had also revealed that the EC made a number of unnecessary purchases, such as a coffee maker for MVR 67,000 (US$4,345) in 2007, a Nikon D200 camera for MVR 233,298 (US$15,129) in 2008, six TV decoders, 16 TVs, 16 shredders, two washing machines, irons, a deep freezer, a mixer, a blender and a gas cooker.

Of 60 fax machines bought by the commission, 50 were kept unused in storage.

Meanwhile, among the cases flagged from the 2012 audit, the report noted that as of March 2013 the commission had not sought MVR 20,000 (US$1,297) owed by political parties in 2012 as fines for non-submission of annual financial statements.

The report noted that the commission has not taken any action concerning the non-payment of fines in addition to sending letters to the parties on August 5, 2012.

In a second case, the audit found that a director at the commission was given notice of termination of employment starting May 2, 2012. However, as the termination chit stated May 6 instead, “we note that the employee was paid MVR 2,468 as salary and allowances for four days for which the office did not receive the employee’s services.”


STO owed MVR 1.45 billion in overdue bills from state institutions, government companies

A large portion of the national budget had been “managed through the cash flow” of the State Trading Organisation (STO), the Auditor General’s Office has said, revealing the state-owned enterprise is owed MVR 1.45 billion (US$94 million) in overdue bills from government companies and state institutions.

In his professional opinion (Dhivehi) on the proposed 2013 budget submitted to parliament’s Budget Review Committee and made public this week, Auditor General Niyaz Ibrahim stated that the “state’s cash flow was being managed through STO”.

“This shows that state expenditure is managed outside of the state budget, that this is an ‘off balance sheet’ finance arrangement and that the actual deficit will be much higher than stated in the state budget,” the Auditor General’s report to parliament stated.

The Auditor General stated that the practice was “worrying” and recommended changes to current treasury management “to put an end to depending on a government-owned company to manage the state’s cash flow.”

STO is a public company with an 81.6 percent stake owned by the government. The company was set up in 1964 to import and supply staple foodstuffs and fuel at controlled prices.

In its report to parliament, the Auditor General’s Office revealed that STO was owed MVR 398 million (US$25.8 million) in overdue payments from state institutions and government companies for goods released on credit.

Of the outstanding amount for items purchased on credit, the Finance Ministry owed MVR 388.1 million (US$25.1 million), according to the findings.

In addition, the Male’ Health Corporation (MHC) owes MVR99.4 million (US$6.4 million), Gan Airport Company owes MVR 61.8 million (US$4 million), Southern Utilities Ltd owes MVR 75.6 million (US$4.9 million), the State Electricity Company (STELCO) owes MVR 53 million (US$3.4 million) and the Works Corporation owes MVR 10.1 million (US$654,993).

Moreover, Fuel Supply Maldives, a subsidiary of STO, was owed MVR 186.2 million (US$12 million) for oil released on credit, mainly from government utility companies, the report added.

As a consequence, STO was owed a total of MVR 1.45 billion (US$94 million) in overdue bills, including outstanding bills worth MVR 289 million (US$18 million) from 2011 and MVR 8.2 million (US$531,776) from 2010 and earlier.

A total of MVR 1.15 billion (US$74 million) is owed to STO from overdue bills in 2012, according to a statement shared by the Finance Ministry showing STO’s receivables.

The government’s health insurance company ‘Aasandha’ meanwhile owed STO MVR 18 million (US$1.1 million) in overdue bills, the report noted.

The figures also showed that state institutions and government companies were “heavily dependent on STO’s working capital” to function.

“And as a result of not receiving millions of rufiyaa owed to STO from the state, STO has not paid any dividends to the Ministry of Finance and Treasury since 2009,” the Auditor General revealed.

In November 2011, the government sold five plots of land measuring 87,155.2 square feet to STO for MVR 522.9 million (US$33.9 million) and deducted the amount from monies owed to STO.

“This was carried out by the Ministry of Finance and Treasury following deliberations by the cabinet and based on the advice of the cabinet,” the Auditor General noted.

The Auditor General contended that the sale was in violation of amendments brought to the Public Finance Act in 2010, which stipulated that state assets and property must be sold in accordance with a law passed by parliament.

The plots were sold to STO in the absence of a law governing the sale of state properties.

“Therefore, we note that it is important to further investigate how this transpired and that the Ministry of Finance and Treasury’s plans to settle payments owed to STO from the government must be clarified before the budget is passed,” the Auditor General recommended.


Parliament approves MVR 57.8 million budget for Auditor General’s Office

Parliament yesterday (November 21) approved 59-2 a MVR 57.8 million (US$3.7 million) budget for the Auditor General’s Office for 2013, MVR14 million (US$907,911) higher than its budget for 2012.

Presenting a Finance Committee report (Dhivehi) on the Auditor General’s Office’s budget, Chair MP Ahmed Nazim explained that parliament was mandated by the audit law to approve an annual budget for the office prior to the submission of the state budget by the Finance Ministry.

A request to increase the Audit Office budget was scrutinised by a sub-committee and approved after a thorough assessment, Nazim said.

Auditor General Niyaz Ibrahim told the committee that the additional funds would be used to hire 43 new staff. The Audit Office presently has 99 staff, including the Auditor General.

As part of its mandate, Niyaz noted that the Audit Office had to audit financial statements from members of the cabinet in addition carrying out annual audits of government offices and other state institutions.

Due to the geographic dispersion of the Maldives, the Audit Office needed to audit over 1,000 offices across the country, Nazim said.

During the debate on the Finance Committee report, most MPs spoke in favour of increasing the Audit Office’s budget and praised the “sincere” and “competent” work of Auditor General Niyaz.


Human Resource Ministry owed more than MVR 350 million in unpaid work permit fees, student loan repayments

The Ministry of Human Resources, Youth and Sports failed to collect MVR 168.4 million (US$10.9 million) in expatriate work permit fees for the past three years and MVR 191 million (US$12.3 million) in repayments for student loans, the ministry’s audit report for 2011 has revealed.

The audit report (Dhivehi) made public on Monday stated that information from the past three years on expatriate work visas showed that the year-on-year increase in foreign workers arriving in the Maldives was “alarming.”

“Records from the Department of Immigration and Emigration show that from July 1, 2009 to June 30, 2011 the state did not receive MVR 168,414,000 (US$10.9 million) owed as work permit fees,” the audit report revealed.

Records showed that the number of foreign workers living in the Maldives without paying work permit fees in 2009 was 16,934.

The figure increased to 27,793 in 2010 and 39,756 in 2011.

While the expatriate workforce in the Maldives as of December 2009 was 57,968 registered workers, the figure had risen to 99,369 by September 2011.

Of the total number of foreign workers, 55 percent or 54,653 expatriates were from Bangladesh and “69 percent of these, or 37,710 people, are working in the country illegally.”

Of the remaining 44,716 from other nations, 18 percent or 8,048 were illegal workers.

“Therefore, records show that the total number of foreigners working in the Maldives illegally is 45,758 (46 percent of foreign workers),” the report revealed.

Student loan repayments

The student loan repayments were meanwhile owed for two loan schemes launched respectively in 2000 and 2005.

As of December 31, 2011, the report found that the ministry failed to collect 154.6 million (US$10 million) as repayments for a long-term student loan programme launched in 2005 from a national higher education fund.

Of MVR 155.6 million (US$10 million) released between 2005 and 2011, the audit discovered that only MVR 904,872.28 (US$58,681) was repaid.

“Students who went for higher education under the scheme have not been repaying the loans because the department of higher education had not sent repayment schedules with details of the total amounts owed,” the report found.

If “adequate efforts” had been undertaken to collect payments, the Auditor General’s Office noted that “a revolving fund could have been established to provide higher education opportunities without additional expenditure from the state budget.”

Meanwhile in 2000, the report explained, the ministry launched a programme with World Bank loan assistance titled the “third education project” and issued MVR 250 million (US$16.2 million) under the scheme, with a specified portion to be paid back to the ministry.

“While it was determined that 15 percent from government employees participating in the scheme and 50 percent from participants from private companies would be collected, we note that repayments have not been sought from anyone,” the report stated.

“And as a result of the ministry not properly maintaining records of how the money was spent on students under the scheme, we note that details of how funds were released for individual students are not available and no one was sent repayment schedules.”

The report observed that MVR 37.5 million (US$2.4 million) estimated as repayments owed under the scheme has not been collected due to the “carelessness, incompetence and negligence of those in charge of the ministry’s relevant department”.

In February 2012, the report noted, the department of higher education and its staff at the Human Resource Ministry were transferred under the Ministry of Education.

Violations of Public Finance Act

The Auditor General’s Office stated that it did not believe expenditure out of the ministry’s budget was “mainly” in accordance with the Public Finance Act and “to the extent specified in the budget, on matters determined in the budget and in ways that would achieve the objectives of the ministry’s budget for 2011.”

In addition to the ministry failing to collect student loan repayments and unpaid work permit fees, the audit report noted a number of instances that were ostensibly in violation of the Public Finance Act and regulations under the law.

The audit discovered that seven political appointees were paid salaries and allowances in 2010 with no records of attendance.

The responsibilities of the seven senior officials who did not sign attendance sheets were unclear, the report noted.

Moreover, the audit found that a state minister was paid MVR 165,897.93 (US$10,758) as salary from February 13, 2012 to May 2012 despite not attending the office during the period.

While the state minister had submitted a written request for a holiday on February 13 before flying abroad, the report noted that the ministry had not made official arrangements for the leave of absence.

On February 7, 2012, former President Mohamed Nasheed resigned under controversial circumstances following a police mutiny at the Republic Square.

“[The state minister] was removed from the post by the President’s Office on July 22, 2012,” the report noted.

In another case, the audit discovered that MVR 865,500.70 (US$56,128) was deposited for seven students studying in Malaysia under the office’s staff development scheme, in excess of the official approved stipend.

In place of RM11,760 (Malaysian Ringgits) as six month’s stipend for each student, a sheet sent to the bank from the ministry mistakenly stated US$11,760, the report found.

While the ministry’s staff studying in Malaysia received an additional MVR 123,642.96 (US$8,018) each, the report noted that no attempt had been made to recover the excess amounts.

The audit report blamed the “failure of the employees to carry out their responsibilities” in preparing, checking and authorising the sheet sent to the bank.

The ministry meanwhile incurred MVR 133,938 (US$8,686) as fines for late payment of water and electricity bills in 2011, but no employees were held responsible and the loss to the state was not recovered.

The report also found that a total of MVR 420,000 (US$27,237) was paid as allowances in 2011 – at a rate of MVR 2,500 (US$162) a month – for 15 members of the National Sports Council under the ministry, without official approval from the government.

The report noted that the council held only seven meetings in 2011, each lasting for about an hour and with half the council’s membership in attendance.

Meanwhile, as a result of failing to properly maintain stock inventories, equipment purchased by the ministry was not registered and five laptops and 15 printers were lost.

The audit also discovered that the ministry provided MVR 200,000 (US$12,970) to the Shaviyani Milandhoo island council in June 2011 to set up a net around the island’s football stadium.

The funds were not approved in the 2011 budget but were released based on a pledge by the President to the islanders, the report stated, noting that such expenditure was “in breach of budgetary rules.”

Cancelled beach games

The audit report revealed that the ministry spent MVR 1.28 million (US$84,306) for “a first-ever beach and water sports tournament in South Asia” that never took place.

In February 2011, event organisers told Minivan News that the “Maldives Beach Games 2011” would bring hundreds of athletes from around the world to compete in 10 sporting events.

The international games were launched in February with a laser show and an appearance from renowned Sri Lankan cricketer Sanath Jayasuriya at a ceremony in Male’s Kulhivaru Ekuveni Indoor Hall.

The audit report meanwhile noted that the reasons for the eventual cancellation could not be discerned from the official documents.

The expenditure – made through the Maldives Olympic Committee – included over MVR 542,000 (US$35,149) on advertising and MVR 103,450 (US$6,708) on “a mascot and theme song for launching the beach games.”

Equipment, furniture and other items purchased for the cancelled games cost MVR139,545 (US$9,050).

Of the ultimately wasteful expenditure, the report noted that MVR 843,571 (US$54,706) was spent in violation of the Public Finance Act and regulations as estimates were only sought from one party.

A member of the sports council created by the ministry was meanwhile paid MVR50,000 (US$3,242) – without a public bidding process – to transfer sand from a soccer pitch made for the games to the artificial beach, the report found.

The Olympic Committee spent MVR 117,000 (US$7,588) to prepare the soccer pitch in the vacant plot in front of Villa College.

Moreover, a deputy minister and the sports council member travelled to Bangalore at a cost of MVR57,825 (US$3,750) purportedly in relation to the games, but the purpose of the trip was unclear as an official report was not prepared.