Fisheries Ministry audit reveals mismatched expenses, widespread abuse of fuel subsidies

The Auditor General’s report on the Fisheries Ministry for 2010 reflects “differences in interpretations” rather than actual fraud in the ministry, Minister of State for Fisheries and Agriculture, Dr Hussein Rasheed has claimed.

Dr Hussein Rasheed served as the Ministry’s Finance Executive from 2010 to 2012.

Parliament’s Finance Committee is currently investigating issues raised in the audit report published earlier this year. The committee on Tuesday summoned Fisheries Minister Ahmed Shafeeu and senior officials of the ministry for questioning.

Committee members expressed concern over the audit report findings. Committee Chair Ahmed Nazim said there was a “systematic problem” in the ministry, while MP Abdul Ghafoor Moosa said “nothing had gone right”.

The Auditor General’s report highlighted several cases of the ministry’s failure in adhering to financial laws and regulations.

Issues raised in the report include discrepancies between financial reports submitted by the ministry for audit and actual expenses records kept by the ministry, reporting of unspent figures as expenses in the ministry’s financial report, failure to collect fines and other money owed to the state, bypassing bidding and tender processes in awarding projects, and irregularities in releasing fishing subsidies, among other things.

The disparities between financial statements submitted by the ministry and financial records at the ministry amount to a difference of more than Rf 4 million (US$260,000). The audit report said the ministry had reported unspent money in bank accounts and safes across different atoll and island offices as expenditure in the finance report.

However Rasheed said the ministry considered money deposited to island and atoll accounts for different projects as expenses.

“We record them as expenses after dispersing the money to the atolls. But the Auditor General considers it spent only after the money reaches the pockets of who it was meant for. The money is there in the accounts. It is not lost. This is just a matter of difference in interpretation,” said Rasheed.

He further said that although the ministry had officially responded to the draft audit report sent by the Auditor General, the ministry’s comments did not seem to have been considered in the final audit report.

“We cleared a lot of issues in our response. But the public is only exposed to the contents of the audit report which does not include any of the ministry’s comments. I am quite sad at the distortion of truth by some critics that has unjustly affected the ministry’s reputation,” said Rasheed.

The audit report expressed concern over the failure of the ministry to take action against bad contractors. It stated that in several cases where contractors had failed to finish the project on time, despite several deadline extensions, the ministry had not taken any action to collect fines and liquidated damages owed to the ministry by law.

The report also said the ministry had made payments to contractors without adequate evaluations of their work and to parties who did not meet the required standards for projects.

Rasheed said some of the contracts were signed before the change of government in 2008 and their contents did not always allow the ministry to take action.

Regarding the missing contents in the ministry’s safe, recorded in the audit report, Rasheed said he was confident that “under my authority and knowledge, nobody took away any money.”

“The auditors emptied the contents of the safe on a table which had books and other things already on it. That day they concluded that one envelope was missing from the safe but we later found it and informed the Auditor General’s office,” explained Rasheed.

Commenting on the accusation that the ministry had failed to properly maintain attendance records, Dr Rasheed said the audit report was compiled when the ministry had just started using a new security system after shifting to Velaanaage. He said the system registered staff going out even if they went to the adjacent office to use the bathroom. However despite the use of this system, attendance records were still kept as an Excel spreadsheet.

In 2010 the Majlis allocated 100 million rufiya as fuel subsidies for fishermen. According to Fisheries Ministry records, 75 million rufiya (US$4.8 million) was released as fuel subsidies to fishermen. Some of the concerns raised in the audit report included releasing fuel subsidies to fishing boats without collecting any data of fishing trips made, and the issuing of subsidies to non-fishing vessels such as passenger boats.

The Audit Office took a random sample of 168 boats which collected fuel subsidies on a specific date, and discovered that only two of the boats went fishing on that date despite collecting the subsidy.

Dr Hussein Rasheed said releasing the subsidies was based on the declarations made by the fishermen as it was currently impossible to confirm whether a specific boat went fishing before collecting the fuel money.

“This is a very important issue and we raised this concern even when the initial discussions about the subsidy were held in the parliament. The only way I can think of is installing a tracking device on the boats. Like we have said before, we can’t keep a policeman on every fishing boat,” said Rasheed.

The fishermen are required to fill both sides of a subsidy slip available from the ministry to collect the subsidy. The audit report also highlighted 3543 missing subsidy slips printed by the ministry.