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.


Government to issue fishing subsidy upon Majilis approval

Fishermen will start receiving the 100 million Rufiyaa (US$6.4 million) fuel subsidy allocated to them in the 2012 state budget as soon as Parliament approves revisions proposed by the Fisheries Ministry, the government has said.

Speaking at a press conference on Wednesday, Minister of Fisheries and Agriculture Ahmed Shafeeu said subsidising fuel for fishing vessels would “incentivise” many fishermen who are currently unable to fish due to high fuel prices.

“A lot of fishermen now use larger fishing boats which require more fuel. So they opt not to make trips if they can’t get a good catch after burning so much fuel. The fuel subsidy will encourage more people to go fishing,” said the minister.

Shafeeu said fishing in the Maldives has declined by more than half from approximately 185,000 tonnes of fish caught in 2006 to about 70,000 in 2011.

“It is very important to assist the fishermen as it affects the livelihood of many people. Also, this needs to be done in order to sustain the industry and increase fish exports as there is a risk of losing some markets,” he explained.

This year’s subsidies, unlike previously, will be given based on the horsepower (hp) of the fishing vessel instead of the size of the vessel. Registrations are open until June 7 for fishing boats to apply for subsidies, according to the ministry.

The former administration withheld releasing the subsidy citing insufficient funds in the state budget for the fishing subsidy. Former Minister of Finance Ahmed Inaz told the Parliament in October 2011 that the state would have to reduce other subsidies to issue Rf100 million as oil subsidies for fishermen.

Governor of the country’s central bank Fazeel Najeeb last month said the Maldives was facing its worst economic crisis in recent history. Parliament’s Finance Committee revealed in May that expected revenue for 2012 had plunged 23 percent – a shortfall of US$168.6 million, leaving the country with a budget deficit of 27 percent.

Fisheries Minister Shafeeu said although the state is in debt, the 100 million must be released to fishermen since  Parliament had allocated the money for fishing subsidies in the state budget.

Former CEO of the Maldives Industry of Fisheries Corporation (MIFCO) Adil Saleem, who also held the position of Transport Minister in the former government, said encouraging a subsidised industry “completely reverses” of the former government’s policies, although he said it was important for fishermen “in the current situation.”

“Subsidising is wrong,” Saleem said, arguing that it did not address the core problems in the industry and is “not the solution for a sustainable industry.”

“Coup financiers are shaping the industry so that the fishermen act as their staff, going fishing everyday on subsidised fuel,” said Saleem.

However, he noted the fishermen are currently in “desperate need” of assistance due to the low prices they get for the fish, and said the subsidies should be released to them as a short-term measure.

“An election is what we really need,” Saleem said.