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.


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.


Tourism Minister implicated in US$6million corruption scandal

An audit report has implicated Tourism Minister Ahmed Adeeb in a corruption scandal involving US$6million, a day after ruling Progressive Party of the Maldives (PPM) amended the Audit Law to reappoint the Auditor General (AG).

AG Niyaz Ibrahim, in today’s special audit report, said the Maldives Marketing and Public Relations Company (MMPRC) obtained a US$1million loan from Maldives Tourism Development Corporation in the guise of making an urgent payment to a foreign party and subsequently loaned the money to a company owned by Adeeb’s father.

Adeeb owned a 35 percent share in Montillion International Private Ltd, but transferred his shares to his father in March 2012 when he assumed the post of Tourism Minister.

The company only made MVR 70,100 in 2011 through trade, but in the period between 2012 and 2014, US$ 6.8 million and MVR 3.6 million from tourism related business rolled through the company’s accounts, the report noted.

In a separate case, the MMPRC also asked the Maldives Ports Ltd (MPL) to hand over MVR 77.1million to pay the company US$5million at a later date. MPL agreed to transaction despite demonstrating no need for dollars.

MMPRC immediately transferred MVR 77.1million to a private company Millenium Capital Management Pvt Ltd. Only US$ 3 million of the pledged US$5million has been paid back. The audit report said Adeeb helped MMPRC push the deal through.

It also suggested the Tourism Ministry awarded a company owned by an Italian an island for resort development to pay back US$2.25million of the US$6million MMPRC owed to MPL and MTDC.

According to the report, Adeeb has failed to declare assets as per Article 138 of the Constitution since he took up the post of Tourism Minister.

The Tourism Ministry and Maldives Inland Revenue Authority (MIRA) refused to cooperate with the investigation, the report noted.

In a tweet Adeeb has condemned the report as politically motivated.

Channel News Maldives (CNM) broke the story of the US$6million corruption scandal in May. Its reporter Abdulla Haseen was charged with disobedience to order in August, but the Prosecutor General withdrew the charges a few weeks later.

Minivan News understands former deputy Speaker of Majlis Mohamed Nazim was involved in leaking documents to CNM. His passport was withheld last week, but Nazim left the country on the date the warrant was issued.

Millenium, Montillion, New Mood

Niyaz said MMPRC had obtained MVR77.1million from MPL and US$1million from MTDC to provide illegal loans to private companies.

Although MPL approved the MVR 77.1million payment in exchange for US$5 million, the company had no need of dollars and the transaction was made on MMPRC’s initiation, not MPL’s.

Further, MPL’s 2014 budget shows it required only US$2.2million for machinery in 2014, but the bidding process had not been opened at the time of transaction. MPL also had US$800,000 in treasury bonds and a large amount of dollars in its accounts.

Moreover, MMPRC is not authorized to engage in dollar trade and does not have the capacity to buy or sell US$5 million, as its working capital at the end of 2013 stood at US$4.5million and assets were only worth MVR 324,485.

MPL authorized the “risky” transfer after MMPRC issued two dated checks. When MMPRC failed to make its second payment of US$2.5 million on July 8, the agreement was amended to allow the company to pay back the money by December 1. The report said the amendment was made because Millennium failed to repay MMPRC on time.

In the second case, MMPRC on April 9 asked MTDC for an urgent loan of US$1million to make an urgent payment to a foreign party for tourism promotion. The loan was to be paid back by May 15.

The money was transferred to Adeeb’s father’s company Montillion on April 15.

But MMPRC made no payment to any foreign party in the period. The loan was paid back by New Mood Resort Pvt Ltd, which was given Dhaalu Atoll Maagau Island, at a head lease rent of US$2.25 million.

Toursim Ministry and MIRA refused to reveal details of the Maagau deal despite repeated requests, the audit report said.

Montillion is also accused of bribing a senior tourism ministry official with US$450,000 in February in a separate resort development deal.

Neither the Finance Ministry nor the MMPRC board were involved in either case. The MMPRC’s Managing Director Abdullah Ziyath personally handled all of the transactions, including picking up checks, against the company’s procedures.

Niyaz has recommended all individuals involved in the two cases be investigated for corruption and charged with abuse of power.


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.


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.


Finance Committee debates prompt investigation of government finances

The Majlis Finance Committee has decided to table the issue of the alleged embezzlement of MVR24million ($US1.5million) by the Disaster Management Centre (DMC) as an emergency issue tomorrow, local media has reported.

Following the release of the Auditor General’s report on the DMC’s 2010 finance, released last week, there have reportedly been two arrests in relation to the case.

Head of the committee Ahmed Nazim called into question the government’s accounting system, as did the Auditor General, Niyaz Ibrahim, who criticised those in charge at the DMC.

Ibrahim has also decided to expedite the audit of the government’s finances after being questioned in the Finance Committee about an allegedly unauthorised MVR300million ($US19.4million) loan, taken by the government from the Bank of Maldives in June.

That is an assignment we had planned for this year. But after the MPs raised questions over the matter, we have sped up that process and the assignment has commenced and is ongoing. This exercise is intended to carry out a comprehensive public debt audit of the State,” Haveeru quoted Ibrahim as saying.

He said that the audit will cover five years of spending and admitted that it was his office’s responsibility to determine legality of state debt.

“Based on the ratios, it is the responsibility of the Auditor General to determine the vulnerability of the State. If you look at the practice of the rest of the world public debt audits will cover such issues,” Niyaz added.

“Debt is a highly sensitive issue. It is related to the sustainability of the State. In addition to determining the authenticity, there are some vulnerability ratios we look for in a public debt audit,” reported Haveeru.


Health ministry audit reveals Rf11.8 million (US$761,290) fraud

A local company charged with procuring medical consumables and laboratory equipment for Malé and regional hospitals has defrauded the health ministry out of Rf 11.8 million (US$ 761, 290), an audit report has revealed.

F- Tech Solutions Pvt. Ltd doctored invoices and delivery notes and forged signatures to collect payment on goods that have not been supplied to the health ministry to this day, Auditor General Niyaz Ibrahim claimed.

The company had only supplied Rf 930, 512 (US$ 60,033) worth of medical consumables and laboratory equipment to the government, the report said.

The tender evaluation board awarded the contract to F- Tech Solutions even though the company had no prior experience in supplying medical equipment, had lied about previously supplying medical equipment to the health ministry in bidding documents, and had no import licenses or permits from the Maldives Food and Drug Authority to distribute medical supplies, the report noted.

The Rf 12.8 million (US$ 831,169) contract was awarded to F-Tech in September 2010 against the Anti Corruption Commission’s (ACC) advice at the time. The ACC had raised concerns over F-Tech’s lack of necessary licenses and permits.

According to the report, the State Minister of Finance at the time opened a Local Letter of Credit facility (LC) worth the total contract amount for F-Tech Solutions at the State Bank of India (SBI). The Auditor General said the move contravened the Maldives Finance Act which states only 15 percent of total contract value can be paid out in advance.

Further, although the contract was made between F-Tech and the health ministry, the state minister for finance authorised finance ministry staff instead of health ministry staff to sign delivery notes, the report said.

Niyaz said the state minister’s decision to establish a LC facility “opened up the opportunity” for payments to be made for unsupplied goods and “weakened the state’s internal control mechanisms.”

A Deputy Director General at the Ministry of Finance and Treasury authorised payment to F-Tech without confirming receipt of goods with the health ministry, even though SBI had noted discrepancies between the invoices and delivery notes. Nine of the 21 invoices were issued a month before the date printed on delivery notes, the report said.

Moreover, the Health Ministry did not annul the contract with F- Tech Solutions as per the agreement even though the company had failed to supply medical equipment for the period October – December 2011.

Instead, the ministry had procured the consumables itself and told F- Tech the amount would be deducted from the total payment to the company. However, no such deduction took place.

Niyaz recommends filing fraud charges against F- Tech Solutions, and filing negligence charges against the Tender Evaluation Board, and relevant Health Ministry and Finance Ministry officials. The report does not name the accused.

Niyaz has asked the police to investigate the case on April 18.

Doctored invoices

The report, published on April 19, said F – Tech Solutions had forged signatures on delivery notes and invoices claiming goods had been supplied to the health ministry. Even on the instances goods were delivered, the prices listed for goods were much higher than that pledged in the contract.

“This office notes that F- Tech Solutions forged signatures on some delivery notes and invoices. Further, the health ministry, hospitals and health centers have not received any of the goods said to have been delivered on the delivery notes. While the health ministry’s supply department has received goods noted on one invoice, the prices noted on the invoice are extraordinarily higher than prices pledged in the contract document,” the report said.

Nine of the 21 delivery notes worth Rf 5,787,272 (US$ 373, 372) were signed by a health ministry procurement officer. However, “the procurement officer in a statement to the office said the signature on the delivery notes were not his, that he had not signed the delivery notes, and that he had not claimed said medical supplies.”

Further, the procurement officer noted he was not authorized to receive medical supplies on behalf of the health ministry, and had not done so previously.

Two of the 21 delivery notes worth Rf 4, 215,642 (US$ 271, 977) were signed by a health ministry staff that did not exist in the health ministry records. However, the name matched the nickname of the ministry staff, but the staff told the Audit Office he had not signed or received goods on behalf of the ministry.

On the instances F – Tech Solutions had supplied goods, the company defrauded the ministry of Rf 1,816,793 (US$ 117, 212). The company had claimed Rf 2,368,954 (US$ 152, 836) on goods that were only worth Rf 522,161 (US$ 33,687).

The Maldives Customs Services has confirmed that F – Tech Solutions has never imported medical consumables and laboratory equipment, the report said. The goods that were supplied to the health ministry were bought on credit from a separate private company.

Further, even though F – Tech had agreed to import Rf 12.8 million (US$ 831,169) worth of goods, the import license approved to the company from the Economic Ministry was only worth Rf 500,000 (US$ 32,258).

According to local media Haveeru, F – Tech’s six directors are: Managing Director: Mohamed Abdulla, Director of Operations: Abdulla Rashid, Director of Administrations: Abdulla Shafeeg, Director of Sales and Marketing: Ahuyad Hisaan, Director of Logistics: Rilwan Shareef, and Director of Human Resources: Fathimath Shiuna.

Of the six, Haveeru notes Shareef and Shiuna are prominent former ruling Maldivian Democratic Party (MDP) activists.

The Supreme Court disqualified MP Ismail Abdul Hameed in February 2012 for authorising payment for goods before delivery while he was director at the Malé Municipalty in 2008. Hameed was sentenced to one year six months banishment.

Meanwhile, Deputy Speaker Ahmed Nazim was acquitted of four counts of fraud in February. The charges against Nazim concerned public procurement tenders of the former Atolls Ministry secured through fraudulent documents and paper companies.

MP ‘Redwave’ Ahmed Saleem was also cleared of corruption charges in February. The state has charged Saleem with the conspiracy to defraud the former Atolls Ministry in the purchase of the mosque sound systems.

In addition, the State Trading Organisation (STO) has withdrawn a a case worth more than a million US dollars lodged against Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed’s Meridian Services Private limited. The case concerned an unpaid sum of money worth Rf 19,333,671.20 (US$1,253,804.88) regarding Meridian’s use of the STO’s credit facilities.