Tag: parliament’s finance committee

Finance Committee begins reviewing salaries of independent institutions, judges, MPs

Parliament’s Finance Committee Chair Abdulla Jabir has said that the parliamentary select committee has begun reviewing the wages and salaries of members of independent institutions, judges and members of the parliament.

During a committee meeting held last Wednesday evening, Committee Chair Jabir stated that it was responsibility of the Finance Committee to review wages and salaries annually. He added that the new initiative by the committee was part of the cooperation extended to the new government of President Abdulla Yameen Abdul Gayoom who has promised to a cost reduction policy.

Article 102 of the constitution states, “The President, Vice President, members of the Cabinet, members of the People’s Majlis, including the Speaker and Deputy Speaker, members of the judiciary, and members of the Independent Commissions and Independent Offices shall be paid such salary and allowances as determined by the [Parliament]”

The task of determining salaries and allowances is entrusted to the Finance Committee under section 100(a) of the parliamentary rules of procedures.

President Yameen previously announced publicly that he would voluntarily be taking a fifty-percent pay cut, a promise which he made during the campaign for presidency. The president also at the time promised to slash the wages of political appointees by 30-50 percent, should he be elected in September.

Furthermore he at the time also pledged to cut the salaries of independent institutions claiming that it was a pivotal step for the country to avoid a sovereign default.

Two propositions were made to the Finance Committee which includes a proposition by interim Dhivehi Rayyithunge Party (DRP) Leader Mohamed ‘Colonel’ Nasheed’s proposition to reduce the wages of a parliament member to MVR 20,000 (US$1300).

The second proposition was put forth by the opposition Maldivian Democratic Party (MDP) MP Ilyas Labeeb who suggested that the committee to collectively bring down the wages of all state institutions including the parliament, the judiciary, the executive and Independent Institutions.

Neither of the propositions was put for a vote during Thursday evening’s Finance Committee meeting.

MP’s Remarks

Speaking during Thursday evening’s committee meeting, Judicial Service Commission (JSC) member and MDP MP Ahmed Hamza suggested the wages of judges and magistrates be brought down before doing the same for members of independent institutions and the parliament.

“President Yameen himself has taken a pay-cut. Right now we must all follow that example shown by him. Else, we would not be able bring down the recurrent costs [in the national budget],” the Biledhdhoo MP told the committee.

The ruling Progressive Party of Maldives (PPM) MP Ahmed ‘Redwave’ Saleem also spoke in support of the committee’s initiative but disagreed with the idea of cutting down salaries of specific institutions such as judges and the judiciary with the intent to undermine such an institution.

MP Saleem argued that should the committee wish to bring down the wages of state institutions, then it must be done with thorough research and without discriminating against specific institutions.

“Such efforts must be sincere. This should not be done with the motive to reduce the pay for the judiciary or any specific institution,” MP Saleem told the committee.

However, opposition MP Abdul Ghafoor ‘Gabey’ Moosa openly disagreed to the idea of pay cuts citing that it could lead to more educated Maldivians taking up employment abroad. He added that based on the current inflation rates, it cannot simply be said that the current wages of state institutions are too high.

Deputy Speaker of Parliament – who is also a member of the committee – also spoke in a similar fashion where he criticised the proposition to bring down the wages of just parliament members, members of the independent institutions and the judges.

He also argued that due to how certain laws have been framed, it was not possible for parliament to bring down wages of some positions. Although the committee must move forward with the pay-cut initiative, the Deputy Speaker stressed that the committee needed to identify the positions which it intends to bring down the wages of.

“We ought to thoroughly research and foresee the outcomes of our decision to bring down the wages of state institutions. We need to assess what changes need to be brought in order to do such a thing,” the Deputy Speaker noted.

Wednesday evening’s committee meeting was forced to conclude after Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed arrived in the meeting room and begun disrupting it, taking points of order in which he complained to the Committee Chair for not informing him of the meeting.

Things became heated when Committee Chair MP Abdulla Jabir decided to call off the session without giving attention to the complaints by MP Riyaz Rasheed. Verbal abuses and physical confrontations ensued between Riyaz Rasheed and Jabir.

The committee meeting concluded with the Committee Chair MP Jabir announcing that it will reconvene in three days time after collecting necessary documents and information regarding the work. The committee also agreed to commit two hours of its time to the matter.

Previous efforts

Last December, Parliament passed revisions to the pay scheme approved by the Finance Committee for senior officials in the executive, judiciary and independent institutions.

The revisions included a MVR 5,000 (US$324) pay raise for board members of the Maldives Inland Revenue Authority (MIRA). MIRA board members now receive monthly pay of MVR 15,500 (US$1,005).

Among other  changes brought at the time by the committee to the pay structure originally passed on December 28, 2010 was a monthly phone allowance of MVR 1,000 (US$65) for MPs, ministers, judges of the High Court and Supreme Court, members of independent commissions, the Prosecutor General, the Attorney General and the Governor of the Maldives Monetary Authority.

According the revisions, should the phone bills exceed MVR 1000, the officials were allowed to claim compensation for the cost of phone calls made for official purposes.

The Finance Committee at the time also decided to discontinue monthly salaries for drivers of cabinet minister’s cars (MVR 7,500) as well as an allowance for petrol cost (MVR 1,000). Ministers were instructed to settle the expenses out of their salaries from April 2013 onwards. However, the committee did not terminate similar expenses for other officials provided state cars.

The revisions also saw increment of the health insurance premium given for judges and their parents from MVR 4,500 (US$292) to MVR 7,000 (US$454).

Despite the calls, the committee at the time also decided against making any changes to the remuneration of parliament members.

The revised pay scheme was passed with 38 votes in favor, two against and five abstentions.

Numbers

The Maldives has one of the highest percentages of government employees to population of any country in the world, at around 11 percent.

Salaries and allowances have also rocketed up, unmatched by government revenue. Much of this growth occurred in the two years leading up to the 2008 election and the introduction of multi-party democracy.

An internal World Bank report leaked in 2010 showed that increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

With the introduction of the new constitution and its requirement for an assortment of independent institutions to oversee various aspects of government, the share of the wage bill to revenue soared to “an astronomical 89 percent.”

The President of the Maldives receives a base salary of MVR100,000 (US$6500) per month. During his government’s attempts to reduce civil servant spending on the urging of the International Monetary Fund (IMF), former President Mohamed Nasheed took a voluntary pay cut of 20 percent.

Despite this, the government’s attempt to impose austerity measures was blocked by the Civil Services Commission, leading to a series of scuffles between the Finance Ministry and the CSC.

The opposition at the time, now in power following Nasheed’s controversial resignation in 2012, contested Nasheed’s expenditure on 244 political appointees – a figure partly the result of the government’s early efforts to consolidate state employees under government-owned companies outside the purview of the CSC.

Figures released by the Ministry of Finance and Treasury showed that these 244 appointees were being paid MVR 99 million (US$6.4 million) a year, however Nasheed’s administration contested that this constituted just two percent of the state’s 2011 wage bill, comparing it to the 39 percent that went to the civil service, 24 percent to uniformed bodies, 17 percent to local councils, 10 percent to independent institutions, 5 percent to the judiciary, and 2 percent to parliament.

In comparison, Nasheed’s successor former President Mohamed Waheed Hassan’s government during 2012 spent MVR 60 million (US$3.9 million) on 136 appointees, according to figures procured by Sun Online.

At the time, the monthly spend included 19 Minister-level posts at MVR 57,500 (US$3730), 42 State Ministers (MVR 40,000-45,000, US$2600-2900), 58 Deputy Ministers (MVR 35,000, US$2250), five Deputy Under-Secretaries (MVR 30,000, US$1950) and 10 advisors to ministers (MVR 25,000, US$1620).

Overall public expenditure in 2012 increased 12 percent on the previous year.  This was in large part due to measures such as the intensified recruitment and promotion of a third of the police force, and repayment of civil servant salaries cut during the Nasheed era.

The Maldives Monetary Authority (MMA) noted that while total expenditure for the year was three percent lower than 2011, this was only due to the government’s failure to pay a large number of bills. Total public debt at the end of 2012 was 72 percent on GDP, the MMA stated.

Meanwhile, the government’s wage bill was in May projected to increase by 37 percent in 2013 as a result of hiring more employees, notably 864 new staff for the police and military – an increase of almost 20 percent.

In its professional opinion on the budget submitted to parliament, the Auditor General’s Office also observed that compared to 2012, the number of state employees was set to rise from 32,868 to 40,333 – resulting in MVR 1.3 billion (US$84.3 million) of additional expenditure in 2013.

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Finance Minister to be summoned to committee

Parliament’s Finance Committee decided on Wednesday to summon Finance Minister Abdulla Jihad to the committee before the annual state budget for 2013 is submitted to parliament.

Local daily Haveeru reported last week that members of the public accounts oversight committee decided that the minister should be questioned over MVR 31 million (US$2 million) withheld from the Male’ Health Corporation (MHC), which was reportedly allocated to pay electricity bills for the Indira Gandhi Memorial Hospital (IGMH).

The committee did not however set a date for summoning the minister.

At a meeting of the Government Oversight Committee on Tuesday night, state institutions with overdue electricity bills blamed the Finance Ministry for withholding funds.

The health corporation had the largest unpaid electricity bill with MVR 31 million (US$2 million) owed to the State Electricity Company (STELCO).

STELCO officials informed the Government Oversight Committee that various state institutions owed the government company a total of MVR 174 million (US$11.3 million) in unpaid electricity bills.

Auditor General Niyaz Ibrahim meanwhile told Sun Online last week that the annual budget was submitted to parliament with only three weeks to assess the planned expenditure, which was not enough time to seek expert advise for a comprehensive assessment.

“We believe that the budget should be presented to parliament latest during the first week of October,” Niyaz was quoted as saying.

Niyaz suggesting that passing the budget before the end of December resulted in problems with executing the budget items.

Niyaz also insisted that government projects should only be financed by government revenue.

“The law states that expenses can only be made if they are included in the budget. Anyone who releases funds otherwise, is committing a crime. Legal action should be taken against them. The government will not be responsible for that. It is the person’s fault,” he said.

Niyaz went on to say that he did not agree with the government obtaining loans to pay civil servants’ salaries.

“Loans should be obtained for capital expenses. These problems can only be solved by reducing recurring expenses,” the Auditor General was quoted as saying.

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Auditor General doubts fisheries subsidies could be released

Auditor General Niyaz Ibrahim told local daily Haveeru last week that he doubted whether the government could release MVR 100 million as fuel subsidies for fishermen as decided by parliament’s Finance Committee on October 17.

In an interview with the newspaper, Niyaz questioned the legality of issuing the subsidy, suggesting that it could be in violation of the Public Finance Act.

“If we look at the Finance Act, we have doubts whether these funds could be released. We also have doubts over the strength of the policies set to issue the subsidy. There are question marks over the effectiveness of the subsidy. Questions arise as to why a certain group is benefiting from these funds as subsidy for a period of two months,” Niyaz was quoted as saying.

The Auditor General’s Office was assessing the guidelines approved by the parliamentary committee for issuing the subsidies, Niyaz said, adding that the office has informed the Fisheries Ministry that its recommendations would be submitted to the Finance Committee.

Deputy Minister of Fisheries Ali Solih told local media last week that an announcement inviting applications for the subsidy would be made in the government’s gazette to start issuing subsidies on November 1.

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Auditor General accuses senior officials of negligence in embezzlement of MVR 24 million from DMC

The Auditor General’s Office has accused senior government officials of negligence in the alleged embezzlement of MVR 24 million (US$1.6 million) through the Disaster Management Center (DMC) in 2009 and 2010.

In a presentation to parliament’s Finance Committee on Wednesday, Director General Ibrahim Aimon reportedly revealed that the Auditor General’s Office suspected former State Minister Abdulla Shahid, who was in charge of the DMC at the time, along with DMC Director General Mohamed Shahid and Deputy Director General Moosa Ali Kaleyfan as well as former State Minister for Finance Ahmed Assad and Finance Controller Ahmed Mohamed, were culpable in the scam or guilty of gross negligence.

Auditor General Niyaz Ibrahim told members of the Finance Committee that the negligence of the DMC and Finance Ministry in the embezzlement of funds was “very serious.”

Minivan News is seeking comment from the accused senior officials.

ABCs

On October 11, the Auditor General’s Office made public a special audit report (Dhivehi) of an investigation into misappropriation of MVR 24 million from the DMC, uncovered in the centre’s 2010 audit.

In the 2010 audit of the DMC, auditors discovered that payments were made for “hundreds of invoices from 2005”. As the DMC refused to comply with a request for all documentation relating to the transactions, the report noted that the files were eventually obtained from the Finance Ministry.

In 2005, the report explained, the DMC bought construction material for tsunami-related reconstruction from local businesses with “credit purchase order forms.”

The Finance Ministry paid the bills for credit purchases from the “tsunami recovery fund (TFR).”

A company named Allocate Business Company (ABC) was issued “a large number of purchase orders in 2005,” the report found, noting that the company was about a year-old and was not an importer or seller of construction material.

“Therefore invoices for all the purchase order forms released to ABC were submitted under the names of ‘Apollo Hardware Store’ and ‘Apollo Holdings Pvt Ltd,” the report stated, adding that the payments were made to Apollo in 2005 for the ABC purchase order forms.

The invoices submitted by Apollo Hardware and Apollo Holdings included references to the purchase order forms released to ABC, the report noted.

“Therefore it is believed that these two companies are strongly linked,” the report stated.

The scam

Meanwhile, in 2009 and 2010, ABC submitted over 700 new invoices to seek payments from the state with photocopies of the original purchase orders taken from the Apollo invoices.

The audit found that MVR 24,008,503.75 was paid out for 571 of the invoices.

The Finance Ministry prepared payment vouchers for the DMC and made the payments in four cheques between August 2009 and April 2010.

The fourth and final payment of MVR 13 million (US$843,060) was issued on April 27, 2010 for 193 fraudulent invoices.

While over 700 invoices were sent over by the DMC, the report noted that the Finance Ministry rejected 140 invoices worth over MVR 10 million (US$648,508) after the public accounting system showed that payments had already been made.

“Therefore, this showed that ABC attempted to obtain funds using invoices for which payments had been made [to the company],” the report noted.

“From one perspective, ABC was offered the opportunity to embezzle funds so openly because the company knew of the faulty arrangement between the Disaster Management Centre and and Ministry of Finance for issuing funds and took advantage of it. Or [it is because] the scam was carried out with the collaboration of senior officials of the Disaster Management Centre and Ministry of Finance and Treasury.”

Negligence or involvement of senior officials

The report added that the issuing of funds for forged invoices accepted by the public accounting system “raises serious questions regarding the integrity and capability of those entrusted with spending public funds.”

Moreover, the case demonstrated “extreme irresponsibility” on the part of the public officials, the report stated.

Among the reasons listed for suspecting either involvement or gross negligence of senior government officials, the report noted that as a rule public funds were released only for original documents, whereas the invoices in the DMC case contained photocopies of purchase order forms.

The Auditor General’s Office therefore believed that “this was done deliberately and with a plan rather than out of ignorance or because of mistakes.”

The report also noted that it was highly unlikely that either the state would have held payments owed to a private company without any reason or that the company would have waited four or five years to demand payment with no record of complaint or a court case.

The audit further discovered that officials from the DMC met with the state minister for finance regarding the payments to ABC, “however neither minutes nor any documentation of the discussion was maintained for any of these meetings.”

Moreover, the audit found that the Finance Ministry had rejected some invoices forwarded by the DMC that lacked purchase order forms. However, the audit investigation found that a Director General at the DMC instructed an employee to photocopy purchase order forms and attach the bill to the invoices, which were then sent again to the Finance Ministry.

In conclusion, the Auditor General recommended further investigations by the Anti-Corruption Commission (ACC) and Maldives Police Service (MPS) for prosecuting the directors of ABC Pvt Ltd as well as the culpable government officials.

According to local media reports, police have since arrested two individuals in connection with the ongoing investigation into the DMC scam. Police have however not revealed the identity of the suspects in custody.

At a press briefing on Thursday, parliament’s Finance Committee Chair MP Ahmed Nazim said that the committee has decided to summon Prosecutor General Ahmed Muiz and members of the ACC along with Finance Minister Abdulla Jihad and Finance Controller Ahmed Mohamed next week to discuss measures to prevent corruption and misappropriation of public funds.

Finance Controller Ahmed Mohamed is among the officials named by the Auditor General’s Office at the Finance Committee meeting last week.

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Finance Committee approves guidelines for MVR 100 million in fuel subsidies for fishermen

Parliament’s Finance Committee yesterday approved guidelines for issuing MVR 100 million (US$6.4 million) worth of fuel subsidies for fishermen following consideration of revisions proposed by the fisheries ministry.

At a press briefing today, Finance Committee Chair MP Ahmed Nazim said that the guidelines were finalised in July but the committee had been unable to vote it through until now due to the reworking of committee composition and the suspension of parliament.

“Today we have informed the fisheries ministry of our decision,” Nazim said. “The sub-committee’s decision states that after deducting MVR 1 million for administrative costs, the remaining MVR 99 million should be used to subsidise the cost of fuel for each [fishing] trip based on engine horsepower.”

The People’s Alliance (PA) MP for Meemu Dhiggaru explained that the fuel subsidies would be released based on fuel consumption or engine horsepower (hp) instead of the size of the fishing vessel as was done previously.

Fishing boats would be divided into three categories based on engine horsepower, Nazim said, ranging from 2hp to 829hp and higher.

The rationale for the decision was to ensure that “as many fishermen as possible receives the subsidy,” he said.

Some 1,053 vessels eligible for the subsidy have been registered at the fisheries ministry, Nazim revealed.

Unlike the past two years, said Nazim, the Finance Committee has instructed the fisheries ministry to directly deposit the subsidy to the boat owner’s bank account and post details of the subsidy and recipient on a special website.

The new mechanism would allow crewmembers to calculate the portion of subsidy owed to them, he added.

Although only two months remained of 2012, Nazim suggested that the fisheries ministry could disburse the total amount before the end of the year.

The Finance Committee had calculated that the MVR 100 million annually would cover 20 percent of fuel costs for each fishing trip, Nazim explained, but the fisheries ministry could now provide a higher percentage of the cost.

The newly approved mechanism would have safeguards in place to avoid fraud, Nazim observed, as the subsidy would only be issued when the boat owner presents the fuel bill along with other documentation.

Asked if the state budget could bear the brunt of MVR 100 million as subsidies, Nazim conceded that the expenditure would strain the budget but argued that increased productivity in the fisheries sector would boost the flagging economy.

“I believe that if fishing improves through such a stimulus or incentive, the benefits to the economy would be felt broadly,” he said.

Concurring with the committee’s chair, Maldivian Democratic Party (MDP) MP Mohamed ‘Colonel’ Nasheed argued that the state should assist workers in the primary sector at a time of economic slowdown.

Noting that the MDP government pledged to make the Maldives carbon neutral in a decade, Nasheed said the previous administration had conducted research in collaboration with international universities into alternative sources of energy to replace marine diesel.

“I still believe that the permanent solution for this would be finding an alternative source of energy, for us to be able to use renewable energy for fishing,” the MP for Haa Dhaal Nolhivaram said.

“Incentivising”

Speaking at a press conference in June, Fisheries Minister Ahmed Shafeeu said the subsidy would “incentivise” many fishermen who were 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 from approximately 185,000 tonnes of fish caught in 2006 to about 70,000 tonnes in 2011.

Meanwhile, in 2011, the MDP administration withheld releasing the subsidy citing insufficient funds in the state budget. Former Finance Minister Ahmed Inaz told parliament in October 2011 that the state would have to reduce other subsidies to release MVR100 million as oil subsidies for fishermen.

In the same month, the then-opposition Dhivehi Qaumee Party (DQP) sued the finance and fisheries ministries for withholding the budget allocated for fuel subsidies.

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

“Subsidising is wrong,” Saleem contended, arguing that it did not address the core problems in the industry and was “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 that fishermen were currently in “desperate need” of assistance due to the low prices they get for the fish, and said the subsidies should be released as a short-term measure.

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