Finance Ministry requests suspension of vehicle domain number sales

The Ministry of Finance has requested authorities cease selling domain numbers for land vehicles pending an investigation into whether funds are being collected through the scheme in accordance to the Public Finance Act, local media has reported.

The suspension of domain numbers, an alternate form of registry for land vehicles, had been taken on advice from the attorney general, Transport Authority Chair Abdul Rasheed Nafiz has told Sun Online.

Nafiz said that a third sale phase for domain numbers was to have originally been announced this week, but had since been suspended due to the Finance Ministry’s request.

Finance Minister Abdulla Jihad had his phone switched off at time of press.

Domain numbers – a condensed, four digit format of vehicle registration – are sold through an online auction with starting prices of MVR 25,000 for cars and MVR 15,000 for motorcycles, according to local media.

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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.

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ACC to investigate alleged violations of public finance law by Prosecutor General’s Office

Parliament today approved a decision by the Finance Committee to instruct the Anti-Corruption Commission (ACC) to investigate alleged violations of public finance law by the Prosecutor General’s Office (PGO).

The decision was made in a report (Dhivehi) forwarded by the Finance Committee after studying violations of the Public Finance Act and regulations under the law flagged in the PGO audit report for 2010.

Reviewing audit reports and recommending measures to be taken by the relevant authorities is part of the mandate of the public accounts oversight committee.

The Finance Committee decision was approved with 51 votes in favour and two abstentions.

The audit report found that the PG office spent a total of MVR 145,596 (US$9,706) in violation of the Public Finance Act.

Among the cases uncovered in the audit that the ACC was asked to investigate, the PGO was found to have spent MVR 40,745 (US$2640) in additional expenses for interior design after moving to its new offices, without an agreement on price and quality of the work as required by section 8.21 of the public finance regulations.

Moreover, the PGO spent MVR 45,938 (US$3000) on an official dinner to participants of an e-crime conference participants in June 2010 without a publicly-announced bidding process.

The Finance Committee decided to send both cases to the ACC for investigation and inform the PGO to take measures to remedy the matters identified in the audit report.

The committee also decided that the Prosecutor General had breached article 17 and 20 of the constitution on non-discrimination and equality before the law as the office has prosecuted cases where the public finance regulations were similarly violated.

After the committee report was passed at today’s sitting, some MPs contended that Prosecutor General Ahmed Muizz would have to be removed from his post due to the decision.

However, Deputy Speaker Ahmed Nazim – also chair of the Finance Committee – said that Muizz would not be dismissed as the process specified in the constitution had to be followed to remove appointed officials at independent institutions.

Meanwhile, in a press release last week, the PGO said it would “always welcome” investigations by other state institutions into alleged violations of the constitution and laws by the office.

The PGO’s statement also assured that the office would provide “full cooperation” for the investigation.

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President Waheed requests parliamentary approval for loans of over US$96 million

Parliament has begun debate on the MVR 16.9 billion (US$1 billion) state budget for 2013 submitted by Finance Minister Abdulla Jihad last week.

At the beginning of Tuesday’s sitting, Speaker Abdulla Shahid read out a letter from President Dr Mohamed Waheed Hassan Manik requesting parliamentary approval for loans and government guarantees in the coming year.

Parliamentary approval for loans is required under amendments brought to the Public Finance Act in 2010.

Speaker Shahid announced that the President’s request was sent to parliament’s Finance Committee for consideration and review.

Minivan News understands President Waheed requested parliamentary approval for loans amounting to over US$96 million.

Presenting the budget to parliament last week, Finance Minister Jihad explained that next year’s budget deficit was to be financed with MVR 971 million (US$62 million) as budget support and MVR 1.3 billion (US$84 million) from Treasury bill (T-bill) sales.

Of the MVR 971 million estimated as budget support, MVR 671 million (US$43 million) was expected as foreign loan assistance, Jihad said, with the rest to be made up from “domestic finance.”

Jihad told parliament’s budget committee on Sunday that a large number of T-bills were sold to Champa Brothers – at an interest rate of about eight percent – when the Maldives Monetary Authority commenced sales to private parties in August this year.

Sun Online reported that Champa Brothers purchased T-bills worth US$11 million.

MMA T-bills of maturity dates of 28 days are sold at 7.73 percent interest, 91 days at 7.70 percent interest, 182 days at 7.55 percent interest, and 364 days at 7.70 percent interest.

Budget debate

Speaker Shahid announced that the debate would take place from 9:00am to 5:00pm with intervals until Thursday.

During Tuesday’s debate – which proceeded haltingly due to frequent loss of quorum – most MPs complained of the lack of funds allocated for development projects in their constituencies, such as harbours, water and sanitation systems, additional classrooms and upgrades to health centres.

In his budget speech (Dhivehi) last week, Jihad revealed that the public sector investment programme (PSIP) for 2013 included construction and repairs of harbours in 14 islands, establishing sewerage systems in 11 islands, water systems in three islands, 1,500 housing units in eight islands, 21 new mosques and upgrading the regional hospitals in Kulhudhufushi and Addu City to tertiary level.

Jihad said MVR 3.1 billion (US$201 million) was earmarked for the PSIP, with MVR 1.5 billion (US$97 million) from the state budget, MVR 21 million (US$1.3 million) from domestic loans, MVR 1.2 billion (US$77 million) as foreign loans and MVR347.6 million (US$22.5 million) as free aid.

Speaking first during Tuesday’s debate, MP Ali Waheed of the formerly ruling Maldivian Democratic Party (MDP) said there were no funds or projects in the budget for his constituency or the neighbouring island of Mahibadhoo in Alif Dhaal atoll.

The MDP parliamentary group deputy leader insisted that the government should continue implementing the former ruling party’s manifesto.

Government-aligned Dhivehi Rayyithunge Party (DRP) MP for Kelaa, Dr Abdulla Mausoom, expressed concern with taking more loans to finance the budget deficit while the public debt was expected to reach MVR 31 billion (US$2 billion) in 2013 – 82 percent of GDP.

Considering the high levels of debt, Dr Mausoom observed that his each of his constituents in Kelaa in the northernmost atoll of the Maldives “are indebted by MVR 85,000 (US$5510)”.

As a consequence of “unequal development of the country,” said Mausoom, there was no sewerage in the islands of Kelaa and Filladhoo.

The DRP MP criticised the administrations of both Presidents Maumoon Abdul Gayoom and Mohamed Nasheed for running up huge deficits and public debts, claiming that public debt “shot up like a rocket” during the three-year rule of the latter.

DRP MP for Kanditheemu, Mohamed Hussain, meanwhile protested over zero funds allocated for the island of Goidhoo in Shaviyani Atoll, part of his constituency.

The MP contended that smaller islands were neglected during formulation of the budget. He added that details of what was needed for the islands were shared with both President Waheed and Finance Minister Jihad prior to the drafting of the budget.

While he did not propose expenditure of more than half a million for the three smallest islands in Shaviyani Atoll, there was “a blank space next to Goidhoo” in the budget.

Local media reported that islanders of Goidhoo launched protests this week over the lack of funds allocated for development of the island.

Independent MP for Vaavu Atoll Velidhoo, Ali Mohamed, said his constituents in Foddhoo have been protesting at the island council for the past five days because the island’s pier was “crumbling” and damaged beyond use.

MDP MP for Ihavandhoo in Haa Alif atoll, Ahmed Abdulla, objected to infrastructure projects for the constituency approved in the budget for 2012 having come to a standstill.

MP Ahmed Abdulla claimed that MVR 10 million from a MVR 70 million loan from the Bank of Maldives had been disbursed but a planned sewerage project for Ihavandhoo did not commence this year.

Meanwhile, at the beginning of today’s sitting, Speaker Shahid said MPs should be “ashamed and embarrassed” that debate was only able to continue yesterday for two and a half hours out of six hours allotted in the agenda.

Yesterday’s debate was frequently interrupted by loss of quorum and was eventually cancelled around 4:00pm. At least 20 MPs are required to be in the chamber for sittings to proceed.

Shahid appealed for cooperation to let all MPs speak before the conclusion of the budget debate on Thursday.

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Audit report flags irregularities in Elections Commission finances

The audit report of the Elections Commission (EC) for 2011 has flagged several expenses in violation of public finance law and regulations.

The report (Dhivehi) made public on Wednesday listed 20 cases of expenditure made by the EC ostensibly in violation of the Public Finance Act and regulations under the law.

Of MVR 19.2 million (US$123,216) sent by the commission to atoll offices for the local council elections in February 2011, the audit found that MVR 1.4 million (US$90,791) was entered into the EC’s financial statement despite not receiving either confirmation or details of the how the funds were spent.

Moreover, while a contract was awarded to a local company for MVR 4.9 million (US$317,769) to print ballot papers following a public announcement by the EC, the audit noted that the commission did not propose it to the tender evaluation board as required for projects exceeding MVR 1.5 million (US$97,276).

The audit also uncovered that the commission paid MVR334,700 (US$21,705) to a company contracted to provide sea transportation during the council elections, for trips not included in the agreement.

While MVR 536,803 (US$34,812) was agreed upon in the contract for 56 trips, the EC ended up paying the company MVR871,503 (US$56,517) due to a number of additional trips.

Agreements made with private parties to hire temporary staff as well as vehicles for use during the council elections could not be found among the EC’s documents, the audit report noted.

A total of MVR 183,238 (US11,883) was however paid for vehicles and short-term staff for the elections in February 2011.

The audit meanwhile could not verify whether deposits from 91 candidates for the council elections, who either received less than 10 percent of the vote or whose candidacies were invalidated, were entered into the state income account.

Based on documentation at the EC, the audit was also unable to verify whether deposits for 1,254 candidates were ever returned.

Phone expenses

Among the other cases highlighted in the report, the audit discovered that commission members spent extra days overseas during official trips to attend seminars and workshops.

The cost of the extended stays during such trips between January 2010 and April 2012 amounted to MVR50,438 (US$3,270) for food, incidentals and pocket money.

The audit also found that commission members transferred phone credit worth MVR5,585 (US$362) from their mobile phones, the bills for which are paid out of the EC budget.

An examination of international calls by commission members showed that a number of such calls were not related to official business.

The audit further revealed that from April 2010 to April 2012, MVR 92,009 (US$5,967) was spent out of the EC budget to pay mobile phone bills of commission members.

A total of MVR 116,954 (US$7,584) was meanwhile paid to EC employees as phone allowances in 2011.

The audit discovered that between December 2007 and August 2011, the commission spent MVR 248,790 (US$16,134) to buy 30 mobile phones for senior staff.

Based on a decision by the former Elections Commissioner in December 2007, 13 phones were to become personal property of the chosen senior staff after one year, the audit revealed.

“We note however that no law or regulation authorises giving away state property,” the report stated.

Moreover, most of the mobile phones were “the most expensive phones on the market at the time [of the purchases],” the audit report noted.

“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 report stated, adding that no employees were held responsible and “compensation in any form was not sought” for the losses.

Some of the phones were discovered missing when “commission employees who were given the phones informed auditors that they were lost.”

A senior staff given a mobile phone worth MVR 14,195 (US$920) bought in 2008 did not return it when he or she left the commission, the audit noted, adding that corrective measures had not been taken on the issue despite recommendations in the EC’s 2010 audit report.

Other cases

The audit found that the EC did not sign agreements for work valued under MVR25,000 (US$1,621), despite public finance regulations stating that agreements must be signed for all government projects.

A total of MVR 249,494 (US$16,179) was paid out in 2011 without formal agreements.

The EC also hired a local company to service four photocopy machines for MVR40,000 (US$2,594) a year without a public bidding process and made an advance payment in violation of public finance regulations.

The audit noted that documentation did not show that the EC was receiving the company’s services each month as stipulated in the agreement.

Moreover, the commission did not seek quotations or estimates from three parties as required by regulations for procurements amounting to MVR 251,148 (US$16,287) in 2011, the audit discovered.

A number of expenses were meanwhile made out of the wrong budget code or item, the audit noted.

The audit report also noted that the EC made 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.

Moreover, items worth MVR 231,193 (US$14,993) were not entered into the registry of the EC’s stock inventory, the audit report noted.

The EC meanwhile failed to collect MVR 469,500 (US$30,447) owed as fines and deposits in 2011 and did not file cases at court as required by regulations.

As of December 2011, the audit revealed that the commission was owed MVR 260,000 (US$16,861) from seven political parties for failing to submit annual audit reports during the past five years.

Lastly, as of the report’s publication, the EC had not recovered MVR 12,999 (US$843) paid to staff in excess of their salaries and allowances.

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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.

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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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Over 100 police bicycles unassembled in warehouse: audit

Over 100 bicycles purchased for police use in 2009 were left unassembled in a warehouse, according to the audit report of the Ministry of Home Affairs for 2010 made public last week. The report flagged several cases of illegal and wasteful expenditure by the Maldives Police Service (MPS).

The audit found that 500 bicycles were procured in 2009 for MVR1.4 million (US$90,791) and paid for in 2010, while the required funds were not allocated for the vehicles in either the 2009 or 2010 police budgets approved by parliament.

“Of the purchased bicycles, 300 were sent to police stations in the atolls,” the report stated. “When [the Auditor General’s Office] checked on 5 September, 2011 to see if the 200 bicycles that should be in Male’ were there, it was discovered that 111 bicycles were kept in boxes in various warehouses while 89 assembled bicycles were left unused in warehouses.”

It added that six of 10 bicycles sent to Haa Dhaal Kulhudhufushi were also left unassembled.

Since the bicycles were left unused in warehouses, the audit concluded that “it could not be considered that these 500 bicycles were bought for police use,” adding that the expenditure was “wasteful” as the funds could have been used for other purposes.

The Auditor General therefore recommended putting the bicycles to use and holding those responsible for the procurement accountable under articles 47 and 48 of the Public Finance Act for violation of the law.

On March 30, 2010, police unveiled a new fleet of bicycles to be used for patrols as part of the previous administration’s plans to achieve carbon neutrality.

Following the publication of the audit report last week, a police spokesperson told local media that the bicycles would be used in the future.

The police media official noted that bicycles were used for patrols during November’s SAARC summit in Addu City.

Violations of public finance law

Among other cases highlighted in the report, the audit found that a private company was hired to construct a nine-storey building at the police Iskandharu Koshi compound for MVR67.2 million (US$4.4 million) on July 19, 2006 – without a publicly announced bidding process through the tender board.

The contract was awarded under the administration of former President Maumoon Abdul Gayoom.

The audit found that the company was paid MVR92.7 million (US$6 million) for the work, 37.87 percent in excess of the agreed upon sum.

The report noted that that the payment was in violation of public finance regulations, which stipulates that additional payments should not exceed 10 percent of the contracted amount.

Moreover, while the contracted period for the construction work was 18 months, the audit found that the Maldives Police Service approved an extension of a further 35 months.

The audit concluded that the extension was dubious and that police were culpable for the long delay.

The Auditor General therefore recommended that the responsible officials be held accountable and that the case should be further investigated by the Anti-Corruption Commission (ACC).

Moreover, also in 2008, a private company was contracted to build the police tow yard for MVR995,103 (US$64,533) without a public bidding process, which is required for government contracts exceeding MVR25,000 (US$1,621).

The audit also discovered that MVR1.6 million (US$103,761) was paid to contractors in violation of public finance regulations requiring approval from the President’s Office.

In August 2010, the audit found, police paid MVR80,000 (US$5,188) to a chief inspector as compensation for his damaged motorcycle, which was set on fire on August 2. The police executive board approved the payment as the price of the damaged motorcycle.

However, auditors found that the documents submitted by the chief inspector in seeking compensation were fraudulent, as the police report of the incident and photos showed that the damage was not extensive.

Moreover, auditors discovered that annual fees for the damaged cycle continued to be paid after the arson incident.

The Auditor General therefore recommended that the case should be investigated by the ACC.

The report further noted that MVR180,400 (US$11,699) was spent out of the budget in 2009 and 2010 for the police sports club while such expenses are explicitly prohibited by section 4.03(b) of the public finance regulations.

Scrutinising expenses out of the police welfare budget, the audit found that cash and tickets were provided for police officers to seek medical treatment overseas without the requisite doctor’s letter and recommendation form by the police medical service.

A senior police official was given US$1,200 out of the welfare budget for accommodation and food for medical treatment overseas, the report noted.

The report criticised the police regulations that allows senior officials to claim over US$1,000 for treatment overseas while lower-ranking officers were provided smaller amounts.

Meanwhile, as a result of delayed payment of utility bills, the audit found that police incurred MVR43,803 (US$2,840) as fines in 2010.

Lastly, the report noted that according to the Finance Ministry’s ledger, the Maldives Police Service spent MVR73 million (US$4.7 million) in excess of the approved budget of MVR627.7 million (US$40.7 million) for 2010.

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Illegal, wasteful expenditure flagged in Home Ministry’s audit report

Several instances of illegal and wasteful expenditure were flagged in the audit report of the Ministry of Home Affairs for 2010, made public on Tuesday, including MVR 800,000 (US$51,880) paid to two political appointees who did not attend the ministry.

The audit discovered that two state ministers were paid salaries and benefits from January to December 2010 while one was working at the Presidential Commission and the other at the Maldives Customs Service.

“Although the two posts were created for the Ministry of Home Affairs, as the ministry did not receive any service from the two appointees, this office believes that the President’s Office’s creation of the two posts cannot be considered for the need of the ministry,” the report (Dhivehi) stated, contending that the appointments were in violation of budgetary rules and procedures.

The two political appointees referred to in the report were Sheikh Hussein Rasheed Ahmed, a member of the Presidential Commission and former head of the Adhaalath Party, and Mohamed Aswan, former principal collector of customs.

Among other cases ostensibly in violation of the Public Finance Act and regulations under the law, the Auditor General’s Office noted that none of the construction projects for island and atoll offices as well as regional fire service buildings begun in 2008 were completed on schedule.

According to a status report on the projects prepared in June 2010, while none of the 14 projects were completed on time, the ministry did not seek over MVR6.5 million (US$421,540) in damages for the delays as stipulated in the contracts for 13 of the projects.

The report also found that the Home Ministry failed to include a clause for damages for delays as required by financial regulations in contracts worth MVR1.1 million (US$71,335) and MVR68,500 (US$4,442) respectively to set up partitions and a reception counter in the office.

Consequently, the ministry incurred a loss of MVR189,225 (US$12,271) that it was unable to claim as damages for delays of 51 days and 19 days respectively.

Moreover, as a result of hiring an engineering firm for a monthly pay of MVR4,500 (US$291) for inspection and management of office buildings begun in 2008 by the now-defunct Ministry of Atolls Development, the ministry had to pay over MVR1 million (US$64,850) as a consultancy fee due to delays in completing the inspection work.

The audit also found that four employees of the Parole Unit at the ministry transferred to the Department of Penitentiary and Rehabilitation Services (DPRS) in September 2010 by the Civil Service Commission (CSC) were paid salaries out of the ministry’s budget from September to December 2010 as the DPRS did not have space for the four transferred staff.

In another case highlighted in the report, the ministry paid an owner of an uninhabited island (Haa Alif Dhapparu) MVR5,310 (US$344) in excess of the compensation stipulated in the agreement when the island’s ownership was transferred to the Ministry of Housing and Environment. The island had been under the care of the Home Ministry before it was designated an uninhabited island on August 9, 2010.

The audit report noted that the ministry’s registry of property and assets were not properly maintained in accordance with section 7 of the financial regulations. While some purchases were not entered into the registry, assets transferred from other ministries were similarly unregistered.

As a result of not requiring employees to sign for use of ministry’s mobile phones and laptops, the report noted, six laptops were lost in 2010 while “no employee was held responsible for the losses”.

Lastly, the report found that financial records of monies collected by the ministry were not properly kept. A registry of cash collected was not maintained and receipts were not entered into the daily ledger, leading to discrepancies in the accounts.

Province Offices

The audit of the former Upper North Province Office meanwhile discovered that political appointees paid a living allowances were using government accommodation in Haa Dhaal Kulhudhufushi free of charge. Consequently, the electricity bill for the province office’s accommodation block amounted to MVR105,812 (US$6,861) in 2010.

Moreover, as of July 2011, the electricity bill for the block reached MVR126,022 (US$8,172).

The audit also found that the province office paid MVR156,133 (US$10,125) as docking fees to the Kulhudhufushi Regional Port for an accommodation barge used by Boskalis International, which was contracted by the government to reclaim land in the island.

As the funds were not included in the province office budget and the land reclamation project not carried out through the office, the audit concluded that the expense was in violation of financial regulations.

The report also flagged the hiring of a project consultant for a monthly pay of MVR10,000 (US$648) who had not submitted education certificates. While the province office had claimed that the other candidates did not show up for the interview, the Auditor General’s Office learned that interviews were conducted.

The consultant was appointed a state minister before the contract period expired, the report noted, suggesting that “the announcement for the post was made directly to hire that person.”

Moreover, the audit found that political appointees at the province office did not submit reports of trips out of the island as required by regulations. However, attendance records showed that the staff in question were said to be out of the island on office business.

Meanwhile, the audit of the South Province Office discovered that an individual hired in January 2010 to draw up a strategic development paper in three months was paid a total of MVR154,000 (US$9,987) after illegally extending the contract period beyond the agreed upon three months.

As of July 2010, the audit found, there was no record that the report was ever submitted.

The audit also found that the province office paid for the expenses of a state minister in Male’ for 49 days while there was no record to show any official business conducted during the stay.

Moreover, the expenses for food and accommodation of the south province state minister were significantly higher than the approved rate for government employees.

On July 15, 2010, the audit found, a state minister arranged a dinner worth MVR10,788 (US$699) for 24 people at the Villigilli Resort and Spa while there was no documentation sent from province office to the resort.

“Moreover, while the expenses form was not properly filled, both the form and the approval for the payment voucher were signed by the state minister,” the report stated.

The province office also spent MVR5,088 (US$329) a day for a Defence Minister’s stay at the Villigilli Resort from July 25 to 27, 2010, while there was no documentation at the office explaining the purpose or nature of the trip. Invoiced for the expenses, the Defence Ministry claimed it was not an official visit.

The audit discovered that the province office spent a total of MVR27,580 (US$1,788) to mark the India-Maldives Friendship Week in Addu City while the funds were not included in the office budget and the expenses were not approved by the Finance Ministry.

In the wake of the revelations of the audit, the Anti-Corruption Commission (ACC) Chair Hassan Luthfy told local media today that the commission would discuss the Home Ministry’s audit report at its meeting tomorrow and identify cases to investigate.

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