Tag: spending

Failure to recover misappropriated state funds to be investigated: Parliament Public Accounts Committee

Parliament’s Public Accounts Committee will investigate the failure of authorities to recover funds highlighted by the auditor general as misappropriated.

In a meeting held on Monday (February 25), Committee Chairperson MP Ahmed Nazim revealed that the committee intended to send a letter to Attorney General Aishath Azima Shakoor regarding the failure to recover the misappropriated funds.

Majlis Finance Committee member MP Ahmed Hamza told Minivan News today (February 26) that the Public Accounts Committee was still going through the reports and was unable to give an estimate as to how much money is still owed as a result of the misuse of state funds.

“We are having to look into past audit reports starting from when they first began under [former President Maumoon Abdul] Gayoom was president. We are not able to scrutinise the spending from any year before audit reports were introduced.

“We have agreed that in order to scrutinise Gayoom’s government accounts, the majority of those looking into them will be held by opposition parties. This will also be the same when [former President Mohamed] Nasheed’s accounts are looked into,” Hamza said.

The finance committee member said that there were two issues in regard to the failure of recovering misused funds.

“If the government incurs a loss due to the misappropriation of funds, rather than recover the money, the guilty party is faced with criminal punishment instead.

“Secondly, it is a case of certain members finding it not possible to recover the funds that had been misused,” Hamza added.

When asked whether there had been any effort to recover the money in the past, Hamza stressed that some had been returned, but he was unable to give a rough figure as to how much.

Dhivehi Rayyithunge Party (DRP) MP Visam Ali was reported by local media as saying that government offices do not correct issues relating to how funds are managed, even after repeatedly being advised to do so in audit reports.

The Attorney General Aishath Azima Shakoor and Head of Majlis Finance Committee and MP Ahmed Nazim were not responding to calls from Minivan News at time of press.

Finance Committee member and Maldivian Democratic Party (MDP) MP Abdul Ghafoor Moosa answered his phone when contacted by Minivan News stating that he was “in a meeting”.

Extravagant spending

Previous reports compiled by the auditor general have uncovered extravagant spending by former Presidents and ministerial officials.

Earlier this year, an audit report for 2010 highlighted 12 instances whereby the President’s Office – under Nasheed’s government – had acted in breach of laws and regulations.

The report noted that in 2010, the President’s Office spent MVR 7,415,960 (US$480,931) over the parliament approved budget for the office.

In addition, the report also highlighted Nasheed’s chartering of an Island Aviation flight from Colombo to Male’ on November 19, 2010. This had cost MVR 146,490 (US$9500).

The audit report states that while all these were paid from state funds, no records were available to prove that Nasheed booked this flight for official purposes.

The report further reveals that President Mohamed Waheed Hassan, then Vice President, had spent MVR 764,121 (US$49,554) on a trip to Malaysia and America with his own family.

Meanwhile, the expenses of Former President Gayoom were leaked last year revealing the excessive spending on Gayoom’s family from money allocated to helping the poor.

Dhivehi Rayyithunge Party (DRP) MP Rozaina Adam leaked the invoices revealing Gayoom’s spending through Twitter in 2012.

In a statement, Rozaina noted that a total of MVR 905,636 (US$58,807) was spent on various items for Gayoom’s family, including MVR 193,209 (US$12,546) on trouser material in 2008.

Auditor General Niyaz Ibrahim told newspaper Haveeru back in October 2012 that the state should recover funds used by former presidents on their families and associates.

Lack of legislation explicitly prohibiting such expenses was not an obstacle to recovering the misappropriated funds, the Auditor General contended.

He noted that there was no law that authorised the use of public funds for personal expenses, adding that assistance from state funds should be provided on an equal and fair basis.

“Even if its Nasheed, Waheed or Maumoon, no one can spend state funds for their own personal use,” Niyaz was quoted as saying.

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Finance Minister aims to “rearrange” ministerial, independent institution spending

Finance Minister Abdulla Jihad will hold discussions over the next week with government departments, independent institutions and the Maldives judiciary to try and reorganise their respective spending allocated within the 2013 budget.

Jihad has told Minivan News this week that he would be meeting with all state departments and various institutions to ascertain the likely financial difficulties they expect to face over the next year after after the proposed 2013 budget was cut by over MVR 1 billion (US$65 million). He stressed that efforts to reorganise funds would not impact the amount of spending assigned to each ministry, but rather how existing money was being spent.

The comments were made after the proposed MVR 16.9 billion (US$1 billion) forwarded to the People’s Majlis was reduced to MVR 15.3 billion (US$992 million) before gaining approval last month.

The parliamentary committee that had reviewed the budget at the time had originally recommended MVR2.4billion (US$156 million) worth of cuts that some of its members claimed could be made largely by reducing “unnecessary recurrent expenditures” within the budget.

The Budget Review Committee’s proposal for a MVR 14.5 billion (US$947 million) budget – in line with recommendations by groups like the International Monetary Fund (IMF) – was met with mixed reactions from opposition and government-aligned parties at the time.

With the budget now passed, Finance Minister Jihad said that his department intended  to look at the entire amount of state financing allocated this year on a department-by-department basis to identify the most significant spending shortfalls.

The finance minister said the review would allow his department to rearrange the budget within each ministry, as well as independent institutions and the courts to better cover spending needs over concerns the state may face “some difficulties” in future.

Jihad claimed that the proposed “rearranging” of state financing would not require parliamentary approval as the allocated overall spending for each body and institution would remain the same.

However, despite the efforts to reallocate monies within each ministry, Jihad maintained claims that the present budget was likely to be insufficient to cover costs over the next year.

“We will have to submit a supplementary budget this year,” he contended.

People’s Aliance (PA) party MP and Finance Committee Chair Ahmed Nazim was not responding to calls today. Fellow Finance Committee member MP Riyaz Rasheed was also not available for comment at time of press.

Supplementary

Finance Minister Jihad has previously told local media that with services being provided by the government expected to double during the coming year, it would become more difficult for the state to manage its budget.

“Because the budget is reduced, it will become difficult to manage expenses at a certain point. We think that a supplementary budget has to be introduced,” he was quoted as telling the Sun Online new service.

According to the Finance Minister, talks have already taken place with various offices to reduce their budgets.

Budget amendments

The estimated MVR 15.3 million budget was passed by parliament with eight additional amendments on December 27.

Amendments voted through included the scrapping of plans to revise import duties on oil, fuel, diesel and staple foodstuffs, as well as any item with import duty presently at zero percent.

An amendment instructing the government to conduct performance audits of the Human Rights Commission and Police Integrity Commission and submit the findings to parliament was passed with 53 votes in favour, ten against and four abstentions.

Amendments proposed by opposition Maldivian Democratic Party (MDP) MP Ali Waheed to shift MVR 100 million (US$6.5 million) to be issued as fuel subsidies for fishermen and MVR 50 million (US$3.2 million) as agriculture subsidies from the Finance Ministry’s contingency budget was passed with 68 votes in favour.

A proposal by Dhivehi Rayyithunge Party (DRP) MP Dr Abdulla Mausoom to add MVR 10 million (US$648,508) to the budget to be provided as financial assistance to civil society organisations was passed with 57 votes in favour and three against.

Revenue measures

Of the measures proposed by the Finance Ministry to raise revenue, revisions to import duties, raising the Tourism Goods and Service Tax (T-GST) from eight percent to 12 percent in July 2013, increasing airport service charge from US$18 to US$25, leasing 14 islands for resort development and imposing GST on telecom services were approved within parliament.

The Finance Ministry had however proposed hiking T-GST from 8 to 15 percent in July 2013 and raising airport service charge or departure tax from US$18 to US$30.

Rightsizing the public sector to reduce deficit

Amidst proposals to balance state spending during 2013, recommendations to reduce the public sector wage were made by the auditor general and submitted to parliament prior to the budget being passed.

Auditor General Niyaz Ibrahim observed that of the estimated MVR 12 billion (US$778 million) of recurrent expenditure, MVR 7 billion (US$453.9 million) would be spent on employees, including MVR 743 million (US$48 million) as pension payments.

Consequently, 59 percent of recurrent expenditure and 42 percent of the total budget would be spent on state employees.

“We note that the yearly increase in employees hired for state posts and jobs has been at a worrying level and that sound measures are needed,” the report stated. “It is unlikely that the budget deficit issue could be resolved without making big changes to the number of state employees as well as salaries and allowances to control state expenditure.”

Following the report, the The Budget Review Committee made cuts to overtime pay (50 percent), travel expenses (50 percent), purchases for office use (30 percent), office expenditure (35 percent), purchases for service provision (30 percent), training costs (30 percent), construction, maintenance and repair work (50 percent) and purchase of assets (35 percent).

The committee estimated that the cuts to recurrent expenditure would amount to MVR 1 billion (US$64.8 million) in savings.

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