A recent audit report of Housing Development Corporation (HDC) has revealed that the corporation used MVR 253 million in violation of regulations between 2017 and 2018.
The period coincides with the presidential campaign of former Maldivian President Abdulla Yameen. Around this time, HDC was mired in multiple accusations of misconduct.
The audit report published on Tuesday revealed HDC spent MVR 18.4 million to contract third parties to clean up Hulhumalé Water Theme Park area. HDC sought the contractors through single-source regulations, and the entire process was in breach of the Maldives Procurement Regulations, the report said.
HDC contracted a private third party to clean up the area from January 2018 until August of the same year. The corporation contracted the private third party without a bid process, citing a reduction in processing time as the reason. The audit report revealed HDC’s then-board had discussed and agreed with the decision.
The report also revealed that the company had failed to complete its work within the agreed period. HDC extended the duration by another 60 days and spent an additional MVR 6.9 million without changing the scope of the project.
The procurement guidelines of the company state that HDC has to publicly announce tenders if the goods or services sought exceed MVR 3 million. The audit report further highlighted that HDC had sufficient time to announce that it was seeking bidders for the water theme park clean-up project.
Before HDC contracted a private third party, it had assigned the work to Waste Management Corporation (WAMCO). WAMCO was contracted on September 26, 2017, until December 9, 2017. HDC spent MVR 12.3 million on the contract.
The audit report also revealed that HDC contracted a foreign party to purchase street lights for a cost of MVR 26 million. The contractor was sought without the required bidding process, under the single-source approach.
The audit revealed that before procuring the street lights, the prerequisite assessments, such as electrical layout works and other technical details, were not completed. The Auditor General’s Office claimed in their report that HDC did not have sufficient grounds to contract a private company without first seeking interested parties through a public announcement.
Furthermore, the supplier was paid an additional MVR 26.9 million for the installation of the street lights, which was not announced publicly and followed the single-source approach. The audit report stated that this did not comply with the regulations and that there were no documents indicating why HDC chose to contract a private company under a single-source approach.
HDC had also spent MVR 193 million of its cash flow on the ‘Hiyaavahi’ project. This led to financial constraints and insufficient funds for organisational operations. The payment made from HDC’s cash flow was at first made out as an advance payment to the contractor of the ‘Hiyaavahi’ project. The contractor received MVR 97 million in advance, while an additional MVR 97 million was paid by HDC in 2018.
The previous government launched ‘Hiyaavahi’ as a middle-income housing project, aimed at government employees and other public sector employees. The project was carried out through user financing and loans. HDC attempted to acquire a loan through the Bank of Maldives (BML) on multiple occasions, though without success.
The audit report further claimed HDC had spent MVR 148 million in excess of the allocated budget. This excess spending caused financial shortages for its cash flow and costs.
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