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NDMA's audit report exposes violations in COVID-19 expenditures

Shahudha Mohamed
17 September 2020, MVT 08:46
National Disaster Management Authority (NDMA)'s Chief Executive Hisan Hassan. PHOTO: NDMA
Shahudha Mohamed
17 September 2020, MVT 08:46

A compliance audit report released by the Auditor General's Office on the National Disaster Management Authority (NDMA)'s spending of state funds for the COVID-19 response exposed that the authority had illegitimately squandered millions.

The compliance audit highlighted issues in securing accommodation for quarantined and isolated cases and frontline workers, providing food for accommodation facilities, failure to maintain the stock records of aid supplies and stock, establishing a medical facility on land which was not under state ownership, and purchasing items for above-market prices.

No policies, no agreements

According to the audit report, a total of MVR 16.7 million was spent on guesthouse accommodation for isolated and quarantined cases as well as frontline workers.

The report stated that NDMA did not have a policy on detailing the guesthouse expenditures and did not check the number of rooms booked or the services provided prior to completing the payments.

The audit report further underlined that no agreements were signed in making payments to the guesthouses.

Due to this, the report noted that different guesthouses had charged varying rates and included unused rooms and services, such as laundry and extra beds, in the billing process.

The authority had also violated the guidelines in making payments to resorts which were used as temporary quarantine facilities. The audit report noted that some resorts were paid a higher amount than the rate set by the government.

Although the state had set a daily rate of MVR 750 for every occupied room, NDMA had paid a daily rate of MVR 840, resulting in spending 12 percent of funds in excess.

The aforementioned increment alone cost an additional MVR 206,280 from the state budget.

MVR 9 million lost without a trace

The Auditor General's report revealed that NDMA spent MVR 17 million till the end of June to provide food and beverages to some facilities along with the National Emergency Operation Centre (NEOC) based in Dharubaaruge convention centre.

As per the report, a total of MVR 9.8 million out of the MVR 17 million is unaccounted for as there is no way to prove that the funds were indeed spent on received goods and services. The report stated that NDMA did not have paperwork backing up the expenditure.

The report highlighted that NDMA was mandated with providing food and beverages to temporary accommodation facilities and Dharubaaruge under a specific set of rules, which stated that payouts must be made for daily meals, at the agreed rate, for all the amount of people the meals were provided for.

NDMA must inform the numbers of meals to the supplier every day, and maintain the records of communication and the receipts to prove that the payment was made for the number of meals delivered per day, the report said.

However, as per the report, NDMA had failed to maintain records of the dealings in every facility other than the quarantine centres in Velidhoo, Alif Alif Atoll, and Gulhifalhu in the Greater Male' Region.

Moreover, the audit noted that the authority had also failed to document the departure dates of individuals taken to facilities, which poses a challenge in concluding that the meals were provided for the number of people present at the facility on a particular day.

Noting that the financial controller had neglected their responsibility in issuing funds, the audit report called for the Ministry of Finance to investigate the issue.

Purchases exceeding controlled prices

The compliance audit also revealed that NDMA had paid above-market prices for goods purchased with state funds.

In addition to over-paying for common items, the report revealed that this included paying excessive amounts for cost-controlled staple foods such as rice, flour and sugar.

Although the controlled price for a kilogram of dhal is MVR 45, NDMA had purchased a kilogram of dhal at MVR 64, while a kilogram of rice priced at MVR 4.80 was bought at prices between MVR 5 to MVR 8.

Similarly, the audit report disclosed that a kilogram of flour which costs MVR 3.80 was purchased for MVR 8 and a kilogram of sugar, with a price controlled at MVR 4.82, was purchased for MVR 16.

The report also highlighted that other items, such as smoked fish, fish cans, dried chilli, milk powder, raw fish, tuna paste (rihaakuru) and soft drinks, were also purchased at above-market prices.

Auditor General Hassan Ziyath advised NDMA to collect the excess amount in payments and transfer the funds to the state budget. He also suggested the Ministry of Economic Development to take measures against the businesses that sold the items at heightened prices.

The audit report requested institutions to compare the prices to market values even while purchasing goods through single-source procurement.

NDMA rejects audit report

Amidst public uproar following the publication of the compliance audit, the National Disaster Management Authority rejected the report, claiming that the Auditor General's Office had failed to conduct the audit thoroughly and failed to mention important information.

Expressing sadness over the "incomplete" audit, NDMA stated that the Auditor General's Office was formally invited to visit and examine the workings of the authority, but the office did not follow through.

Referring to all the issues raised by the audit report, the authority further stated that the full details and documentation required for all the areas were submitted to the audit office while the audit process was ongoing.

Moreover, NDMA asserted that the excess funds spent in securing accommodation and were recovered as well.

During a press conference held on Wednesday, NDMA's Chief Executive Hisan Hassan stated that the authority was aware of the issues in purchasing the items at above-market prices and had rectified the error already.

"The funds were collected a long time before the audit report was published. Therefore, this issue should not even have been raised in the audit report", he said.

He further noted that providing food and beverages to facilities was closely monitored after identifying the error in purchasing the goods.