Managing Director of Fenaka Corporation Muaz Mohamed Rasheed has said that while cases of fraud occurred during the previous management, the company is currently in significant debt.
Fenaka Corporation's current Managing Director, Muaz Mohamed Rasheed has said today that there is significant fraudulent purchases of engines and gensets within the company. He said that the case will soon be forwarded to the Anti-Corruption Commission (ACC).
During the meeting President Dr. Mohamed Muizzu held with the residents of Baa atoll Kendhoo, Muaz spoke in detail about the situation within the company.
Muaz said the government took over Fenaka with a debt of MVR 4.3 billion and has to spend MVR 86 million every month on salaries alone. Fenaka has 8,000 employees, and the company is bankrupt, he said.
"Fenaka receives revenue of approximately MVR 120 million. From this MVR 120 million, MVR 86 million is being spent only on salaries. Funds are also required for operations. The situation Fenaka has fallen into has to be pondered over," Muaz said.
Muaz said that the company currently utilizes 502 gensets, out of which 302 are damaged beyond repair. He added that if an island has three generators, two of them are inoperable.
"Over the last five years, no funds have been allocated for maintenance. The reason is quite evident. It involves purchasing gensets, akin to making a transaction when a resource is depleted, turning the process into a significant business," he said.
"In 2022 and 2023 alone, Fenaka has acquired 90 gensets. However, our situation has not improved. All the gensets are damaged. Why? Maintenance has not been a priority for the previous management," Muaz said.
Despite the gensets not being repaired, Muaz said that the financial records indicate an expenditure of MVR 100 million on genset repairs. He said that the necessary equipment for the gensets has not been procured in the last five years, resulting in their damage and necessitating the purchase of new ones.
"Therefore, in this case, Fenaka is operating as a business. They have been negligent, allowing the engines to deteriorate, then purchasing new engines, turning it into a lucrative business. I am stating what the figures indicate," Muaz said.
Muaz said that the statement indicates that repairs for the gensets cost MVR 100 million, and Fenaka currently lacks its own service center. He added that the decision to establish a service center with all the necessary facilities has been made and will incur a cost of MVR 60 million.
Under the guise of transport and logistics, Fenaka has committed significant fraud, spending approximately MVR 100 million every year, Muaz alleged. However, he added that Fenaka does not possess its own vessel or landing craft.
Muaz said that the company is in serious debt, owing MVR 2 billion to the State Trading Organization (STO) alone. He said that no payments have been made to STO since 2019, however, the payment process has now commenced.
Muaz said that 60 Fenaka office development projects have been halted, with MVR 1 billion spent on these projects alone. This amount is substantial compared to the market rate, and only 45 percent of the projects have been completed, he said. If the projects continue at the current pace, Muaz noted that more than MVR 1 billion will need to be spent to finish them.
"For an office building that could be constructed for MVR 23 million at the market rate, MVR 55 million has been spent, and 60 percent of it is still not completed. This is the current situation. The previous management committed significant acts of fraud during the previous administration," Muaz stated.
"This is a huge negligence, a huge fraud, a theft."
Muaz said that they are exploring ways to change the approach to office building projects to decrease costs.
"We have to make a difficult journey. However, I want to assure the citizens that, to overcome this, we are cutting the company's expenses and implementing new measures to increase revenue under the guidance of the President. God willing, we will save this company," he said.
Muaz said that Fenaka does not currently have the capacity to settle debts with other companies all at once, but there is a plan to repay all the money within the next two and a half years. Stalled projects will also be resumed as financial conditions permit.
"But we will ensure not to initiate projects that cannot be clearly completed," Muaz added.
Muaz said that sufficient information has now been gathered to report the frauds committed within Fenaka to the ACC, and all the cases will be submitted soon.
In the coming days, there is a likelihood of electricity issues in the islands, and we apologize for that, Muaz said. However, he repeatedly emphasized that the company has been forced into such a situation.
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