SIFCO Audit report: issues with flat and catering

A recent audit report has revealed that delays in the construction of MNDF flats by Noomadi were caused not only by payment issues from SIFCO, the MNDF welfare company, but also due to problems sourcing catering services.

Parliament's Public Accounts Committee on Tuesday shared key findings from the Auditor General's report on SIFCO. According to the report, although the housing project was officially awarded to Noomadi on March 28, 2014 construction materials were only brought to the site in 2015, over a year later.

The report states that out of MVR 191.4 million due from SIFCO as a down payment, only MVR 125.93 million had been paid as of November 16, 2019. By the time on-site construction began, MVR 89.5 million had been handed over to Noomadi. However, Noomadi failed to follow the agreed timeline and work schedule as of December 1, 2023.

The audit also confirms that the delays were partly due to SIFCO’s failure to release funds on time. After the contract was eventually cancelled due to lack of progress, Noomadi agreed to refund MVR 92.5 million. These funds were processed via three dated cheques between September 30, 2016 and March 30. The Finance Ministry in April 2021 said that all dues had been settled and that Noomadi owed no additional payments to SIFCO. The project was subsequently reassigned to a Chinese construction company.

The audit further highlighted irregularities in meal and catering expenses. SIFCO was awarded a contract in September 2013 to supply meals for employees at the Bandaara Koshi. Over MVR 18.5 million was spent between September 2013 and June 2015 using petty cash, handed over to an MNDF staff member in charge of procurement.

The report states, "The employee responsible for procuring goods from the market does not follow any guidelines to ensure that items are purchased at reasonable prices. This is especially concerning since prices of vegetables, fruits, and fish fluctuate frequently, and these items are typically not available on credit."

According to the report, fruits and vegetables are now being imported to address the issue. It also stated that petty cash and meal expenses are currently managed under SIFCO’s standard procedures. Since the cooperative has a procurement policy in place, future purchases will be made in accordance with that policy.

The report also revealed that a company was hired to clean mess rooms without a public announcement or price comparison. From October 2013 to June 2015, MVR 2.5 million was paid to the contractor without verifying if they maintained the agreed number of cleaning staff. SIFCO has since corrected this and now ensures proper staffing.

Between October and December 2014, MVR 3.03 million was generated from firework events. SIFCO received 50 percent of the revenue, while the remaining half went to Wenzhai East Coast Fireworks Company Limited, a Chinese firm. The audit noted that this company was selected to import fireworks without comparing prices from other suppliers, and proposals for the work had also not been submitted by another company.