The Edition


Procurement violations cost millions for MRDC: audit report

Fathmath Shaahunaz
22 December 2020, MVT 14:32
MRDC's road development project in HDh.Kulhudhuffushi. PHOTO/MRDC
Fathmath Shaahunaz
22 December 2020, MVT 14:32

Issues and violations in procurements cost the state millions of Maldivian Rufiyaa through the Maldives Road Development Corporation (MRDC), revealed a special audit report publicised on Tuesday.

Signed by Auditor General Hassan Ziyath, the special audit report detailed MRDC's procurements for projects carried out from 2015 through 2017, during the previous administration.

The report brought to light that MRDC had made advanced payments to subcontractors, and did not pursue compensation for the latter's failures on several projects, leading to the loss of millions from state coffers.

Notable issues highlighted in the report include MRDC's advance payment of MVR 7,494,200 to a private company contracted to procure a 200-tonne landing craft for MRDC. While the amount accounts for 50 percent of the total cost, the audit noted that MRDC had paid MVR 5,245,940 of the amount in violation of company guidelines.

Although MRDC had rejected the landing craft as it did not meet technical specifications and broke off the agreement with the contractor, the audit pointed out that the advance payment was not repaid to MRDC.

MRDC had also paid the total project cost of MVR 10,058,340, in violation of its own policies and guidelines, in advance to a company contracted to supply 5,000 metric tonnes of cement. However, MRDC did not get back an amount of MVR 1 million from the advance payment as penalty for delays in supplying the cement, not did it pursue compensation for damaged cement sacks.

Moreover, MRDC was 48 days late in settling MVR 5,056,200 invoiced by a company contracted to supply interlocking zigzag bricks. Their agreement stipulated MRDC to make the payment within 10 days of receiving the invoice, but it did not specify a specific amount to be paid as penalty. However, according to the audit report, MRDC had paid MVR 2.29 million to the company as late penalty fees.

In addition to procurements, the audit noted issues in road development projects, such as MRDC's subcontracting of a company to construct roads on seven islands at project costs higher than the original amount awarded by the Ministry of Housing and Infrastructure.

The corporation also failed to pursue compensation for 4.3 kilometres of road construction on Fonadhoo, Laamu Atoll, from the foreign subcontractor after the latter took an additional 21 months to complete the project.

Furthermore, MRDC did not utilise the vehicles it rented for road development work on four islands, but had to pay MVR 5.53 million as rent for that time period.

While the audit report detailed a number of other similar cases, Auditor General Hassan Ziyath recommended MRDC to adhere to company policies and guidelines for procurements, and to closely monitor the work of subcontractors. In cases where the corporation did not receive compensation or payments, the audit urged MRDC to pursue legal action and lodge cases at relevant authorities such as the Anti-Corruption Commission (ACC).