Audit office calls action against Polco former board

Following revelation of possible corruption by the Police Cooperative Society (Polco) in the development of housing units for Maldives Police Service officers, contracted by the government in 2013, the Auditor General’s Office, whose audit revealed the financial mismanagement, has demanded action against the responsible individuals of the then Polco board of directors.

A recent audit revealed the Maldives government lost MVR 354.7 million in the housing project, while the total project cost was recorded at MVR 1.06 billion as of the audited date; which meant the price of the project was MVR 1,851 per square foot.

However, according to information provided by the Ministry of Finance’s Tender Evaluation Board, the market rate of construction of similar project by private contractors is between MVR 1,300 and MVR 1,500; indicating the police housing units were constructed at an excess of between MVR 240.1 million and MVR 354.7 million.

The Auditor General’s Office has thus, demanded taking necessary action against all the culpable individuals in the potential malpractice. While the agreements made with one of the project’s contractors, Island Experts, has been repudiated, the Auditor General’s Office had urged recovering the payments issued to the contractor at the earliest.

The office further identified the agreement between Polco and Island Experts was detrimental to the state. Besides this, the Auditor General’s Office further recommended suggesting the Ministry of Finance to take action against the contractors, whose agreements were cancelled owing to breach of contractual obligations.

The report made additional recommendations, such as clear announcement of any duty exemptions for the import of construction materials in the event they are imported for government-initiated projects, and assigning the relevant government authority for such development projects instead of awarding them to such cooperative societies.

“The expenditure of nearly twice more than the requirements indicate Polco lacks technical capabilities, amendments to agreements favoring contractors, and other elements that indicate potential fraudulent and corrupt activities in the project,” the report read.

The audit further revealed that the agreements were made in a manner benefitting the representative of Noomadi, who though remained unnamed in the report, was identified as the Managing Director of Island Experts, and a family relative of the Managing Director of ‘Dhe Koamas’, another contractor of the project.

The representative had received, both directly and indirectly, payments of MVR 682 million in total, the audit revealed.