SIFCO audit: Catering and flat delays

The audit report found it unlikely that Noomadi, the company contracted to complete army flats, delayed work due to unpaid dues from the Sifainge Cooperative (SIFCO). It also noted inconsistencies in catering services for soldiers at Bandara Barracks.

The Public Accounts Committee subcommittee shared the Auditor General’s Office report on SIFCO on Tuesday. The report highlights issues regarding the flats built by SIFCO.

In 2013, Noomadi Investments was awarded a contract to build 300 housing units for SIFCO.

According to the report, work on the flats was to start by March 28, 2014, at the latest. Noomadi began installing machinery and materials at the site in October of that year. Contract work on the first block started on May 23, 2015, 13 months later, the report said.

As a down payment, SIFCO was required to pay MVR 191.4 million to Noomadi, of which MVR 125.93 million had been paid as of November 16, 2015.

The report also noted that SIFCO paid MVR 89.5 million to Noomadi before construction began on site.

The audit found that Noomadi did not adhere to the schedule outlined in the agreement with SIFCO.

“Since SIFCO had paid MVR 89.5 million to Noomadi before construction commenced, Noomadi failed to start work within the stipulated time and did not proceed according to schedule,” the audit report stated.

The contract was terminated in 2016, and Noomadi agreed to pay MVR 92.5 million to SIFCO. Noomadi was given the opportunity to pay this amount between September 30, 2016, and March 31, 2017.

In payment, Noomadi sent three dated checks to SIFCO. Under a settlement agreement signed in August 2019, the amount owed to SIFCO by Noomadi was settled. Consequently, the Ministry of Finance confirmed in 2021 that no additional payments were due to Noomadi from SIFCO.

Later, the army flats were completed by a Chinese company.

As a second issue, the audit highlighted the provision of meals for soldiers stationed at Bandara Barracks.

The catering work was awarded to SIFCO in September 2013. According to the audit, the purchase of vegetables, fruits, seafood, and sugarcane under the agreement was managed by an MNDF employee managing petty cash.

From September 30, 2013, to June 22, 2015, MVR 18.5 million was spent on the project through petty cash, the report stated.

The employee responsible for procuring goods from the market did not follow guidelines to ensure goods were purchased at reasonable prices. The audit also noted that vegetables, fruits, and fish are subject to price fluctuations.

The report quoted SIFCO as saying that fruits and vegetables are now imported. Additionally, SIFCO continues to cover meal expenses with petty cash as general policy, the report said.