A recent Auditor General’s review has revealed that the previous Maldivian Democratic Party (MDP) administration authorized an excessive compensation payout of MVR 26 million to Umet Construction following the cancellation of the Kurendhoo harbour project—far above the legally justified amount of MVR 2.8 million, resulting in an overpayment of MVR 23.2 million.
The contract to build Lh. Kurendhoo harbour was initially awarded in January 2011 to state‐owned Works Corporation Limited, which subcontracted the work to Umet for MVR 14.9 million. After project scope adjustments in October of the same year, the subcontract value increased to MVR 21.1 million.
Work on the harbour stalled in early 2013. On March 10, 2013, the government terminated the contract when an MTCC assessment found inadequate progress. The Civil Court initially ruled for compensation of MVR 13.4 million, but the High Court overturned this, stating the termination was lawful, a judgment upheld by the Supreme Court.
Despite the clear judicial rulings, the Economic Council under former President Ibrahim Mohamed Solih approved a MVR 26 million payout in April 2023, attributing it to out-of-court settlement. The Auditor General’s report criticizes this decision, describing the compensation calculation as legally unjustified and calling the extra MVR 23.2 million “undue”.
Auditors also flagged the lack of independent verification of Umet’s own loss calculations—including inflated claims for delay-related idle costs and projected interest earnings—which departed from Supreme Court guidance on damages.
The audit recommends that the government seek recovery of the overpaid funds and initiate investigations into officials who sanctioned the payment. With this settlement already rescinded by the current administration, the focus now shifts to enforcing accountability and restoring public trust.
