Contractor overpayments highlight deep-seated corruption in Police Housing Project

A recent audit has uncovered substantial financial discrepancies and potential corruption within the Police Housing Project, also known as the Blues Housing Project. The findings highlight significant overspending, procurement irregularities, and mismanagement, raising concerns about the project’s administration.

Project Overview and Financial Discrepancies

Initiated to provide housing for police personnel, the Blues Housing Project has seen its costs escalate dramatically. The audit report indicates that an additional 480 million Maldivian Rufiyaa (MVR) was spent beyond the initial agreement, bringing the total expenditure to 1.06 billion MVR. This equates to a construction cost of 1,851 MVR per square foot for the 573,332 square feet developed.

In contrast, data from the Tender Evaluation Board of the Ministry of Finance and Planning, as well as costs from private construction projects, suggest that the average expense for similar construction ranges between 1,300 and 1,500 MVR per square foot. Based on these figures, the project’s cost should have been between 745.3 million MVR and a maximum of 859.9 million MVR, indicating an excess expenditure of approximately 354.7 million MVR.

Contractual Irregularities and Management Concerns

The audit attributes this overspending to several factors, including POLCO’s (Police Cooperative Society) lack of technical capacity to manage large-scale projects, modifications to agreements favoring contractors, and activities suggestive of fraud and corruption. Notably, the initial agreement for the project was valued at 580 million MVR, but subsequent expenditures have nearly doubled this amount.

Further scrutiny of the bidding process revealed violations of the State Finance Regulations. On June 30, 2013, a contract to construct 300 housing units for 500 million MVR was awarded to Noomadi without publicizing the bid in the government gazette or consulting the Tender Evaluation Board. This oversight led to the eventual removal of the contractor due to delays and unmet deadlines, necessitating the reassignment of work and escalating project costs.

Elevator Procurement Discrepancies

The audit also identified significant issues in the procurement of elevators for the housing units. Despite payments totaling 28.3 million MVR for 12 elevators, only seven have been delivered to date. The market rate for supplying and installing an elevator with the required specifications is estimated at a maximum of 1 million MVR. Therefore, the expected cost for 12 elevators should have been around 12 million MVR, indicating a significant overpayment.

Overpayment to Contractors

Additionally, the audit highlighted that POLCO paid 96 million MVR to Noomadi for construction work, while the actual value of the completed work was assessed at 38 million MVR. This disparity underscores the financial mismanagement and potential corruption within the project.

Conclusion and Recommendations

These findings raise serious concerns about the management and oversight of the Police Housing Project. The audit calls for immediate corrective actions to address the identified issues, enhance transparency, and prevent future occurrences of such financial mismanagement.