MVR 23 million paid to UMET in undue compensation must be recovered and action taken: Audit Office

Auditor General’s Office has revealed that the government overpaid UMET Construction by MVR 23 million in compensation, an amount far exceeding what the company was legally entitled to receive.

According to a report released by the Auditor General, the overcompensation occurred after the agreement for the construction of the Lhaviyani atoll Kurendhoo harbor was terminated and handed over to Maldives Transport and Contracting Company (MTCC) on March 18, 2013.

UMET Construction subsequently sought compensation for damages, which was approved by the then Economic Council in a manner deemed detrimental to the state.

The Economic Council that approved the payout during the previous administration included then-President’s Office Minister Ali Shiyam, then-Finance Minister Ibrahim Ameer, former Planning Minister Mohamed Aslam, and former Economic Minister Fayyaz Ismail.

According to the audit, UMET should have been awarded a maximum of MVR 2.7 million in damages. However, on April 30, 2023, the Economic Council approved a compensation package of MVR 26 million which is over nine times the assessed amount.

The report states that based on the invoices submitted by UMET Construction and those already paid, work on the project ceased on April 1, 2012.

Therefore, the idle cost; payment for equipment and labor rendered unproductive, should only have been calculated for 343 days, totaling MVR 2.7 million. Instead, the company was paid MVR 6.2 million as idle cost, an excess of MVR 3.4 million.

UMET Construction had previously filed a lawsuit to claim MVR 21 million in compensation. In 2021, Supreme Court ruled that the MVR 7.6 million that was already paid by the government should be deducted, and only the remaining MVR 13 million to be awarded. However, the audit report points out that this ruling was not considered when the government later approved the compensation package.

The Auditor General’s Office also noted that the compensation included amounts that even courts had ruled could not be awarded. Additionally, the audit found that the compensation covered payments for work that was never completed. The calculation of idle costs also included days during which work was actively ongoing, further inflating the amount.

The Audit Office stated that the excess funds paid should be recovered and that those responsible for facilitating the undue disbursement of state funds should be investigated and held accountable.