A report released by Auditor General Hussain Niyazy has revealed that the Football Association of Maldives (FAM) lost more than MVR 590 million in potential income due to subleasing portions of land allocated for a football training school in Hulhumalé at rates significantly lower than market value.
The FAM audit report, released last Wednesday, noted that the average market rate for leasing land for commercial purposes in Hulhumalé Phase 1 is MVR 20.23 per square foot per month.
However, under the leadership of former FAM President Bassam Adeel Jaleel, 74,958 square feet of land was leased to private parties at an average rate of just MVR 2.91 per square foot per month.
According to the figures in the special audit report issued by Auditor General Niyazy regarding the transactions for the football school land, it is estimated that FAM would receive a total of MVR 66.5 million under the existing agreements.
However, the Auditor General estimates that if those lands had been leased at the market rate used by HDC, FAM would have received MVR 590.6 million within the duration of the agreements.
This represents a massive loss of income exceeding MVR 524 million for the institution due to leasing land at prices drastically lower than market rates.
The Auditor General's report highlighted that the total value of the agreements for many of the leased slots from that land had been collected in advance.
According to the audit report, by collecting the rent for future years in advance as a lump sum, FAM suffered a significant loss even when considering the present value of that money at a 12 percent discount rate. While the present value of this money at market rates is MVR 146.4 million, FAM is expected to receive only MVR 66.5 million in advance. Even when calculated by current value, this is a loss of approximately MVR 79.9 million.
Expressing concern over the issue, the Auditor General stated that due to leasing the lands at extraordinarily low prices compared to market rates, a large portion of the income FAM was due to receive has been lost. Niyazy stated in the report that this serves as a major obstacle to the institution's "financial stability."
The report noted that while FAM suffered a major loss by leasing the lands at unusually low prices, the parties who leased the land are receiving an unfairly large profit.
