Members of parliament’s public accounts committee sought this week to assign blame over an MVR78 million (US$5 million) payout from the state broadcaster to a marketing company.
The state-owned Public Service Media company incurred MVR72.9 million as fines after failing to settle a claim of MVR5.6 million made by the Business Image Group (BIG). The lawsuit was filed in 2012 over the cancellation of a marketing deal.
The payout with accrued fines was ordered by the civil court in June 2016. But the judgment was not appealed during the previous government.
The payments started weeks after the new administration took office in November.
Last month, PSM paid out MVR30 million to BIG. It was done after the Privatisation and Corporations Board instructed the corporation to pay off its debt, the Maldives Independent has learned.
The parliamentary oversight committee subsequently asked the finance ministry to halt remaining payments pending an inquiry.
On Monday, public accounts committee chair Ahmed Nashid shared details of the case with members after the finance ministry wrote back to the committee.
Suspicions had been raised about the agreement with BIG in a 2014 audit, which recommended an investigation by the Anti-Corruption Commission, he noted.
But the ACC did not launch a probe, the civil court judgment was never appealed, and the public accounts committee failed to look into the audit report despite its mandate to do so, MP Nashid said.
“So this committee can’t hold the payment. If we do, more fines are going to add up. We have to retract the letter [which instructed withholding further payments],” he suggested.
“What we can do is check how the ACC investigation is going. We recently brought a list of cases ACC is investigating. This case is now in that list. We can check how that’s going.”
In a heated discussion that ensued, MP Mohamed Mustafa criticised the judge who ruled in favour of BIG.
“The person who is getting this money has not spent a dime to earn this money. The auditor general said they don’t deserve MVR2 million, let alone MVR5 million,” he said.
MP Ali Shah blamed the finance ministry and the current auditor general for failing to follow up on his predecessor’s recommendations.
“I don’t believe it is our responsibility to stop this payment…I don’t want this committee or myself to be held responsible for allowing a loss to the state because of something that happened years ago,” he said.
Nashid criticised the former chair of the committee for failing to table the 2014 audit in the agenda during the past five years.
“So let us accept that we too failed to do our duty well. This special audit was sent to us a long time ago. Why was this not put on agenda on 13th April 2014?” he asked.
After consultations among the lawmakers, the committee voted to review the ongoing investigation by the anti-corruption watchdog.
– 2014 audit –
The 2010 agreement with BIG was made with the defunct Maldives National Broadcasting Corporation during former president Mohamed Nasheed’s administration.
The television and radio channels operated by MNBC were handed over to the Maldives Broadcasting Corporation after the change of government in February 2012.
The MBC was also dissolved and replaced by the Public Service Media corporation in April 2015.
PSM inherited the MNBC’s assets and debt.
In addition to making BIG the exclusive sales agent for a five-year period, MNBC had agreed to pay the company a monthly fee of MVR25,000 (US$1,621) as well as 15 percent of all income generated through BIG.
The agreement allowed BIG to claim a commission from sales revenue for announcements, text messages for programmes and airtime sales. But BIG played no role in attracting the revenue, the audit report noted.
As of August 2012, BIG had been paid a total of MVR5.78 million (US$374,837) as sales commission.
Auditors were unable to verify from the available documentation – payment vouchers and invoices submitted by the company – that the commission was from additional income generated as a result of BIG’s work.
Auditors concluded that BIG was not owed a commission from income generated from public announcements, SMS, my tones, advertisements, and airtime sales.
BIG had raised another invoice for MVR5.78 million in October 2012 but the release of the funds was halted on the instruction of the ACC.
Auditors found the contract was awarded to BIG without a transparent and competitive bidding process.
Based on the findings, former auditor general Niyaz Ibrahim had recommended that the case should be investigated by the ACC and that action should be taken against the officials responsible for drawing up the agreement in a manner detrimental to the interests of MNBC.