Campaign donors, family firms, and election-eve payments: the Fenaka scandal explained

Established in August 2012 as a 100 percent government-owned limited liability company, Fenaka provides electricity, water and sewerage services to most islands outside the Greater Malé Region and Kaafu atoll.

The corporation employed more than 7,000 staff as of mid-2024, a bloated workforce that more than doubled during the MDP-led government of former president Ibrahim Mohamed Solih.

Between 2021 and 2023, Fenaka awarded MVR 1.37 billion (US$ 89 million) worth of projects – 65 percent of 673 agreements signed during this period – without competitive tendering processes. The corporation's direct purchase committee made decisions on 439 no-bid contracts after obtaining quotes from just two or three parties. Spare parts worth MVR 221 million were also procured in violation of the rules after seeking a quote from one party. 

Suppliers charged profit margins between 40 to 55 percent for generators, cables and transformers. Several water and sewerage projects were handed out without bidding processes. Fenaka could have reduced costs by MVR 287 million by using third-party procurement for international purchases, the audit concluded. 

Fenaka also conducted 57 in-house projects to build powerhouses and offices at a cost of more than MVR 1 billion, of which 41 projects remained unfinished by the end of 2024. The audit found that completion will cost MVR 767 million more than if the same work were contracted at market rates, highlighting the inefficiency of Fenaka's in-house construction approach. 

The audit flagged several other cases of inflated costs for the in-house projects. Transportation of materials between islands was contracted at rates MVR 47.5 million higher than market prices. Catering contractors were overpaid by MVR 14.2 million by charging for more workers than were actually present.

In one case, a Fenaka supervisor for the construction of a powerhouse in Haa Alif Dhidhdhoo signed an MVR 5.4 million catering contract with his own company. Petty cash amounting to MVR 26.5 million was released to managers of powerhouse and office construction projects, of which MVR 21 million was deposited to their personal bank accounts.  

Vehicles were rented without public announcements for several projects at a cost that exceeded the estimated price of buying the vehicles by MVR 18.9 million. 

Fenaka also failed to recover MVR 22 million made as advance payments to contractors despite the termination of agreements. Many such contracts had been made without proper guarantees.

By the end of 2023, the company's debt reached MVR 3.9 billion and Fenaka owed MVR 2.99 billion to suppliers. These bills remained unpaid for over a year. But Fenaka made regular payments to 79 parties. 

Over the three-year audit period, 100 lawsuits were filed against Fenaka. The civil court ordered the company to pay MVR 377 million, of which MVR 330 million remained outstanding by June this year. 

Despite its poor finances, Fenaka spent MVR 46 million on sponsorship and corporate social responsibility projects.  

The government provided MVR 4.03 billion in assistance from 2021 to 2024 to keep the company afloat, including subsidies of MVR 343 million in the second quarter of 2023 ahead of the presidential elections in September. 

The alleged corruption occurred under the leadership of managing director Ahmed Saeed, who was sentenced to four years in prison on Sunday on charges of abuse of authority in authorising payments for public relations services under a settlement agreement in 2019, despite the company’s failure to complete the work outlined in an initial contract signed in 2018.

Ahead of his sentencing, Saeed denied any wrongdoing and dismissed the audit report as rushed and containing false information to serve political ends. 

Saeed is also facing trial over the purchase of an ice plant without consulting the tender evaluation committee. The second case had been filed in April after the Anti-Corruption Commission sought charges against Saeed and Fenaka's former chief accountant.

The ACC is reportedly investigating several "serious" cases involving Fenaka, including six cases related to Saeed.  

According to the audit, Fenaka awarded contracts worth MVR 49.7 million under 92 agreements to companies linked to Saeed's family, including those registered under the names of his nephew and two of his brothers-in-law.

Shelter Holdings received 84 agreements worth MVR 22.2 million for aluminium door installations; six projects worth MVR 15.7 million went to Pawarey Investment for powerhouses and office construction; Coral Investment got two agreements worth MVR 11.6 million. The total amount disbursed to these three companies stood at MVR 31.1 million by 2024.

Fenaka also spent MVR 111.9 million to purchase diesel from Sirius Enterprises, a private supplier partially owned by MDP MP 'Andhun' Hussain Shaheem. These purchases – which accounted for 88 percent of Fenaka's fuel supply with the rest provided by state-owned companies – had been made without formal supply agreements. In order to avoid competitive bidding, multiple purchase orders were made on the same day with amounts under the limit required by Fenaka's procurement policy.

Campaign donors to both former president Solih and the incumbent President Dr Mohamed Muizzu were among the companies with no-bid contracts from Fenaka, all of whom were listed in the audit report's annex.  

Fenaka awarded 10 contracts worth MVR 107 million to Azzrova Maldives, which contributed MVR 2 million to Solih's re-election bid, according to the campaign finance report submitted to the Elections Commission.  

Salah Shareef, a board member of the state-owned Maldives Industrial Fisheries Companies, who contributed MVR 2.8 million to Muizzu's campaign, was among the shareholders of Kengo Maldives, a company that made agreements worth MVR 19.45 million with Fenaka without public tenders. 

Contacted by Adhadhu, Salah denied signing any agreements with Fenaka in violation of the company's procurement rules.

The audit report was published late on Thursday night. A link posted on X in the early hours of Friday (September 26) was deleted and reposted at 1:53pm in the afternoon. But shortly after the midnight release, the government-aligned MMTV and other outlets launched breathless coverage highlighting the MDP leaders implicated in the scandal. On social media, government supporters seized on the report to counter the MDP's slogans for Friday's protest. 

On his campaign tour in Thaa atoll, President Muizzu announced on Friday night that police investigations are underway into the suspected misappropriation of MVR 2.2 billion, pledging to enact a new asset recovery law.

In a statement released on Sunday, the MDP condemned the report as politically motivated. President Muizzu threatened Auditor General Hussain Niyazi with dismissal to produce and strategically release the report, the party alleged.

The MDP criticised the audit office for publishing the report without questioning the companies and individuals named in it, accusing Niyazi of damaging local businesses with unproven allegations, questioning the credibility of the findings, and characterising the report as and intended to "cover up" corruption under the current government and divert public attention ahead of the October 3 mass protest. The MDP said it would respond to "government propaganda machine" in a court of law.

Meanwhile, in a scathing op-ed on Dhauru, veteran editor Moosa Latheef called for Fenaka to be abolished entirely, contending that it was structurally designed for embezzlement and political hires. 

He referred to ruling party MP Ibrahim Shujau appearing on the state broadcaster on Friday to discuss the Fenaka scandal, noting recent revelations about his Official Events company receiving MVR 13 million for President Muizzu's inauguration through a non-competitive process.

"The government sending Shujau to speak about theft and corruption shows this government treats corruption as a joke," he wrote. 

Latheef's argument for dissolving Fenaka was bolstered on Monday afternoon by a leaked report from the central bank's Financial Intelligence Unit, which flagged payments of MVR 12 million from Fenaka to two companies just days before the April 2024 parliamentary elections.

In the April 21 polls, the ruling People's National Congress won a supermajority of parliament after Muizzu's victory in the September 2023 presidential elections. 

According to the FIU report, verified by multiple sources to Dhauru, Fenaka paid MVR 2.47 million to Kengo on April 18, three days before the election. The following day, about MVR 700,000 was distributed from Kengo to various parties.

A second company, D&V Investment – owned by PNC MP Ibrahim Didi and his wife – was paid MVR 9.8 million from Fenaka on April 16. D&V then transferred MVR 750,000 to Kengo in five transactions over two days, which Kengo subsequently distributed to various individuals.

Former Fenaka managing director Muaz Mohamed Rasheed – who resigned in December last year – denied any procedural violations.