Corruption probe widens beyond US$23 million police housing scandal

An anonymous POLCO employee brought the allegations to the attention of a parliamentary committee that has been trying to untangle how the “Blues Housing Project” launched in 2013 ballooned to over MVR 1 billion.

"It's not just the housing issue. There have been corrupt practices by POLCO. This is much broader - corruption in procurement of goods and services within POLCO," Deputy Speaker Ahmed Nazim said at Sunday’s meeting of a subcommittee tasked with reviewing the findings of a damning special audit of the POLCO flats in Hulhumalé.

Nazim, the committee's chair, informed other members about the whistleblower’s letter, which referenced a 2019 report sent to then-Commissioner Mohamed Hameed that allegedly went unheeded. 

The committee launched its inquiry after the audit report was released in late January with recommendations for further investigation to hold POLCO’s management accountable. 

"Currently, the committee is working on compiling all the available documents. This is something that has been a huge mess of confusion since 2013. God willing – large or small – we will get to the bottom of this," Mohamed Mamdhooh, a ruling party lawmaker and member of the committee, told the Maldives Independent last week.

In the wake of the audit revelations, a team from the Anti-Corruption Commission entered the police welfare company’s office on February 3 to gather information for a probe.

According to the audit, the housing project was plagued by contractor changes, payment irregularities, and questionable decisions by POLCO that consistently favoured certain business interests.

The same businessman, a Thai national named Anon Songpanya, controlled multiple companies that were awarded contracts throughout the 10 years since the project was launched in 2013. The report referred to Songpanya as Person X.

The audit flagged evidence suggesting police leadership may have taken bribes in the form of luxury apartments and duty-free luxury vehicles imported for the project in exchange for making decisions that benefited the contractors.

Ilyas Labeeb, a former lawmaker familiar with the case through his previous role as chair of the parliamentary oversight committee for state-owned enterprises, blamed the project’s inflated price tag on the alleged illegal benefits for police leadership. There was reasonable evidence for the suspected bribery but "every government from 2013 to date has watched this massive crime of corruption being committed." he told the Maldives Independent.

"No action has been taken against any party yet," police spokesman Ahmed Shifan said when asked about internal disciplinary proceedings.

On Monday last week, Auditor General Hussain Niyazy briefed the parliamentary oversight committee on public accounts about the audit findings.

POLCO informed auditors that several key documents, including bid evaluation documents, had gone missing after a server crashed, Niyazi revealed.

"We cannot clearly verify how the bidding and evaluation process was conducted. We checked the gazette. The announcement certainly wasn't in the gazette. Therefore, we cannot clearly determine how the entire project evaluation process was conducted," Niyazy said in response to a question from MP Abdul Ghafoor Moosa from the opposition Maldivian Democratic Party. 

In June 2013, a contract worth MVR 580.2 million was awarded to Noomadi Investments to build 300 housing units in three 13-storey towers in Hulhumalé Phase 1. The project was to be completed within two years. In November 2013, Noomadi was paid MVR 116.04 million, representing 20 percent of the contract value.

But the agreement with Noomadi was terminated in January 2016 due to non-performance. Of the MVR 96.3 million paid out to the company by POLCO, Noomadi only returned MVR 20.1 million.

In March 2016, a new contract was awarded to a company called Island Expert for MVR 628 million. The new contractor was to build 361 housing units (61 more units) within 14 months. But following multiple delays, the contract was extended three times, adding MVR 122.2 million and 54 months to the timeline. 

Island Expert was a subcontractor for Noomadi. Anon Songpanya, the Thai national, was Island Expert's chairman, CEO and managing director. POLCO’s action benefited Noomadi and Island Expert at the expense of the state, which suffered losses of MVR 354 million, the audit concluded.

Moreover, the project was awarded to Noomadi through a single-source procurement process without a public announcement or submission to the Tender Evaluation Board as required by public finance laws and regulations. Noomadi's financial and technical experience and capabilities were not evaluated.

Island Expert's contract was terminated in January 2021 due to non-completion of work. By then, POLCO had paid the company MVR 633 million for the work. However, only MVR 448.2 million worth of work was completed. The contractor was overpaid by MVR 185 million.

Instead of returning the excess amount, POLCO and Island Expert reached an agreement for the company to pay back MVR 129.5 million, a shortfall of MVR 55.5 million. It was unclear how or on what basis this amount was agreed upon.

The unfinished work was awarded to Amin Construction in December 2021 for MVR 274 million. However, the audit shows that MVR 310 million was paid to Amin Construction.

Subsequently, two companies – De Corps and Hao – were paid MVR 14.1 million and MVR 10.2 million, respectively, for completing the remaining work. Songpanya, CEO of Island Expert, was also the owner of De Corps.

In the final weeks of president Ibrahim Mohamed Solih's term in September 2023 – when the contractor failed to return MVR 129.5 million – new payment arrangements were made with Island Expert along with Ensis Private Limited and its subsidiary Thanburuma Private Limited.

Under this arrangement, Ensis paid MVR 100,000 to POLCO. The remaining MVR 71.48 million was to be paid in 57 installments. However, of the total amount of MVR 129.5 million to be returned, Island Expert only paid MVR 42.6 million. Ensis paid MVR 1.9 million.

In the end, POLCO's 361 flats were completed at a cost of MVR 1.06 billion. This averages about MVR 1,850 per square foot. But such projects typically cost between MVR 1,300 and MVR 1,500 per square foot, the audit report noted. Therefore, "based on these estimated costs, this office believes the project has been overspent by between MVR 354.7 million and at least MVR 240.1 million," the audit estimated.

The police officers who were awarded the apartments have since moved in with their families.

The state-owned Maldives Transport and Contracting Company is currently installing elevators at the police flats. But MTCC has yet to be paid for the work.

A timeline of the scandal:

June 2013

- Initial contract worth MVR 580.2 million awarded to Noomadi Investments

November 2013

- Noomadi receives MVR 116.04 million (20% of contract value) as advance payment

January 2016

- Contract with Noomadi terminated due to non-performance

March 2016

- Contract awarded to Island Expert for MVR 628 million with 14 months for completion

- Contract underwent three extensions, adding:

  - MVR 122.2 million to cost

  - 54 months to timeline

January 2021

- Island Expert's contract terminated due to non-completion

- POLCO had paid MVR 633 million to Island Expert

- Only MVR 448.2 million worth of construction work completed

- MVR 185 million identified as overpayment

- Agreement reached: Island Expert to return MVR 129.5 million (reduced from MVR 185 million)

December 2021

- Remaining work awarded to Amin Construction for MVR 274 million

- Actual payment to Amin Construction: MVR 310 million

Later phases:

- De Corps paid MVR 14.1 million for remaining work

- Hao paid MVR 10.2 million for remaining work

September 2023

- New payment arrangement made with Island Expert, Ensis, and Thanburuma 

- Ensis pays MVR 100,000 to POLCO

- Agreement to pay remaining MVR 71.48 million in 57 installments

- Final status: Island Expert paid only MVR 42.6 million of agreed MVR 129.5 million

- Ensis paid MVR 1.9 million

Current Status

- Total project cost: MVR 1.06 billion

- Flats now occupied

- MTCC conducting elevator work (payment pending)

- Project moved from POLCO to Construction Ministry