Funds were diverted through the Maldives Integrated Tourism Development Corporation during the previous administration for various projects unrelated to its mandate, the state-owned company’s new management told a parliamentary committee on Wednesday.
Under the guise of a corporate social responsibility project, the MITDC spent MVR1.9 million (US$123,200) to build an office for the former ruling party. The company also bought gym equipment for the Department of Judicial Administration and set up a filing system at the Attorney General’s office.
A fireworks machine was also purchased from the company’s budget.
The revelations prompted calls from MP ‘Andhun’ Hussain Shaheem for the dissolution of the company, which he said was formed to misappropriate state funds. Its mandate of developing “guesthouse islands” was also contrary to the ruling Maldivian Democratic Party’s local tourism policy, the MDP MP contended.
But MITDC’s new managing director Mohamed Raaid disagreed and suggested that its projects could prove beneficial if properly managed. The new management has a plan to make it a self-sustaining enterprise, he insisted.
Raaid revealed details of how the company funded the office of the formerly ruling Progressive Party of Maldives.
“[The former management] wrote up a resolution to use MVR1.8 million to build an office for the PPM in a 4,000 square feet plot,” he told lawmakers on the state-owned enterprises oversight committee, adding that the cost exceeded the estimated figure.
The original signed copy of the resolution was destroyed but a digital version was recovered from the company’s hard drives, Raaid said.
The case was also flagged in the 2017 audit report of the MITDC released in early January.
An expenditure of MVR1.998 million was first recorded in the 2016 financial statement under property, plant and equipment. But in the following year, it was reclassified as a corporate social responsibility expense as an adjustment.
“Due to lack of sufficient appropriate evidence to substantiate this expenditure, we were unable to examine the cause for and nature of this CSR expenditure and the benefit – perceived or otherwise – that the company was expected to gain out of this expenditure,” the audit report stated.
According to Raaid, the board resolution that approved funding the PPM office construction stated that the move would earn the favour of the executive. He alleged that further resolutions had been passed in a cover up attempt.
The anti-corruption watchdog has since launched a probe.
– “Money laundering” –
During the nearly three-hour committee meeting, Raaid said funds for CSR projects did not come from MITDC.
“What they were doing is the tourism ministry takes money from different resorts claiming it is for CSR purposes. But they couldn’t spend the money through the ministry,” he explained.
“So they have these ‘friendly companies’ in their language. One of them is MITDC…The tourism ministry takes the money as CSR from resorts and sends it to MITDC accounts and then the expenses are undertaken. In my opinion, this is nothing but an act of money laundering.”
Some US$2.4 million paid by 14 resorts was funnelled to MITDC accounts, Raaid alleged, noting that it was unclear whether they were paid by operational resorts or properties under development. He provided a list of the resort islands.
Referring to a stalled guesthouse island project on Baresdhoo island in Laamu atoll, Raaid alleged that plots had been leased to former ministers, lawmakers and senior officials of other state-owned companies. But it was done through a legal bidding process, he noted.
As the project never properly got underway, MITDC has refunded 10 parties who paid booking fees worth US$600,000, Raaid said. But discussions are underway with investors to resume the project, he added.
In March last year, MITDC launched a “tourist village” project on Kaashidhoo island with a US$1 million loan from the government at an interest rate of eight percent. But only a metal structure worth about US$200,000 was built when the funds were used up, Raaid said.
During the transition period in November, former tourism minister Moosa Zameer instructed MITDC to scrap the project as it was “not feasible,” Raaid revealed, adding that it was initiated without a plan in a bid to win support ahead of the presidential election.
Before September’s election, MITDC also spent MVR1 million to hold a symposium in Addu City under a tourism project in the southernmost atoll. Bid documents were sold to 11 parties who were shown plots on Google maps but the bid announcement was cancelled two days later, Raaid told MPs.
According to a quarterly performance analysis, despite considerably reducing administrative expenses, MITDC did not generate any revenue and operated at a loss of MVR1.1 million (US$71,300) during the first quarter. However, the company expected to generate “future cash inflows” from ongoing projects.