Audit reveals high costs, graft in MVR 1 billion police flats
According to the audit, as of the report’s release, a total of MVR 1.06 billion had been spent on the project.
Auditor General’s Office (AGO) on Thursday released a report detailing alleged fraud and financial irregularities in the MVR 1 billion Blues Housing Project, a police welfare initiative managed by the Police Cooperative Society (POLCO) over the past 11 years.
The project, intended to construct three 13-story towers with 300 housing units, was first awarded to Noomadi on June 19, 2013, for MVR 580.2 million with a two-year completion deadline. However, the agreement was amended in November 2013 to allow for a 20% advance payment. By January 2016, the contract was terminated due to non-performance, with POLCO having paid MVR 96.3 million to Noomadi. Noomadi agreed to refund MVR 20.2 million to POLCO.
The project was re-awarded in March 2016 to Island Expert for MVR 628 million, with a revised goal of completing 361 housing units within 14 months. The contract was amended three times between March 2016 and October 2019, increasing the cost by MVR 122.2 million and extending the completion timeline to 54 months. The contract was eventually terminated in January 2021, with POLCO having paid Island Expert MVR 439.9 million.
In December 2021, the government took over the project and awarded the remaining work to Amin Construction for MVR 274 million. Additional contracts were given to Dekomas, Hao, and MTTC for other aspects of the project.
According to the audit, as of the report’s release, a total of MVR 1.06 billion had been spent on the project. The cost per square foot was significantly higher than standard rates, leading to an estimated additional expenditure of MVR 240–354.7 million.
The audit report identified multiple violations, including:
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Awarding the original contract to Noomadi without a competitive bidding process or an evaluation of the company’s financial and technical capabilities.
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Single-sourcing and subsequent contract amendments that increased costs and extended timelines.
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A failure to evaluate the technical and financial capacity of Island Expert, which was later revealed to be a subcontractor of Noomadi. The managing director of Island Expert was linked to Noomadi and was identified as a key financial beneficiary of the project.
The audit report also highlighted connections between contractors. For instance, the managing director of Dekomas, a company awarded the contract for elevators and CCTV systems, was identified as a family member of Island Expert’s managing director.
The report recommended:
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Referring the case to the Anti-Corruption Commission (ACC) and other investigative agencies to identify and take action against individuals and entities involved.
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Holding the POLCO board and management accountable for decisions and contracts related to the project.
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Ensuring future projects funded by the state budget follow tendering rules outlined in the Finance Act, providing equal opportunities to all bidders.
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Recovering additional payments made to Island Expert and seeking compensation for damages caused by non-performance.
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Shifting responsibility for large-scale housing projects from POLCO to relevant government ministries.
The AGO report emphasises the need for stricter oversight and adherence to tendering regulations to prevent similar issues in future projects.
