Key documents related to the POLCO Flat project have been lost due to a server issue, according to Auditor General Hussain Niyazi, raising further concerns about transparency in the long-delayed and increasingly costly housing project.
The Blues Housing Project, awarded in 2013 to the Police Cooperative Society (POLCO) to support police welfare, has faced multiple contractor changes, cost escalations, and delays. An audit report released last month by the Auditor General’s Office detailed allegations of financial mismanagement and irregularities, prompting questions about how the project was handled over the years.
During a Parliament Finance Committee meeting on Monday, Hanimaadhoo MP Abdul Ghafoor Moosa questioned whether POLCO was aware that the project had been reassigned to two companies operated by the same individuals. Niyazi confirmed that the audit reviewed the bidding process but noted that many key documents were unavailable. POLCO management attributed the missing records to a server failure.
Without access to these records, auditors were unable to determine how the bidding and evaluation processes were conducted. The lack of public announcement in the government gazette has added to concerns about transparency.
A Troubled Timeline
The project was initially awarded to Noomadi on 19th June 2013 to construct three 13-storey towers with 300 housing units for MVR 580.2 million, with an expected completion period of two years. However, the contract was amended in November 2013 to include a 20% upfront payment, and by January 2016, it was terminated due to non-performance. Of the MVR 96.3 million paid to Noomadi, only MVR 20.1 million was recovered, with a penalty fee of just MVR 1.4 million imposed.
In March 2016, the project was reassigned to Island Expert for MVR 628 million to build 361 units in 14 months. However, the contract was amended three times between 2016 and 2019, increasing costs by MVR 122.2 million and extending the deadline to 54 months. The contract was eventually terminated in January 2021 due to incomplete work, with POLCO having already paid MVR 633 million, though a quantity survey valued the work completed at only MVR 448.2 million.
A new agreement was signed in September 2023 between POLCO, Island Expert, and Ensis Pty Ltd. Under this arrangement, Island Expert owed POLCO MVR 42.6 million out of MVR 129.5 million, while Ensis committed to repaying MVR 100,000 in 57 instalments. However, the contract placed no liability on Island Expert if these payments were not made.
In December 2021, the government took over the project and awarded a new contract to Amin Construction for MVR 274 million, with additional work assigned to Decomas, Hao, and MTCC.
Audit Findings: Cost Overruns and Lack of Oversight
The audit report highlighted serious financial irregularities, estimating that MVR 1.06 billion had been spent on the project to date. The average construction cost per hectare stood at MVR 1,851, exceeding the standard rate of MVR 1,300 per hectare.
Based on standard pricing, the project should have cost between MVR 745 million and MVR 859.9 million. Instead, more than MVR 600 million of the total expenditure was channelled through private companies, raising concerns about financial management and accountability.
Additionally, the audit found that the original contract had been awarded without a proper bidding process, and the selected company’s financial and technical capacity had not been assessed. The lack of a competitive evaluation process contributed to delays, cost overruns, and the need for multiple reassignments.
Ongoing Questions Over Transparency
The revelation that key documents have been lost due to a server issue has only deepened concerns over transparency in the handling of the POLCO Flat project. With billions already spent and further payments required to complete the development, questions remain about how the project was managed, who benefited from the cost escalations, and whether any accountability measures will be enforced.
The findings of the Auditor General’s report are likely to lead to further scrutiny in Parliament as lawmakers seek answers about the project’s financial discrepancies and its prolonged timeline.
