In a country of small communities and large state companies, corruption rarely looks like a single envelope across a table. It looks like process. It looks like a tender that never went out to bid, a board that never asks for the working, a procurement rule that says “comply or explain” and a culture that always explains. That is the story the special audit of Fenaka tells, and it is why the conversation should now move from personalities to governance.
The Auditor General’s special audit describes a state utility that normalised no-bid deals, weak controls and conflicted decisions between 2021 and 2023. Sixty-five percent of 673 agreements were signed without competitive tender. The direct purchase committee took hundreds of decisions after getting only two or three quotations, and even single-quote buys for spare parts were allowed. The report points to inflated margins, unfinished in-house projects and advances that were never recovered. By end-2023, debt had swelled and suppliers were unpaid for over a year. These are not quirks of one manager. They are symptoms of a system in which boards, risk functions and procurement frameworks failed to do their most basic job.
Events since the audit underline both the political heat and the governance gap. A former managing director was convicted on a separate corruption charge related to a payment authorised without proper verification. Allegations about election-week transfers and fuel purchases without framework agreements raised further concerns about procurement discipline and political finance. The company has now announced reform steps in response to the audit. These are welcome. They are not enough on their own.
Maldives does not lack rules. For listed companies there is a Corporate Governance Code under the CMDA. For state-owned enterprises there is a Code issued by the Privatisation and Corporatisation Board, and procurement guidance published by the Ministry of Finance on a comply-or-explain basis. A new Companies Act took effect in 2024, modernising directors’ duties and allowing more independent oversight. On paper, boards should guard against conflicts, ensure internal audit independence and hold executives to measurable performance. The problem is not the absence of frameworks. It is the distance between frameworks and practice.
This is where corporate governance becomes an anti-corruption strategy rather than a compliance exercise. International guidance is clear on what works for state-owned firms. Independent and qualified boards. Transparent appointments. Audit committees that answer to the board, not management. Competitive, open procurement with contract and beneficial-ownership disclosure. Clear performance targets agreed with the shareholder. Publication of subsidies and quasi-fiscal obligations so losses are not buried in opaque accounts. These are not decorative reforms. They change incentives. They make it harder to hide waste and easier to reward delivery.
What would that look like in practice for Maldives, starting with utilities like Fenaka?
First, fix the boardroom. Require a majority of independent non-executive directors with public CVs, conflict-of-interest registers and term limits. Make board appointments through a skills-based shortlist rather than political nomination alone. Publish a board skills matrix and minutes of decisions that set major financial commitments.
Second, make procurement truly competitive. Move from fragmented quotations to e-procurement by default, with open tenders, standardised evaluation criteria and contract awards published with unit prices. Disclose beneficial owners of winning bidders, and require cooling-off rules for politically exposed persons and related parties. The Ministry of Finance guidance already points to higher standards; the task is to shift from “explain” to “comply”.
Third, strengthen the assurance spine. Internal audit should report to an independent audit committee chaired by an experienced non-executive, not to the CEO. External auditors for SOEs should rotate on a fixed cycle and their management letters should be published with management responses and timelines. The audit regulator’s own rules anticipate stronger practice. Publication is the difference between a warning no one sees and a timetable the public can hold to account.
Fourth, tie money to performance. The Ministry of Finance, as the state’s shareholder, should publish performance agreements that set service targets, loss-reduction goals, receivables days and procurement KPIs. Any subsidy should reference these targets, with quarterly dashboards. The World Bank’s support for SOE reform has repeatedly linked fiscal risk to weak governance. If subsidies are inevitable in essential services, they must buy measurable results.
Fifth, protect whistleblowers and open the data. Create anonymous reporting channels that go to the audit committee and the Auditor General at the same time. Publish project lists, contract change orders and payment delays in machine-readable form. Corruption thrives in silence. Data makes silence costly.
There is a political cycle to scandals. An audit drops. Outrage rises. A prosecution lands. Governments promise to clean house. Then attention moves on. Corporate governance is how a country breaks that cycle. It makes abuse harder to organise and easier to detect. It lets honest managers say no without losing their jobs. It gives the public a way to see whether a rupee spent on a transformer bought power or patronage.
The Fenaka episode is not just a story about one company. It is a stress test of how Maldives runs the institutions that keep communities powered and watered. The choice is not between outrage and amnesia. It is between governance that lives in documents and governance that lives in decisions. The second is the only kind that reduces corruption.
