Fenaka Audit 2021–2023: Billions Lost to Procurement Breaches

The Auditor General’s Office has disclosed that a majority of contracts awarded by Fenaka Corporation between 2021 and 2023 were issued without competitive bidding, raising concerns over procurement practices and financial management at the state-owned utility provider.

According to the special audit report released on Thursday evening, Fenaka undertook projects valued at MVR 2.2 billion during the three-year period. Of this, MVR 1.3 billion was granted without a public tendering process. The audit found that out of 673 contracts signed for services and equipment, 438 – or 65 per cent – bypassed open bidding. Instead, the company’s Direct Purchase Committee directly selected contractors.

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Procurement Breaches

Fenaka’s internal procurement regulation sets a threshold of MVR 225,000, excluding GST, for reopening tenders in cases involving overseas suppliers. However, the audit revealed that numerous contracts for generators, transformers, and power cables exceeded this limit without being re-tendered.

The report highlighted significant mark-ups, with suppliers charging Fenaka profit margins of 40 to 55 per cent. It also noted irregularities in leasing arrangements, with MVR 12.1 million spent on property leases and renovations that contravened regulations.

Family-Linked Companies

The report also revisited earlier findings that former Managing Director Ahmed Saeed had signed contracts worth MVR 49.8 million with three companies linked to his family. These included Sheltera Holdings, Power Pay Investments, and Coral Investments, which collectively received more than MVR 31 million by the end of 2018.

Contract Allocations

• 294 contracts for power cables worth MVR 544.3 million;
• 82 contracts for generator sets worth MVR 259 million;
• 33 contracts for transformers worth MVR 76.3 million;
• 29 contracts for water and sewage projects worth MVR 491.7 million.

The audit also found that Fenaka purchased fossil fuels worth MVR 127 million without formal contracts, with MVR 111 million of the supply sourced through a private company. Additionally, MVR 221 million of the MVR 245 million spent on spare parts was procured from external suppliers.

Further Findings

• Catering services worth MVR 5.4 million awarded to the project supervisor’s company for the Haa Alifu Dhidhdhoo power project.
• Vehicle rentals totalling MVR 18.9 million awarded without competitive bidding.
• Over 100 legal cases against Fenaka during the three-year period, with MVR 330 million in unpaid court-mandated settlements by June 2023.
• CSR and sponsorship activities amounting to MVR 46 million undertaken despite severe financial pressures.
• Petty cash of MVR 26.5 million allocated to project managers, including MVR 21 million deposited directly into personal accounts without expenditure records.

Mounting Debt

By the end of 2023, Fenaka carried a debt of MVR 3.9 billion, of which MVR 2.9 billion related to overdue bills. At the same time, the company continued to make payments to 79 parties.

Meanwhile, allegations of embezzlement against former MD Saeed remain under investigation by the Anti-Corruption Commission (ACC). He is accused of misappropriating funds from an ice plant in L. Maamendhoo operated by Kaizan Investments. The ACC confirmed it is examining six cases linked to Saeed, whose passport has been withheld as part of the inquiry.