Audit Flags Procurement and Financial Management Concerns at Addu Equatorial Hospital

Addu Equatorial Hospital repeatedly bypassed state procurement procedures and awarded contracts hundreds of thousands of Rufiyaa above estimated costs between 2022 and 2024, according to a compliance audit released by the Auditor General’s Office.

The compliance audit examined the hospital’s procurement and financial practices over the three-year period, identifying several key areas of concern including uncollected liquidated damages and potential conflicts of interest involving vendor-funded staff events.

The audit found that the hospital disqualified the lowest bidder for a project to replace exterior wall tiles, citing an incomplete bid form because unit prices had not been provided.

However, the Auditor General’s Office noted that the tender consisted of a single item, meaning the total bid amount effectively represented the unit price.

The contract was subsequently awarded to the second-lowest bidder for MVR 1,277,521. The amount was MVR 1,027,521 above the hospital’s internal cost estimate and MVR 577,681 higher than the lowest bid.

The hospital also spent MVR 827,860 on design and Environmental Impact Assessment (EIA) services for a proposed extension building and waste management centre in 2022. 

According to the audit, no physical work had begun on either project as of 12 September 2025.

The audit further found that work related to the extension building’s design and EIA exceeded the contractual deadline by 228 days. Despite the delay, AEH did not deduct MVR 116,070 in liquidated damages and paid the contractor the full contract value of MVR 773,800.

The audit raised additional concerns over the procurement of a vehicle after an earlier contract was cancelled because the supplier failed to deliver a van within the required timeframe.

AEH subsequently purchased a vehicle from the second bidder for MVR 1,378,000 MVR 583,000 more than the price under the original award.

The Auditor General’s Office noted that a vehicle meeting the hospital’s requirements had been offered at a lower price during the initial procurement process. It concluded that awarding the contract at the higher price without conducting a new tender was not economically advantageous to the hospital.

The audit found that AEH entered into a two-year air-conditioning maintenance contract in 2021 valued at MVR 7,970,400, or MVR 332,100 per month.

The contract was approved by the hospital’s Bid Committee without the required approval of the National Tender Board, the audit said.

The agreement covered monthly servicing of 68 air-conditioning units ranging from 5,000 to 24,000 BTU. The total cost of servicing over two years reached MVR 1,072,800, compared with an estimated combined value of MVR 662,983 for the units themselves.

The audit also identified irregularities in the procurement of orthodontic instruments and dental consumables.

Four items were identified as excessively priced during the bid evaluation. Following negotiations, the price of one item was reduced from MVR 76,365 to MVR 1,680, while the prices of the other three items remained unchanged.

The Bid Committee had instructed the hospital to remove the items whose prices were not adjusted. However, according to the audit, AEH proceeded to purchase all four items for MVR 450,685.

A comparison with competing bids indicated that the hospital paid MVR 173,663 more than the prices offered by other bidders for the items.

The audit examined donations received from suppliers and vendors between 2022 and 2024, revealing that AEH received MVR 755,785 in vendor contributions to support staff participation in seminars, conferences, and other events.

Recipients of these vendor-funded trips included members of the hospital’s Bid Committee as well as senior officials in procurement and finance.

The Auditor General’s Office warned that accepting financial support from suppliers could create a risk of undue influence in procurement decisions, noting that several vendors that provided donations subsequently secured procurement contracts from the hospital.

The audit also found that AEH did not have a standardised and transparent process for selecting employees to attend overseas training programmes and conferences.

The findings form part of the Auditor General’s assessment of AEH’s compliance with applicable state procurement and financial management standards.