MDP Advises BML to Refrain From Financing Unlawful and Unsecured Contracts

The fundamental principle of the Public Finance Act (Law No. 3/2006) and implemented through the Public Finance Regulation (PFR) is that items and services should be procured by the State through an open, transparent, fair, and competitive bidding process. It should be noted that no regulation issued by any government ministry can override these fundamental principles.

However, the Ministry of Finance recently published certain amendments to the PFR allowing government contracts to be awarded without an open tender process, raising serious concerns about transparency and accountability in public procurement.

Following these amendments, 206 government contracts have been signed with 52 contractors, with announcements that these projects are to be financed by the Bank of Maldives (BML).

Several irregularities have been observed, including:

• - Contracts and contractors not selected by BML but imposed by the government

• - Technical capacity and experience of contractors not being properly considered

• - No requirement for any form of security against the loans

BML’s financing of these projects would constitute a violation of the Banking Act (Law No. 24/2010), Maldives Monetary Authority regulations, and the bank’s own corporate financing standards. Providing funds for 100% high-risk transactions could also have serious financial implications.

Cases concerning these unlawful, corruption-driven contracts were submitted to the Anti-Corruption Commission (ACC) earlier this month.

Therefore, the Maldivian Democratic Party (MDP) today, in a letter to the Bank’s Chairperson, has advised against participating in the government’s unlawful transactions and financing of unsecured contracts, and warned that officials involved would be held accountable under the next government.