SIFCO pressed to recover MVR 92M from ex-contractor for housing scheme

Anti-Corruption Commission (ACC) has instructed Sifaige Corporative (SIFCO) to recover the money owed to the State by the former private contractor for SIFCO’s 300 housing unit project.

SIFCO terminated its contract with the original contractor of the project over failure to carry out the project’s work as agreed on January 27, 2016.

SIFCO had paid the contractor MVR 125,938,079 up to the point of the contract was terminated. The amount included MVR 10,635,175 collected from future tenants and MVR 115,302,079 paid out of the State’s budget.

The balance after setting off the MVR 125,938,079 against the MVR 33,367,439.73 owed to the contractor for its work up until the contract was terminated is MVR 92,570,639.27.

As per the agreement for termination of contract, the contractor is required to return the MVR 92,570,639.27 to SIFCO.

The contractor issued three post-dated bank cheques to return the money, each of which bounced.

SIFCO had filed a case with the Maldives Police Service over the bounced cheques, and discussed legal avenues for recovery of the funds with the Attorney General’s Office.

ACC, which completed its review of the case this Sunday, instructed SIFCO to recover the funds, and made two recommendations.

The first one – which has already been applied – is to inform Ministry of Finance to release payments owed by the State to the contractor for any project only after deducting the MVR 92,570,639.27 it owes to SIFCO. The second recommendation is to take legal action if the State does not have any pending payment for the contractor.

The contractor has sent a letter to SIFCO saying it has no objection to the State offsetting its debt against any outstanding payment going its way.

THE TERMINATED CONTRACT

• The total value of the project is MVR 638,110,440
• 40 percent of the money needs to be paid as down payment
• 16 percent of the 40 percent must be collected from sale of commercial lots in the apartment complex
• 26 percent of the money must be paid as government subsidy
• 4 percent of the money must be paid by SIFCO in installments stretching 24 months
• Remaining money must be paid to the contractor in fixed installments over 30 years by collecting the money from tenants on end-user finance basis