Vakarufalhi resort was sold with a huge loss to STO

Friday, 10 October 2008 22:30

Auditor General Ibrahim Naeem has revealed STO Board was against selling STO’s resort Vakarufalhi but in spite of that STO has sold the resort at a very low price. Auditor General has revealed this in the 2007 Audit Report of STO in which he has mentioned about several irregularities of the company. Naeem pointed out the resort was sold under an obligation because major investment of the resort was by Athama Investment with only a name sake investment on the part of STO. This has resulted in a situation where STO ran the risk of losing the resort compelling the company to sell the resort.

Naeem however said Vakarufalhi Resort was sold at a price of US $ 7,441,039 and this price was fixed on the basis of the rentals Athama Travels has to pay to STO from 2007 to 2017 which was discounted up to 2007 amounting to US$ 3,647,848. Auditor General said this price is not the market price of a resort of this kind which could be sold at a much higher price in the open market. The resort will get an additional 10 years of lease if a sum of US$ 10 million is invested on the resort and it is one reason why the resort can fetch a much higher price. Auditor General was of the view Vakarufalhi was a resort with a major share of the government, and the resort have been sold with huge loss to the company and someone has to take responsibility for recovering this loss to the company.

The report also brought to light STO has given loan facilities to three investors in the tourism sector amounting to sums of Mrf 112,732,250, Mrf 11,333,347 and Mrf 10,178,248 which the report said is against the relevant procedures. The report also referred to the sale of tea estate in Sri Lanka, import of medicines and consumables and procurement of staple food and other items. STO has issued a statement in response to the report with particular reference to the loan facilities which the company said was provided under an agreement to obtain the necessary foreign currency for the imports of the company.

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