Utilities billing company ARMS Ltd was owed nearly €90 million in outstanding bills at the end of last year, with a quarter of the debtors having dues that went back more than two years, an audit has revealed.
The National Audit Office said it was “uncertain or difficult” if long outstanding amounts would ever be recouped.
According to information it provided to the auditor, Automated Management Services Limited was owed €89.4 million at the end of last year.
Of this amount, €21.3 million, or about 23 per cent, was due for more than two years while another 23 per cent was due for between two and five years.
Between 2017 and 2020, the value of outstanding bills increased by 14 per cent, from €78.7 million.
The audit found that the increase was mainly related to amounts owed for less than one year while significant decreases were noted in debt outstanding between two and five years.
The audit examined a sample of 24 accounts, 15 of which had outstanding amounts due to ARMS totalling €4.1 million.
Nearly 80 per cent of the sampled debtors owed substantial amounts – €3.2 million in all – with insignificant repayments registered during 2019 and 2020.
'Difficult clients'
NAO was informed that, since the outstanding balances were considered highly material, legal action was being taken by ARMS to try and recoup the amounts in question.
However, a number of these debtors were “difficult clients” where ARMS was not in a position to suspend the service.
ARMS said it would continue to try and control outstanding debtors’ amounts while taking the necessary action with respect to write-offs of long outstanding defaulters.
“There may be instances where ARMS would not be able to suspend the services of defaulters, such as social and humanitarian cases, NGOs, educational institutions, hospitals, political parties and media houses.
“Such realities accentuated the need for the implementation of a robust, efficient and effective legal and debt recovery mechanism, which has proven to be an essential and pivotal tool that ARMS has in the recovery of debt,” the NAO said.
Judicial letters and garnishee orders have been issued to recoup some of the dues.
The NAO recommended that legal action be followed up to avoid unnecessary interest accumulating on outstanding amounts.
The company told the auditor it managed to achieve “optimal results” during the pandemic, even when faced with a proliferation of defaulters. It said it adopted a fair and reasonable approach, especially with those in financial difficulties, and still managed to secure payments through agreements.
ARMS Ltd was set up in January 2009 to issue bills and collect revenue on behalf of its two shareholders, Enemalta and Water Services Corporation.