The SAO scrutinized management of the public limited company MUFIS a.s.
Press Release – April 29, 2013
The Supreme Audit Office performed an audit of the public limited company MUFIS a.s. (“Municipal Funding Company”) and scrutinized the company’s management with funds received from the state budget as well as funds with the state’s guarantee.
MUFIS a.s. was established in April 1994. On the basis of an intergovernmental agreement, the company could draw up funds in the maximum amount of USD 100 million under the condition that the Czech Republic would provide a guarantee for the credit. Through the agency of 11 individual banks, MUFIS a.s. provided financial support to municipalities and their development projects. The development projects were aimed at thermal insulation of buildings, gas installations, and (re-)constructions of water pipelines and sewerage systems.
Without the initial fees, the loans from American investors amounted to USD 43.2 million. MUFIS a.s. paid back USD 85.5 million. MUFIS a.s. funded 122 projects in 112 municipalities and the average interest rates for the municipalities reached 12 %. It was a development programme but it was funded on a commercial bases. In the end, the credit conditions seemed too disadvantageous for the Czech Republic, and a decision to pay back the loans early was made. The early pay-back was successfully accomplished only in two cases. MUFIS a.s. carried out the last payment on January 30, 2012.
In August 2003, the Government of the Czech Republic ruled that unused funds from the programme “Housing Guaranty Program” (HGP) in the amount of CZK 500 million will be provided as a long-term loan to the State Environmental Fund (SEF) for environmental protection projects. The Ministry of Finance made a commitment to settle up the fee, which included the costs of acquiring the funds from HGP and their transfer to the SEF. From 2003 to June 2012, the Ministry paid CZK 186.3 million in total. The Ministry paid the sum without respect to the actual costs of the funds’ acquiring and transfer.
From 1996 to July 2012, MUFIS a.s. received CZK 527 million from the state budget. The SAO believes that the company’s future existence is not reasonable as its purpose stated during the company’s establishing has already been fulfilled.
For further details about the auditing operation No. 12/17 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-12-17.pdf (pdf 279 kB).
Communication Department
Supreme Audit Office