The SAO audited the state-owned enterprise VOP CZ
Press Release – July 22, 2013
The Supreme Audit Office scrutinized the state-owned enterprise VOP CZ and its management within the period 2009–2011. VOP CZ is a company that specializes in the field of military equipment, engineering production, and development. In 2011, VOP CZ consisted of organisational units in following locations: Šternberk, Šenov u Nového Jičína, Vyškov, Slavičín, and Brno. The auditors also scrutinized whether the Ministry of Defence fulfilled its duties as the company’s establisher.
The main purpose of the company is to supply complex services and products in the field of defence and security of the Czech Republic. Over the time, the company’s turnover has increasingly been generated within the civilian sector – in 2011, the share got to 52 %. Among the reasons for such a change are decreasing budgets of the Ministry of Defence, which should be the majority customer of the company – in view of the main subject of the company’s business activities.
The SAO scrutinized five selected cases of useless properties’ selling. For example, auditors aimed at selling of immovable properties in Šternberk, which were worth CZK 274 million and included a fully equipped assembly shop finished in 2007. Its construction cost CZK 219 million. The expert’s opinion stated its value was CZK 84–134 million. The evaluation committee approved the sale to a candidate who had offered the highest bid – CZK 136 million.
When deciding on selling the property in Šternberk, the Ministry of Defence made a ruling, which the SAO considers as non-conceptual and non-coordinated. In spite the selling was planned as early as in September 2011, the Ministry approved the property’s selling only after the Supervisory Board had given their positive opinion on it. A loss in the amount of CZK 146 million was generated as a consequence of the difference between the property’s balance cost and the selling price (including the taxation). If redundancy payments to the employees are included, the loss amounts to CZK 187 million.
VOP CZ failed to include sanctions for failure to meet the debts into the agreements with foreign customers, and that is why the debts could not be demanded in case the customers did not pay. A purchase agreement subject was extended by an additional supply worth CZK 6.7 million in spite the purchaser had fallen behind with a payment in the amount of CZK 34.7 million. VOP CZ started legal proceedings to demand the claim only after the payment was one year past its due date. The SAO considers such actions as violation of the due diligence principle.
For further details about the auditing operation No. 12/26 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-12-26.pdf (pdf 493 kB).
Communication Department
Supreme Audit Office