Organisational units of the Ministry of Transport purposefully divided public orders and spent on gifts, publicity and bonuses
PRESS RELEASE on Audit No. 13/33 – August 4, 2014
The Supreme Audit Office (SAO) audited the Ministry of Transport and its subordinate organisational units: the Directorate of Waterways, the State Navigation Administration, the Civil Aviation Authority, and the Air Accidents Investigation Institute. Auditors scrutinized costs of informational and communication technologies, office supplies, vehicles’ maintenance and services, travel expenses, representation, legal services and consultations, and wages. Within the audited period 2010–2013, total costs in the audited areas amounted to CZK 2,700 million.
Auditors revealed significant errors with public orders. For example, big orders were divided into smaller contracts, applicants were discriminated and suppliers were pre-selected and directly called instead of organizing open selection procedures. In one case, the Ministry concluded five sequential agreements with one consultant in the cosmic research field. All agreements shared the same subject matter. The first agreement was worth CZK 1.7 million and was concluded after a negotiated procedure without publication, other four agreements worth CZK 4.2 million in total were entitled “small-scale public contracts”. Similar approach was taken by the Directorate of Waterways: an order of legal services worth CZK 3.8 million in total was divided into two small-scale public contracts, which were awarded to the same supplier in January 2012 and in April 2012.
Audited subjects were usually unable to submit necessary documents related to public contracts, or to declare which specific services had been procured. The Directorate of Waterways had ordinary personnel management and accounting works done by hired natural persons and for example in 2012, paid CZK 472,000 for them. The Directorate could not submit any documentation of the selection procedures. The Air Accidents Investigation Institute concluded an agreement with a provider of economic works and paid them CZK 1.8 million in total during the audited period. The costs included works above the frame of the agreement in the amount of CZK 641,000. The submitted documents did not give details about types of the procured works or scheduling estimates.
High expenses were revealed with promotional products, gifts, hospitality costs, and other purchases. For example, the Directorate of Waterways spent six times more on representation in 2013 than in 2010, with most of the expenses covering hospitality costs. The Directorate did not present the complete documentation, but still, auditors could see that hospitality costs were refunded to the same employee who was responsible for the approvals. In 2011 and 2012, the Air Accidents Investigation Institute purchased promotional gifts including 100 memorial tablets for CZK 96,000, 56 scarves for CZK 23,000, 35 torches for CZK 18,000, and 13 belts for CZK 13,000. The Institute also purchased a treadmill for CZK 27,000 in 2011.
Most significant errors were revealed at the Directorate of Waterways, which made errors in all audited areas including the wages and bonuses. In 2012, six out of 13 employees of the Directorate got annual bonuses, which equalled 104 % of their wages. The Directorate also concluded work agreements with own employees, whose job contents were identical with the subject matters of the agreements.
The SAO estimates that audited subjects could have saved 6 % of their costs in the audited areas, which enumerates to CZK 88 million. With the Directorate of Waterways, the minimum estimated savings could have been even 13 %.
Communication Department
Supreme Audit Office