Strategic state-owned enterprises under the interior and defence ministries play a key role in ensuring the functioning of the country’s security and defence structures. Their management should therefore be a priority for the ministries and serve as an example of economical and efficient stewardship of public assets, enabling them to fulfil clearly defined tasks in the public interest. However, audits conducted by the national external audit authority revealed that both companies operate without a strategic framework set by their sole shareholder – the ministry – and instead of pursuing targeted development, they function largely in a reactive mode.

“In these companies, the state behaves more like a passive observer than a responsible owner. The ministries of interior and defence, acting as shareholders, have long failed to define clear strategic goals and measurable outcomes that these companies should pursue. If the state cannot clearly define what it expects from its companies, it cannot effectively oversee their performance or financial management. The absence of objectives then negatively affects day-to-day management,” said SAO Vice-President Jaroslav Ivančo.

The Motor Vehicle Repair Company performs important functions in managing the vehicle fleets of the Ministry of the Interior, the police, and the fire and rescue services, and since 2023 it has also been the exclusive manufacturer of vehicle registration plates. Problems arose with its IT Services Division, established in 2021 with the ambitious goal of saving EUR 28 million over five years. The audit revealed, however, that the project generated losses of EUR 2.86 million and significantly affected the company’s financial results between 2022 and 2024. Without this loss-making division, the company would have remained profitable during the monitored period.

The Ministry of Interior also neglected its oversight role. The supervisory board failed to perform its duties properly, while business plans – intended to serve as the company’s core management documents – were approved by the shareholder with substantial delays. In 2022, the company issued invoices for services that had not yet been delivered, acting in breach of contract terms. In 2023, despite reporting a loss of almost EUR 650,000, the company paid extraordinary bonuses totalling EUR 50,000 to the chairman and two board members. Without repeated financial intervention by the state, which increased the company’s share capital by EUR 3.5 million, the enterprise would have faced serious financial instability in 2024.

“This is an example of a decision implemented without adequate preparation and prior analysis. The project was also insufficiently managed by the ministry and caused serious economic problems for the company, which ultimately had to be covered by public funds,” emphasised Vice-President Jaroslav Ivančo.

A positive development is that the loss-making division was dissolved in 2024, creating conditions for the company’s more stable operation in the future.

The Aircraft Repair Company Trenčín is responsible for repairs and maintenance of aviation equipment for the armed forces and other contractual clients. The audit confirmed that the company maintains a functioning quality management system and stable operations. However, LOTN’s seemingly favourable financial results were achieved mainly through the sale of long-term assets – particularly real estate – and through increases in share capital provided by the shareholder. For example, in 2024, revenues from the sale of long-term assets exceeded EUR 10.6 million and represented the decisive factor in achieving a profit.

At the same time, the company has consistently failed to meet planned revenues, reaching only 56–67% of projected income during the audited period. Despite being a key enterprise within the defence sector, its potential is not being systematically utilised, as evidenced by low investment implementation rates of only 45%. Without clear direction from the state, there is a risk that the company will fall behind in preparing to service new military equipment for the armed forces. Nevertheless, the company retains strong professional expertise and a functioning quality management system, which – if supported by a clear strategy – could provide a solid basis for future development and financial stability.

The national external audit authority therefore recommends that the ministries of interior and defence significantly strengthen the exercise of shareholder rights, clearly define strategic objectives for their companies, and introduce measurable performance indicators. At the same time, it is necessary to improve the management of investments, projects, and internal control mechanisms so that state-owned companies can fulfil their roles effectively and without requiring additional financing from public funds.

“Without clear, strategic and predictable management, state-owned enterprises will continue to operate more out of inertia than as instruments serving the public interest,” concluded Vice-President of the state auditors Jaroslav Ivančo.