K. Mitrík highlights the risks in contracting or fulfilling commitments to NATO

Bratislava 18th January, 2018 – In the second half of 2018, the Supreme Audit Office of the Slovak Republic (SAO SR) completed eleven audits in 70 audited entities. The Office carried out audits on the country readiness to meet the Agenda 2030 objectives, the process of centralising public procurement for hospital beds, the conduct of the Ministry of Economy in issuing the licenses, examined the activities of selected organizations in the field of regional education, and assessed the process of SAS (Slovak Academy  of Sciences) transformation.

In the area of ??self-government, the auditors assessed the system of providing social services for seniors. The SAO SR also prepared two analytical reports focusing on the use of investment incentives and fulfillment of the main objectives in the field of science and research. The SAO SR President Karol Mitrík, sent the information for the ninth time to the three highest constitutional officials, drawing the attention of the President, the Speaker of the Parliament and the Prime Minister to the findings of the audit conclusions in the Ministry of Transport and Development (contract award system) and the Ministry of Defense (Slovak Republic commitments to NATO and development of the of the armed forces).

The system of concluding contracts within the subordinated organization in the transport and construction sector.

The purpose of the audit was to assess the merits of the contractual relations in the selected areas of services concluded by the Národná diaľničná spoločnosť (National Motorway Company – NMC) and Železničná spoločnosť Slovensko (SlovakRail – SRSK). In 2017, NMC used public funds for selected service in volume around 2.5 million EUR which was an increase of 90% over the previous year. The largest increase was represented by legal services that grew by 394% to 1.44 million EUR compared to 2014.

The auditors found that the NMC had, among other things, ordered two legal analyses related for possible merger of NMC and Slovak Road Administration, as well as NMC and Railway Technical Recovery and Protection. The NMC must have known that the joining a State budget organization and the joint stock company is not permitted by law. The company also commissioned two expert analyses from the Research Institute of Transport in Žilina for the identical section of the D1 motorway, using only one.

Several critical sites The SAO SR identified several critical points  in the provision of services related to electronic toll stamps, such as the payment of incentive remuneration (approximately 200,000 EUR for two years), or the payment of bank charges, which, contrary to the contract, was paid by NDS (approx. 55 000 EUR).

In 2017, the SlovakRail drew public funds for selected services in the amount of EUR 946 000, which was 65% higher than in 2014. The highest costs were incurred for consultancy services increased by 57% to EUR 835 000 in the monitored period (2014-2017). For example, uneconomical handling of public funds has been identified by auditors in the provision of a legal analysis related to the free transport provided by passenger rail transport to a selected group of citizens (approximately EUR 18 000).

The SAO SR also drew attention to the fact that the same analysis was carried out in 2014 by the Ministry of Transport and paid for it more than EUR 73,000. Several shortcomings were revealed in the contract processes, but also consulting services related to the preparation of projects funded by the European funds. In the period 2014-2017, the SlovakRail paid for these services to EUROTARGET a remuneration of more than 2.3 mil. EUR excluding VAT.

On the basis of the findings, the SAO SR concluded that the disbursement of funds by the SlovakRail was in many cases non-transparent, and the basic principles of the funds economic management were not complied with. The SAO SR also took the view that a number of professional services should be carried out by the NMC or the SlovakRail by their in-house professional services units and should be provided by internal staff.

Meeting the Slovak Republic commitments to NATO and Defense Development Programme

The purpose of the audit was to map the state of fulfillment of selected commitments to NATO and to define the causes of their non-fulfillment. The Slovak Republic, when joining the North Atlantic Alliance, committed itself to fulfil its obligations to contribute to collective defense, to create a comprehensive system of active security against the new world threats of terrorism, extremism or migration.

Within the framework of fulfilling the Eligibility Goals, Slovakia has problems mainly due to insufficient financial cover that is negatively reflected in the modernization and rearmament of the Slovak Armed Forces. Of the total 18 Eligibility Goals 2013-2017, only one (Ground Air Assistance Management) was met. An important shortcoming is the inability to provide a heavy mechanized brigade from the SR for the Alliance, with the creation of a fully-fledged brigade scheduled for 2030.

The audit carried out within the defense sector identified, in 2016, several risks related to possible inefficient, inefficient management of state resources. For example, than EUR 16 mil was set to modernise two military helicopters. Their upgrade was planned in 2010, but the renewed helicopters Mi-17 did not serve the armed forces even in 2018. In the event of suspected serious violations of the law, the SAO SR passed the detected shortcomings to the law enforcement authorities and in this case it also provided the police with the protocol.

SAO SR states that defense, public order and security spending has risen by more than 18% in the last five years, to a total of EUR 2.6 billion. In view of this significant volume of public funds and SAO SR own analysis, it put the Ministry of Defense among the risky institutions, which will be under most sophisticated view in the next three years.

Taking this step, the SAO SR wants to contribute to the state resources devoted to the strategic development of military equipment, that equipment was used to achieve the stated goals and the Ministry of Defense transparently evaluated the measurable indicators defined in key documents for the development, modernization of the armed forces. As the auditors worked with information protected under the Act on Classified Information Protection, K. Mitrík, SAO SR President Chairman, sent protocols not only to the highest constitutional actors but also to members of the Defense and Security Committee of the National Council of the Slovak Republic.