Management of the State Property in Connection with Winding-up of the State Enterprises
Press release on completion of the auditing operation No. 05/25
The aim of the audit was to examine winding-up process of the selected state enterprises subordinated to the Ministry of Finance, the Ministry for regional Development, and the Ministry of Industry and Trade. The audited period was the actual duration of winding-up of the selected 17 state enterprises.
The auditing operation was managed by Mrs. Eliška Kadaňová, Member of the SAO.
By the year 2005, still 265 state enterprises connected with privatization have not completed their winding-up. The audit found out that the relevant property was in some cases sold with the consent of the Ministry of Finance directly without any attempt to sell it by public auction. On the other hand, liquidators carried out in many cases auctions repeatedly (even tens of unsuccessful auctions); this not only dragged out duration of winding-up but the auctions costs themselves often exceeded gained yield.
A wholly extraordinary case was a direct sale of filling stations of the BENZINA Company for CZK 772 million. This decision was justified particularly by the need to pay delinquent tax, carry out an obligation from ecological burden, and avoid further costs. However, the realization of this sale was not carried out in a transparent manner and the original intentions were not met.
The winding-up costs were considerably influenced by expenses, which were paid by some liquidators for services. The examination of liquidators’ procedures uncovered cases, where payments for services were excessive, invoices were too aggregated, or some liquidators paid from enterprises’ resources such expenses, which were beyond framework of contracts with the relevant founders. Some of such found cases represented expenses, which evidently were not connected with winding-up of the enterprise; they were sometimes undertaken for purposes other than winding-up (providing and taking loans, free funds trade). The audit also found cases that liquidators awarded contracts to companies, with which they were connected.
Liquidators were motivated neither to complete winding-up quickly nor to gain the highest yielding. The audited ministries did not supervised efficiency of the process of conversion property into cash.
There it was not possible to find out even the total volume of residual balance after winding-up; it was paid either to the separate account administered by the National Property Fund or to the deposit account of the state financial assets. The records of the Ministry of Finance also did not contain any data applicable to ascertain for what purpose the gained funds were actually used.