Operational Programme Enterprise and Innovation lacks a functioning system of control; errors found in one-third of the projects
PRESS RELEASE on Audit No. 13/17 – April 14, 2014
The Supreme Audit Office (SAO) scrutinized funds utilized for implementation of the Operational Programme Enterprise and Innovation (OPEI), which aims at increasing the competitiveness of the Czech economy. Out of the Programme’s six priority axes, the SAO focused on priority axes 4 (“Innovation”) and 5 (“Environment for enterprise and innovation”). Auditors scrutinized the Ministry of Industry and Trade and the CzechInvest (Investment and Business Development Agency), which grant the subsidies and are the Programme’s managing and controlling authorities. When scrutinizing 22 selected projects, which were worth CZK 983 million in total, auditors found errors in seven projects. The deficiencies amounted to CZK 105 million. The SAO informed the financial authorities about the violation of budgetary principles.
The Ministry of Industry and Trade as well as the CzechInvest made substantial errors when evaluating the projects. Rules were not clearly defined for project managers so that they avoided giving opinions different from those previously given by external evaluators. Project managers are responsible for the preparation of fundament materials, which are used by evaluation committees when selecting the projects to be supported. Other significant errors were found in the controlling system and its functioning. The Ministry and the CzechInvest failed to reveal several problems when performing in-situ inspections at beneficiaries (problems in the competitive tendering processes), which should have been detected by the controlling system. That’s why the SAO concluded that the system was only partially working.
The European Commission (EC) also had objections to the Programme’s functioning. For the period 2007–2013, the EC allocated nearly CZK 101,000 million for the Programme’s implementation. By the end of 2013, the beneficiaries got reimbursements in the amount of CZK 55,600 million. As the EC’s objections have not been solved yet, there is a risk that the Czech Republic will not manage to draw the funds in time.
In several projects, the SAO auditors found errors in competitive tendering processes as well as ineligible expenses of the beneficiaries. Some beneficiaries also submitted documents, which were inconsistent with the reality.
For example, Technistone, a.s., received more than CZK 50 million for building factory units, where newly developed products would be made. However, the Company failed to define the object of one order in the request documentation and did not rule out candidates who could not meet fundamental qualification criteria. In the project, the Company declared debt-free in spite having unpaid balance with health insurance companies.
Another example is the company FERRIT s.r.o., which applied for reimbursement of a property purchase in spite the purchased land was not related with the project. The company ELMARCO s.r.o. bought a laminating machine, but it was not included into the project documentation. On the contrary, the Company failed to purchase another machine, which was additionally included into the documentation as the Company allegedly needed it to finish the project. The Company also got reimbursements of costs of construction plans regarding a building, which was not built in the end.
Communication Department
Supreme Audit Office