Financial audit at six ministries reveals poor management and squandering of public funds

The Czech Finance Ministry on Thursday unveiled the results of in-depth audits conducted at six ministries. The findings indicate that millions of crowns in public funds could be saved with better planning, centralized purchasing and better use of the ministries’ own resources.

Andrej Babiš, Lukáš Wagenknecht, photo: CTK

When business tycoon turned-politician Andrej Babiš took up his post at the finance ministry he promised to run the institution like he would his own private company, arguing that millions of crowns in public funds was being squandered in state administration. In order to prove the case he ordered in-depth audits at six ministries that his own party ANO now controls – the ministries of finance, local development, transport, justice, defense and the environment.

The results, which were unveiled to the press on Thursday, appear to have proved him right. They revealed that in the past these institutions purchased overpriced goods from firms without making any effort to compare prices on the market, they bought office equipment for which there was no need in order to spend funds already earmarked, and paid exorbitant amounts of money for outsourcing services which their own employees should have been tasked with.

“I said I would run my ministry as I did my own company and each company has its own internal mechanisms of securing supervision over money spent. There must also be accountability. If someone squanders public funds we believe they should be held accountable. And I dare say that on the grounds of this audit we will file a number of criminal complaints regarding abuse of public funds at the finance ministry because public finances were really not managed as they should have been.”

According to the minister there are invoices to the tune of 16 billion crowns for which there do not appear to have been public tenders, there was a case of 6 million crowns spent on advisory services without anything to show for it and the differences in the price range of the same goods acquired by different ministries was up to 300 percent. While the defense ministry paid 400.000 crowns per vehicle for a new fleet of Skoda Octavia cars, the environment ministry bought the same cars at the cost of 600.000 per vehicle at more or less the same time. The finance minister said he was shocked to find that his ministry which has 1,500 employees also has 1,500 printers and that there were 100 spare computers stacked in the basement. Norms and rules regarding purchasing of office ware differ at every ministry with little coordination at government level. Deputy Finance Minister Lukáš Wagenknecht says the answer is central planning in public administration.

Photo: Barbora Kmentová

“If you lack coordination in running a company, if you have poor planning and purchase goods at random, on a small scale you are going to lose money. The results of this audit only proves what anyone with common sense and a head for business knows – good planning and coordination could save state coffers billions of crowns.”

The ministry is now working on a system of centralized planning that should cut costs in public administration in the future. And Finance Minister Andrej Babiš says that his own party’s ministries at least will save money by significantly curbing outsourcing services. This particular financial audit is a case in point. It was conducted –over a period of three months – by five of the ministry’s own employees. Had the ministry commissioned an outsourcing company to do the job it would have cost taxpayers 3 million crowns.