The Court of Audit is the body that is, according to the Constitution, the highest body for the control of state accounts, the state budget, and total public spending in the Republic of Slovenia. Therefore, there is no doubt that we have a body in our country that offers professional and independent advice to those who use public funds while also conducting business reviews to protect taxpayers who contribute money to the budget, from which public funds are then drawn. The question that arises is whether the Court of Audit of the Republic of Slovenia is really performing its basic task. Namely, some of the indicators we have listed with the help of financial experts say otherwise – especially when it comes to the business of the Social Democrats party (SD). Namely, their business operations cannot be assessed as positive, but the Court of Audit obviously thought otherwise.
In recent weeks, we have already pointed out quite a few things regarding the operations of the Social Democrats party. Among other things, the Court of Audit and its President, Tomaž Vesel, confirmed that the SD party only has a loan in the amount of 500 thousand euros, although it is evident that the party received yet another 100 thousand euros from the same bank and on the same day as the first loan. How could such an anomaly have occurred? The operations of each entity are subject to clear legal provisions. Political parties, in addition to complying with the written legal provisions, are morally obliged to organise their business in such a way that they can set an example for everyone. The purpose of founding a political party is to actively influence the basic social norms – which are created by example and with the help of written provisions. It is impossible to imagine how someone who does not know how to manage their own finances in accordance with the regulations in an exemplary manner, would be able to do so elsewhere.
As everyone may have certain reservations or concerns about their business, there must be a professional and independent body that can help them with this. This is all the more important when it comes to doing business and spending public funds. A body like that, which offers help and advice to users of public funds, is, of course, the Court of Audit of the Republic of Slovenia. Here is what is written on the court’s website: “The Court of Audit advises those who use public funds, primarily by making recommendations during or after the completion of audits but may also give opinions on public finance issues. It also advises on important issues outside the audit process.” The basic task of the Court of Audit is to review and control the operations of users of public funds. By auditing, the court obtains appropriate and sufficient information for expressing an opinion on the auditee’s operations. It then issues a report on the performed audit, which it also forwards to the auditees and the National Assembly and publishes it on its website.
Is the Court of Audit actually realising its most fundamental purpose?
As they also wrote on their website: “In accordance with the Slovenian Constitution, the Court of Audit is the highest body for supervising state accounts, the state budget and all public spending in Slovenia. The Constitution further provides that the Court of Audit is independent in the performance of its duties. The Court of Audit Act also defines that the acts with which the Court of Audit exercises its auditing powers cannot be challenged before the courts or other state bodies.” So, there is no doubt about it – in the Republic of Slovenia, we do have a state body that offers professional and independent advice to users of public funds while also reviewing operations to protect taxpayers who contribute money to the budget, from which public funds are then drawn. So far, so good. The question, however, is whether the Court of Audit is actually realising its most fundamental purpose.
To answer this question, we took a closer look at the audits of the Court of Audit for the SD party in 2018. Why this particular year? Because in the year 2018, the SD party received heavy loans from the Delavska hranilnica bank (the Workers’ Savings Bank) that year. Delavska hranilnica is a bank that is predominantly owned by trade unions and the Republic of Slovenia, as they share a total of more than 33 percent of all shares. It should also be noted that the year 2018 was an election year – namely, there were early parliamentary elections, as well as local elections held in the Republic of Slovenia that year. First of all, let’s take a closer look at the audit report of the Court of Audit.
Why did the Court of Audit not investigate the origin of SD’s own funds?
In the audit report, we mainly focused on the loans. Namely, according to legal provisions in the Election and Referendum Campaign Act, the maturity date of the loan must not be later than 30 days before the deadline for closing the account. But after a closer examination of the findings of the Court of Audit, it became clear that the court did not actually pay much attention to this issue. The SD party acquired 70.9 percent of the “collected” funds by transferring funds in the amount of 238,119.50 euros from its transaction account. However, there is no data on the origin of the funds that the SD party transferred to this account. Even from a cursory review of the SD party’s statements, it is pretty clear that these are not their actual own funds, as it can be established that they do not actually have their own funds. However, they do have loans and liabilities to suppliers. So it is more than obvious that the funds on the bank account used for elections purposes, from which the SD party transferred the funds, are actually funds of the lender or supplier. By no means can this be just classic funds. Why did the Court of Audit not pay any attention to this issue – even though it was supposed to investigate the origin of the party’s funds thoroughly?
It is obvious that the SD party does not even have its own funds
Publicly available data shows that the party does not even have its own funds, but the court did not seem too worried about that.
But despite all of the complaints in the audit report, the Court of Audit still decided to issue a positive opinion. This is clearly not a credible opinion – it would be interesting to see what would happen if the court also took a closer look at the source of the SD party’s “own” funds, which the party transferred from its own account to the election account.
Business conduct like that could by no means receive a positive review
The Court of Audit reviewed the operations of the SD party in the year 2018 and found a surplus of expenses in the amount of 359,952.23 euros – meaning that these are actually losses. But apparently, the court did not consider this to be important. Although the Court of Audit is supposed to monitor the operations of the budget consumers and also advise on how to improve their operations. Well, these worrying findings about the business inefficiency and losses are nowhere to be found in the Business Report – regardless of the negative capital of 639.922,93 euros. This means that for several years now, the SD party has been operating at a loss. Needless to say, every normal entity would receive a recommendation on financial restructuring or compulsory settlement. However, if this proved to be unsuccessful, the entity would be deemed ripe for bankruptcy. And it is by no means possible to give a positive opinion to such business practices. The SD party’s operations certainly raise concerns, and the auditor should have been aware of that.
We were wondering where 63,598 euros of long-term liabilities disappeared to at the end of 2018
The Court of Audit found some violations of the law, which they also mentioned in their Business Report. But that was still not enough for the court to take the SD party’s business more seriously. Among the persons who violated the law with their contributions, the Court of Audit names the former Prime Minister and Minister of Finance Anton Rop, SD MP Matjaž Han’s wife, and the former Minister Janez Prešiček is also mentioned.
At a later point of the report, however, the Court of Audit made another mistake. In a previous article, we already wrote about the fact that the Court of Audit overlooked a 100-thousand-euro loan from the Delavska hranilnica bank, which the SD party took out in 2018. Even if we take a look at the SD party’s annual report, there is no way to come to the conclusion of the Court of Audit – that the party “only” has 500 thousand euros in loans. On the contrary, with due diligence or even a cursory glance, it is possible to quickly figure out that the SD party has 536,402 euros of long-term financial liabilities. Either way, the Court of Audit made another big mistake. Even if they simply copied the number from the SD party’s annual report, they had copied it wrong. Intentional or not, for such an important institution as the Court of Audit and for all it represents, an error like this is unacceptable. Especially because they are supposed to audit these exact statements, which contain the 536,042 euros worth of long-term financial liabilities!
Regardless of all the irregularities found, the Court of Audit nevertheless issued a favourable opinion
After everything we have written, we have to point out that the Court of Audit still decided to issue a positive opinion – in spite of all the irregularities. If we were to add all the irregularities that could be found in the Court of Audit’s report, we absolutely could not come to the conclusion that the business operations of the SD party deserve a positive opinion. But an entity that is, in fact, ripe for bankruptcy is apparently operating in an exemplary manner, according to the Court of Audit. It should be noted once again that this opinion was issued by the highest body for the control of state accounts, the state budget, and total public spending in the Republic of Slovenia.
Sara Bertoncelj
