The SAO audited the management of contributory organisations of the Ministry of Culture

Press release on audit No. 21/10 – 18 July 2022

The Supreme Audit Office focused on the management of contributory organisations of the Ministry of Culture — the National Gallery in Prague (NGP) and the Museum of Decorative Arts in Prague (MoDA) — between 2018 and 2020. Fundamental problems related to the National Gallery and its public contracts as well as to the management itself. For example, the NGP ignored procurement procedure when selecting suppliers for legal, real estate or cleaning services, circumvented the Act on the Register of Contracts and acted in a non-transparent manner by awarding its CEO a contract for CZK 1.1 million directly (without an open competition). The SAO assessed a number of the described irregularities as a suspected violation of budgetary discipline. Compared to the National Gallery, minor deficiencies were found at the Museum of Decorative Arts.

Although the NGP had its own legal department, it hired three external companies to carry out its agenda in place of its legal department. The NGP concluded seven contracts with the external contractors without a tendering procedure being held beforehand. Between 2018 and 2020, the NGP paid CZK 6.7 million for these services. Since the NGP violated the Law on the Register of Contracts (failed to provide mandatory information and changed the effective date of the contract), three of the seven contracts were invalid. However, the NGP paid CZK 4.5 million on the basis of them. The NGP paid remuneration to one of the legal service suppliers in the months when this supplier did not provide any services. In the case of another contract, the NGP increased the remuneration from CZK 1.5 million to CZK 2.6 million by two contract amendments, and in the end, it even paid CZK 373 thousand (all including VAT) more than these two amendments stipulated.

Real estate services were also provided to the NGP by three different companies, with which the NGP concluded contracts worth CZK 2.4 million, again without a tendering procedure. In this case too, less than half a year after signing the contract, the NGP increased the price from the original CZK 1.2 million to CZK 2 million with an addendum. The NGP concluded three contracts with another real estate agency in one day for a total of CZK 145,000, while the individual contracts did not exceed the value of CZK 50,000. In doing so, the NGP avoided the obligation to publish the contracts in the register of contracts and thus circumvented the Law on the Register of Contracts. The NGP proceeded in the same way with a third supplier, with whom it concluded five contracts under CZK 50,000 within two days. The resulting amount thus exceeded CZK 239 thousand.

The contract for the provision of security services was also problematic. The NGP did not publish its value in the register of contracts, which is mandatory information, and the contract was therefore cancelled under the Law on the Register of Contracts. Despite this, the NGP paid the supplier CZK 154 million on the basis of the invalid contract.

In addition, the NGP entered into a contract with its CEO in December 2018 to create a copyright work for more than CZK 1.1 million. It did so without any tendering procedure, thereby violating the principle of transparency under the Public Procurement Act. Moreover, the contract was signed on behalf of an unauthorised person — the CEO's chancellor.

Last but not least, the NGP concluded a contract to create a new logo for CZK 1.3 million. However, due to the fact that the new logo had a name other than that given by law, the NGP cannot use this logo on official documents.

The common denominator of the described deficiencies was, among other things, that the NGP concluded contracts with the suppliers without the approval of the competent persons who had this obligation. This is one of the fundamental failures of the internal control system. It did not work properly at the NGP and is generally one of the main reasons for the problems described above. The non-functioning control system is also related to the fact that the NGP does not maintain an electronic file service even after 17 years since it was required by law to do so.

At the Museum of Decorative Arts in Prague, the SAO revealed minor shortcomings compared to the NGP. These deficiencies related to the internal control system, as well as the registration of assets or the bookkeeping. In two cases, the Museum of Decorative Arts left premises used for business and equipment (movable property) free of charge to the lessee. In one of these cases, the property was worth CZK 1 million.

Communication Department
Supreme Audit Office

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