The rules for obtaining subsidies to support forestry have not obliged applicants to watch prices. CZK 300,000 was earmarked for elevated hunting blinds.

Press release for audit No 17/06 – 15th January 2018

The Supreme Audit Office focused on forestry support from 2011 to 2016 that was provided from the EU rural development programmes and from the national subsidy programme1 and forest management contributions from national funds. For example, the SAO examined how the Ministry of Agriculture, the State Agricultural Intervention Fund (SAIF), and some regional authorities selected and evaluated applications for subsidies or how they evaluated the impacts of distributed money. In case of subsidy beneficiaries, objectives of the audit were mainly on how they met the conditions associated with obtaining money. The SAO audited a total sample of CZK 230 million. The auditors found shortcomings regarding the way of money distribution in the "Rural Development Programme of the Czech Republic 2007-2013". The rules for obtaining subsidies did not obliged the recipient to proceed in the most economical way and to try to get the best prices, which impacted several results.

The Ministry of Agriculture did not set a limit in many cases for eligible expenditures in the Rural Development Programme for 2007 to 2013 - i.e., it did not specify financial limits for each type of expenditure (for example, for the price of resting places in the forest, shelters, bridges, etc.) to which the money would be paid to the applicants. At the same time, the Ministry of Agriculture set the subsidy rate to 100 percent, so the applicant did not have to contribute financially at all. An example is the situation where a recipient applied for a subsidy to build five elevated hunting blinds. He received CZK 348 000 for one of this observatory, for the rest he got CZK 295 000 per each. As the limit for eligible expenditure had not been set and as the subsidy covered all project costs, the applicant did not have to deal with the price of hides at all.

The Ministry of Agriculture did not set limits for eligible expenditures even in the case when the money was earmarked for the restoration of forests after calamities, which negatively influenced the prices of forest paths reconstructions. They reached up to CZK 13 000 per one restored meter. When reconstructions of the paths were financed by the same programme, but with measures with a fixed financial limit, the prices were approximately CZK 3000 per one meter of a reconstructed path. In both these cases, there were two consecutive sections of a path in the same location and the money was obtained by the same beneficiary. Another problem was that the applicant did not have to present photographs of the damage or other evidence. He did not have to document how much of the forest land was destroyed as well as had no obligation to prove the total damage.

The auditors also found that one of the planned objectives of the Ministry was not reached. Using the money provided from the "Payments within Natura 2000 forest areas" measure, originally, 37,000 hectares of forest had to be afforested. Due to the administration complexity, setting of the conditions, and the long waiting time for the subsidy, only 21 applicants benefited from this support and so only 1 500 hectares of the land were afforested.

For the subsidy beneficiaries, the audit showed that one of them had given false information about the project. The SAIF did not find this and paid the subsidy. Thus, it committed a breach of budgetary discipline of almost CZK 9.5 million.

Money from rural development programmes and subsidies from national sources should contribute jointly to the realisation of the vision and the forestry strategy. The main strategic document was the National Forest Programme for the Period until 2013. By the end of the audit, the Ministry of Agriculture did not update it and its impacts were not evaluated.

Communication department
Supreme Audit Office

1] The National Programme of Conservation and Reproduction of Forest Tree Species.

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