BRIEFLY
- In three years (2021-2023), out of all official travels, in 32 cases or 60% of official travels, the Prime Minister of Latvia has used special flights for foreign visits whose costs constituted 1.2 million euros.
- Estimates of the State Audit Office of Latvia on special flights show that at least 221,566 euros from the state budget were spent illegally whereas at least 323,688 euros from the funds of the European Council were spent uneconomically. Thus, the Law on the Prevention of Squandering of the Financial Resources and Property of Public Entity was violated.
- The State Chancellery made procurements for business trips in violation of the Law on Public Procurement, and violations of the Accounting Law were also found.
- Travel agencies have been paid 91,200 euros for the organization of special flights over three years.
- Information about the special flights used by the Prime Minister and the calculations of the State Audit Office of Latvia are also available in the form of the data analysis and visualization tool “Power BI”.
- The State Audit Office of Latvia has addressed the responsible law enforcement authorities.
The State Audit Office of Latvia considers that by using special flights even in cases where the country had not declared a state of emergency and when alternatives to regular commercial flights were available in a reasonable time, (1) illegal actions have been taken with state budget funds, which, according to the estimates made by the State Audit Office of Latvia, constitute additional state budget expenses of at least 221,566 euros; (2) uneconomic conduct was allowed, which, according to the estimates made by the State Audit Office of Latvia, has resulted in additional expenses of at least 323,688 euros for the European Council. Thus, the Law on Prevention of Squandering of the Financial Resources and Property of Public Entity has not been complied with.
The financial audit also found violations of laws and regulations related to the organization of public procurement and accounting.
The information obtained during the audit shows that both the Prime Minister, the Prime Minister’s Office under his direct authority, and the State Chancellery were actually involved in the decision-making and implementation of the use of special flights for the foreign missions of the Prime Minister and the delegation. The State Audit Office of Latvia considers that responsibility of all involved persons for the decisions made to use special flights must be assessed. At the same time, the State Audit Office of Latvia points out that identifying specific responsible persons who made decisions about the use of special flights during the foreign business trips of the Prime Minister and the delegation is impossible by applying audit methods.
“The State Audit Office of Latvia does not question and the audit did not assess the necessity and importance of foreign visits, nor does it doubt that the functions of the Prime Minister and their continuity should be ensured. The State Audit Office of Latvia considers the use of special flights during an emergency or in cases where there was no other alternative to be permissible. However, the multiple use of the exceptional solution of an emergency situation disregarding the regulatory restrictions at a time when alternatives to regular flights are available is not permissible,” stated Ms Inga Vilka, Council Member of the State Audit Office of Latvia.
The audited period was three years (1 January 2021-31 December 2023). The audit did not assess the reasonableness of special flight expenses and compliance with regulations during the emergency situation declared in Latvia (9 November 2020 - 6 April 2021 and 11 October 2021 – 28 February 2022).
At least 221,566 euros from the state budget were spent illegally for official travel expenses
From 2021 to 2023, the Prime Minister and his delegation went on 18 official travels by means of special flights, as their share was 46% of the foreign visits paid for by the state budget during this time.
Article 32 of Cabinet Regulation No 969 “Procedure in which expenses related to official travels are reimbursed” of 12 October 2010 state that the travel expenses of the Prime Minister and members of the delegation in all modes of transport are reimbursed according to the actual costs, but no more than according to tariffs of business class or equivalent class. For foreign official travels financed from the state budget by using special flights during the time when the state of emergency was not declared, and in cases when there were alternatives of regular flights available in time, the limits of travel expenses specified in the Cabinet Regulation were not respected. Thus, the conduct in these cases is considered illegal, as a result of which the travel expenses for special flights were at least 221,566 euros higher than they would have been if the expenditure limits stipulated in the Cabinet Regulation were observed. In general, the expenses for special flights paid from the state budget are 613,830 euros.
Uneconomical use of 323,688 euros for official travel to attend the European Council
When choosing special flights for official travels to the European Council meetings and not evaluating flight alternatives in 93% of cases, according to the estimates of the State Audit Office of Latvia, at least 323,688 euros were used uneconomically. Special flights to the European Council were also used when there was no emergency and when reasonable alternative regular flights were available. For example, out of 14 official travels of the Prime Minister to the European Council, where special flights were used, alternative regular commercial flights were available in both directions or in one direction during 11 official travels. “It is an uneconomical action, even when transport expenses, including special flight expenses to the European Council meetings were covered from the budget of the EU Council. When choosing a special flight, justification and an evaluation of possible alternatives would be required,” indicated Inga Vilka. In total, the cost of special flights to the European Council meetings was 568,331 euros.
It should be mentioned that the State Chancellery of Latvia, without checking the reasonableness of the expenses included in the special flights to the European Council meetings, has increased the costs of the flights to the European Council, including in the invoices also unrelated expenses in the amount of euros, e.g., expenses for the delay of another special flight and also the payment of a fine for a cancelled flight. By doing so, the requirements of the Accounting Law were not followed, as well as false information was provided to the public about the actual expenses of the special flights.
It should be mentioned that without checking the reasonableness of the expenses included in the special flights to the European Council meetings, the State Chancellery has increased the costs of the flights to the European Council by including also unrelated expenses of 28,530 euros in the invoices, e.g., expenses for the delay of another special flight and also the payment of a fine for a cancelled flight. By doing so, the requirements of the Accounting Law were not followed, as well as false information was provided to the public about the actual expenses of the special flights.
In making decisions about the use of special flights, the actual involvement of the Prime Minister, the Prime Minister’s Office under his direct authority, and the State Chancellery is detectable
The Prime Minister’s Office organised special flights on which the Prime Minister and delegations went on official travels. Neither from the information provided in writing nor from the information obtained in the interviews, the State Audit Office of Latvia obtained evidence that the costs of regular commercial flights as alternatives to special flights and their comparison were evaluated when making decisions on the choice of special flights.
The State Audit Office was provided conflicting information about who made the decisions to use special flights for official travels. Therefore, the State Audit Office points out that identifying specific persons responsible for making decisions on foreign visits of the Prime Minister of Latvia and the delegation by using special flights is impossible with audit methods. The State Audit Office considers that responsibility of all involved persons for the decisions made to use special flights must be assessed.
Procurement for official travels was carried out by violating the law. There were 91,208 euros paid to travel agencies for the organization of special flights in three years.
Disregarding the Law on Public Procurement, the State Chancellery purchased services for ensuring official travels, including special flights, without appropriate procurement procedures, without ensuring open and equal competition and posing the risk of uneconomic costs. Accordingly, the Law on Prevention of Squandering of the Financial Resources and Property of Public Entity has also not been observed.
The audit did not provide assurance that the State Chancellery chose the most economically advantageous offer of special flight. Although the contracts with travel agencies for official travels and business trips provide for special flights, the State Chancellery did not select the offers and did not evaluate their prices, nor did it agree with the travel agencies on the brokerage service fee for the organization of special flights, therefore the agencies were free to determine its amount. For three years, the State Chancellery has paid travel agencies 91,208 euros for intermediation of services, which varies between 2.7% and 13% from the actual costs of each special flight, or 2,850 euros per special flight on an average. Travel agencies concluded contracts with one special flight broker, while the broker concluded contracts with special flight operators or providers in all cases.
The Prime Minister and members of the delegation have always been paid the maximum additional allowances
According to the Cabinet Regulation, several groups of officials may be given an additional allowance to the per diem for official travels. The Prime Minister of Latvia and members of the delegation have received the maximum possible additional allowance on all official travels, including the Prime Minister himself, that is, 30% of the per diem of the official travel without justifying either its need or its amount.
Since 2023, a monthly salary of senior officials has been significantly increased, including the Prime Minister and Ministers while the compensation of representation expenses has also been preserved at the same time, and in a larger amount than before the increase of the monthly salary. Representation expenses of officials are not subject to personal income tax, they are transferred together with the monthly salary and do not have to be accounted for. In the opinion of the State Audit Office of Latvia, the amount intended for representation expenses is actually equivalent to the salary. In 2023, the Prime Minister’s representation expenses were 1,592 euros per month, and he was actually paid 46,971 euros in three years. By giving up compensation for representation expenses for officials, it would be possible to save about 350 thousand euros from the state budget per annum.
Recommendations #PēcRevīzijas
After the audit, there are four recommendations provided to facilitate more transparent and responsible activities of state administration and state officials. By implementing the recommendations, (1) rational and economical organization of official travels in accordance with laws and regulations will be promoted, (2) a cost-effective evaluation of the choice of transport for official travels will be carried out effectively, (3) information on foreign visits and their expenses will be made public, (4) procurement planning and organization will be ensured, and the performance of contracts in accordance with the Law on Public Procurement will be monitored.
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About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organization of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General.
100 years of AUDIT STRENGTH
On 16 August 2023, the State Audit Law turned 100 years old. With the adoption of this Law, the State Audit Office from a formal de facto institution founded on 2 December 1918 became a de jure independent, collegial supreme audit institution of the Republic of Latvia. The State Audit Office is one of the independent state institutions enshrined in the Satversme (Constitution) of Latvia. The Constitution was signed by Roberts Ivanovs as the secretary of the Constitutional Assembly, who was then confirmed as the Auditor General. He worked as the first Auditor General for 12 years. His signature confirmed the text of our Constitution alongside that of Jānis Čakste.
Additional information
Ms Signe Znotiņa-Znota
Head of PR and Internal Communication Division
Ph. + 371 67017671 | M. + 371 26440185 | E-mail: signe.znotina-znota@lrvk.gov.lv