EC could demand repayment of State subsidies to Brodosplit and 3. maj shipyards




The State Audit Office has released a rather embarrassing report on the audit at the Ministry of the Economy in the part concerning the restructuring program of the Brodosplit and 3. maj shipyards. It cites negative reports filed by Hrvatska brodogradnja - Jadranbrod (HBJ), the shipbuilding management company authorized to monitor the implementation of the restructuring program, in connection with "irregularities" in the implementation of the program at Brodosplit and 3. maj.

The State Audit thus points out that there is a danger that the European Commission will request reimbursement of the subsidies, which would push the two shipyards into bankruptcy. "The State Audit Office is of the opinion that there is a risk that the European Commission, in accordance with the approved Restructuring Program and the fulfillment of conditions agreed with the EU, will order the Republic of Croatia to demand repayment of the subsidies from the shipyards, which would have negative consequences for the economy of the Republic of Croatia," states the audit report.

Final report

It then points out that, "on the basis of the request of the Ministry of Economy, the Ministry of Finance has carried out budgetary supervision at the [Brodosplit] shipyard in Split; the minutes made of the supervision process do not record a finding of improper use of the state support funds". The Ministry of the Economy, the report says, accepted the said position of the Ministry of Finance. After that, in March 2017, it requested the Ministry of Finance to carry out budgetary supervision at the [3. maj] shipyard in Rijeka. The process ended in September 2017, but strangely, the report says nothing about the results of the supervision.

Furthermore, the document (made on August 23) says that the Ministry of the Economy was preparing the final, 14th report to the European Commission on the implementation of the restructuring program for all three shipyards - Brodosplit in Split, 3. maj in Rijeka, and Uljanik in Pula - which was expected to be sent by the end of that week. The report states that, consequently, a reaction is expected from the European Commission. The final report has thus already been sent to the EC, but the Government or the Ministry of the Economy have not released the information about it to the public.

The report will inform the European Commission about the completion of the five-year restructuring process for all three shipyards. The Ministry has previously sent 13 six-month reports to the European Commission  on the restructuring of the three shipyards, which contain information on its own contribution to the process, on the production at the shipyards, capacity reduction, state support etc. "The European Commission has not issued comments related to those documents", claims the State Audit Office.

Large sums

According to the HBJ reports, Brodosplit was granted HRK 1,503,268,641 in restructuring subsidies  between 2012 to 2017, while 3. maj received HRK 847,377,751. HBJ stresses that Brodosplit, inter alia, "has not used the received subsidy to its intended purpose, nor made its own contribution to the cost of restructuring".

On its part, the Rijeka shipyard has not fulfilled its commitment to contribute HRK 842 million to the cost of restructuring. In HBJ's opinion, only 695.58 million in the shipyard's spending can be recognized as such.