ProMoPro director and co-owner Jaroslav Veselý says calling the contract with Prague Congress Center exclusive is ‘unfortunate’
Debate rages as to whether Defense Minister Alexandr Vondra (Civic Democrats, ODS) erred in the ProMoPro case and should therefore resign. Nevertheless, there is a range of aspects to the case that are not being taken into account.
When ProMoPro signed a contract with the Government Office for the provision of audiovisual and translation services at events hosted by the Czech Republic within the framework of the country’s six-month presidency of the EU, the firm’s finances were not in the best of shape, to say the least. ProMoPro won the contract for the provision of conference services without a tender on the grounds that it had exclusive rights to provide services in the Prague Congress Center; nevertheless, the owner of the company admits that use of the term “exclusive” is “unfortunate.”
At least according to the company’s financial results, prior to securing the contract with the Government Office, the company ProMoPro could not be described as a successful company. Information in the commercial register indicates that the company’s owners Mr. and Mrs. Veselý propped up the company from their own funds. “When it was needed in the past, we provided the company with credit. We will do the same in the future,” Jaroslav Veselý told Czech Position.
This statement by the company’s director seems to contradict the very logic of running a business, i.e. to make a profit. After all, no owner keeps a business alive only in order to continually lend it money.
Alone in the red
ProMoPro’s financial results for 2007 are missing from the commercial register. The following year, the company recorded a loss of ProMoPro’s financial performance improved dramatically thanks to the Czech EU PresidencyKč 9 million from a turnover of Kč 131 million, and the company’s negative balance reached Kč 11 million. By December 31, 2008, the Veselýs had provided the company a loan of Kč 37 million.
Veselý says that ProMoPro was in the red in 2008 due to investments and amortizations. “If the write-offs are not counted, the company made an operating profit,” Veselý said, adding that apart from his and his wife’s own loans to the company, at the end of 2008 the firm was free of obligations.
ProMoPro’s financial performance improved dramatically thanks to the Czech EU Presidency of the EU in the first half of 2009. The Government Office is known to have paid the company almost Kč 551 million including VAT for services provided in 2009, and according to the documents available in the commercial register, the company’s turnover for the year increased to Kč 493 million and its capital jumped to Kč 50 million. That same year, the company’s owners returned almost Kč 35 million from the company to their private accounts.
Nevertheless, Kč 45 million was actually transferred from the company to the Veselýs’ accounts. “Maybe it’s surprising for somebody, but Mr. and Mrs. Veselý actually pay themselves a wage and bonuses. The Kč 45 million included the regularly paid monthly wages, return of loans and a yearly bonus,” Veselý said by way of explaining the disparity in sums.
We’re not saying!
ProMoPro’s owners declined to reveal information about the firm’s current financial state even though they already know the audited results for 2010. The company’s results for last year have not yet been submitted to the commercial register.
“We will, of course, fulfill the legal obligation to make the figures available to the public,” Veselý replied, when asked about the company’s turnover, operating profit, expenses and amortization for last year. When the results become available, not only will they reveal how the firm has fared without state contracts, but also to what extent it was dependent on a single lucrative set of events.
The Veselýs say that they charged the government the firm’s normal prices for the provision of audiovisual technologies, and for other services their company put forward an offer for each individual event. However, a comparison of ProMoPro’s financial results for 2008 with those for 2009 cast doubt on their assertion. The prices calculated for the state must have been higher, otherwise the company wouldn’t have made such as high profit in 2009. Nevertheless, it will only be possible to reach a definitive conclusion when the results for 2010 are made available. The cabinet has not published the amendments and appendices to these contracts, nor the protocols of an audit.
Exactly for what ProMoPro charged the government is described in the appendices of contracts concluded between the Government Office and the company. However, the cabinet has not published the amendments and appendices to these contracts, nor the protocols of an audit, which includes spending on the EU presidency, conducted by PricewaterhouseCoopers.
The framework agreement with ProMoPro, pricelists, the number of invoices paid and the total sum that the Government Office paid to the company, are available on the government website, but without the additional agreements these documents are practically worthless for making a comprehensive analysis.
“In addition to the investigation already completed by the Financial Analytical Unit (FAÚ) of the Ministry of Finance, the [police] anti-corruption and financial crimes department has been conducting an investigation of the Government Office,” government spokesman Jan Osúch told Czech Position. “The office’s management is cooperating fully with the investigation and is providing all the important documents. For this reason, we are not providing additional documentation to individual journalists.”