FBiH Motorways receive negative auditor's opinion due to legal violations and non-transparent operations

(Patria) - The Motorways of the Federation of Bosnia and Herzegovina received a negative opinion from the Office for Audit of Institutions of FBiH regarding compliance with legal regulations, while in the segment of financial statements they received a qualified opinion.

According to the auditors' report, the Company's operations in 2024 were not in accordance with the laws and other regulations that constitute the audit criteria.

One of the key reasons is the multiple amendments to contracts for the construction and supervision of motorway sections through annexes, which led to an increase in investment value and extension of construction deadlines. On just four sections, costs increased by EUR 255.5 million, while additional interest on rescheduled loans amounting to BAM 11.57 million was also charged.

The auditors also determined that loan funds were not used in accordance with the planned construction dynamics, resulting in the FBiH Motorways being charged a fee for undrawn funds in the amount of BAM 442,115 in connection with the contract signed with the EBRD.

An example of a problematic investment is the Mostar south – Buna section, subsection Tunnel Kvanj – Buna, whose total value grew to EUR 152.6 million, which is EUR 54.5 million more than the original estimate. The reason cited is the inefficient conduct of proceedings with international creditors, which lasted more than six years.

Employment without a competition

The audit also revealed irregularities in employment. During 2024, 30 workers were hired by the FBiH Motorways without conducting a public advertisement procedure, although the Labor Law and the relevant Regulation mandate mandatory advertising and transparency in employment.

In total, 97 workers and five interns were employed in 2024, of which 60 were through a public competition. However, 30 workers were hired for a fixed term without an advertisement, and some of them were later employed permanently.

Financial statements with a qualification

In the part of the financial statements, the Office for Audit issued a qualified opinion due to improper booking and assessment of liabilities.

The Počitelj – Zvirovići sections (lots 1 and 2), although put into traffic in September 2024, were not activated in the books, which led to an overvalued value of assets under construction and an undervalued value of construction objects by at least BAM 222.5 million.

No assessment of provisions for court disputes worth BAM 20.6 million was carried out, which relate to arbitration for works on the Klopče – Drivuša section (BAM 18.3 million) and land expropriation (BAM 2.3 million).

The Office for Audit concluded that these irregularities significantly affected the transparency and legality of the operations of the FBiH Motorways in 2024.