site.btaAudit Office Refers Lozenets Hospital to Prosecution on Suspicion of Crime Committed in 2022-2023

The National Audit Office sent parts of the audit report on the Lozenets Multiprofile Hospital for Active Treatment EAD for the period from January 1, 2022, to December 31, 2023, to the prosecution service, according to the institution's press centre. The audit covered the period of management of the previous hospital management.

In case of suspicion of a crime, the audit institution sends the audit report or parts of it together with the materials to the prosecution service in accordance with the Bulgarian National Audit Office Act. Until the conclusion of the criminal proceedings, the data from the report should not be disclosed. Therefore, the National Audit Office publishes the audit report on its website without the parts that have been sent to the prosecution service, the statement said.

Several other institutions have been notified of violations found during the audit of Lozenets Hospital.

The report has also been sent to the Minister of Health, and the part concerning violations of public procurement procedures has been sent to the Executive Director of the Public Procurement Agency.

The audit of Lozenets Hospital was included in the audit programme of the National Audit Office for 2024 and covers three areas of investigation: "Management and core activities," "Financial condition and real estate management," and "Planning and awarding of public procurement contracts."

Findings that have not been sent to the prosecution service and are subject to publication:

1. During the audited period, Lozenets Hospital EAD was in a difficult financial situation.

There is a persistent tendency for the company to generate negative financial results. The total accumulated loss for previous years is close to BGN 72 million, and with the loss for 2023, it exceeded BGN 94 million. As a result of the losses accumulated over the years, the company's equity capital decreased and was almost 50% below the registered capital, despite a twofold increase in capital during the audited period, totaling BGN 17 million.

2. The liabilities of the medical institution at the end of the audited period increased (from BGN 17 million in 2022 to BGN 25.8 million in 2023) and exceed its receivables, with a risk that the company will not be able to pay its liabilities to suppliers and creditors on time.

3. Reported expenses for 2023 increased by nearly BGN 4 million compared to the previous year, from BGN 58 million to BGN 62 million.

4. There is a sustained trend of losses generated by the activities of the Lozenez Sports and Health Complex, which has a negative impact on the financial results of the medical facility. To use the services of the complex, subscription cards are purchased or a fee is paid for a single visit. The company's employees use the swimming pool and fitness centre free of charge, and their relatives enjoy preferential rates.

5. As of December 31, 2023, Lozenets Hospital managed 33 properties with a total value of BGN 75.3 million. This includes land with an area of over 168,000 square meters with a value of BGN 14 million and 32 buildings with a value of BGN 61 million. Some of the buildings and part of the land are not used for the activities of the medical facility, but at the same time generate maintenance, depreciation, tax, and fee expenses.

6. An inventory and on-site inspection during the audit found that one of the buildings owned by the Health Ministry does not exist, but has not been written off from the company's balance sheet and depreciation, property tax, and waste collection fees have been charged for it.

7. During the audited period, two tenders were held for the lease of real estate, but with violations, including the lack of a specific bidding step, failure to specify the date, place, and time for the re-conduct of the tender, and failure to publish the tender decision by announcement on the website of the Lozenets Hospital within the specified time limit.

8. The audit team found that vending machines for snacks, drinks, and coffee had been installed in the medical facility without a contract and without rent being received.

9. It was also found that equipped offices were rented out, with contracts concluded without conducting tenders. The rent was not paid by all tenants within the agreed deadlines, both due to the late issuance of invoices by the medical facility and due to delays in payments by tenants.

10. During the audited period, 45 public procurement contracts were opened and awarded through procedures under the Public Procurement Act with a total estimated value of nearly BGN 25.5 million excluding VAT, of which 19 procedures with a total estimated value of BGN 7 million were audited. The open procedures conducted revealed non-compliance with the legal framework, such as omissions in the documentation, expired validity of required documents, conclusion of contracts after the expiry of the statutory deadline, etc.

As a result of the audit, the National Audit Office issued one recommendation to the Minister of Health and seven recommendations to the Executive Director of Lozenets Hospital, the statement said.