Irregularities and concealment of documentation discovered, the Institute orders a new audit

The health insurance institute of Herzegovina-Neretva Canton is amongst the institutions that were not satisfied with the audit of the FBiH Audit Office, so they decided to use citizens’ money to hire a new one that would satisfy their reputation and beautification of business operations.

Namely, the Audit office of the institutions of FBiH published a report in September of 2023 on financial auditing of the Health insurance institute of Herzegovina-Neretva Canton, during which they observed a large number of irregularities in business operations, bad business decisions, and at the end they did not receive necessary documentation about the “Fifth floor”, an affair of the former director Rade Bošnjak that is now a matter of SIPA and Federation Police Administration. Only a month after the audit report was published the Institute of Herzegovina-Neretva Canton published an open call for new auditing services.

New audit at the expense of taxpayers

Just after the auditor’s report was published, the Institute announced a tender for a new audit on September 28, and as stated in the tender documentation, they plan to spend BAM 10.000 without VAT on this audit.

The deadline for completion of the audit, which would most likely, given all the circumstances, suit the Institute’s leaders, is April 15, 2024, and according to the tender documentation, no alternative offer is allowed.

The deadline for submission of bids was October 3, which is also very controversial since potential auditors had only 5 days to see and register for this tender. Although they have offered such a very short deadline for submission of bids, the Institute still did not publish the results of the call even though more than a month and a half has passed from the submission deadline.

The award criterion for this job is economically most favorable offer, and the documentation states that the price makes 50 percent of the offer, hours spent on audit activities 30 percent, and the number of hours spent on pre-audit activities 20 percent. The Institute also boasts its own internal audit office on its website, and there has been a head of the office since 2013.

We asked the Institute about the reasons for new audit

“The FBiH Audit Office conducted an audit of the Institute’s operations for the year 2022. The stance of the FBiH Audit Office and the legal obligation of the Institute (Law on Accounting and Audit of the Federation of BiH) is to hire an audit that will audit the year when it is not done by the Audit Office of the Institutions in FBiH, with the aim of having every year audited,” read their answer to Inforadar.

As they claim, there were no disputed elements of the audit: “We do not know what exactly are you implying, the audit was carried out without difficulties and in accordance with the implementation plan”, they emphasized.

They said the following about the concealment of documentation for the “Fifth floor” and the legitimacy of the acting director: “Audit Office of the Institutions in FBiH conducted an audit of the Institute’s operations for the year 2022 in line with its authority and responsibilities. Director Vidačak was appointed by the Government of Herzegovina-Neretva Canton and is registered in the court register as the person responsible for managing the Health Insurance Institute of HNC”.

What did the Federation auditors find in the Institute?

Expenses on the basis of international agreements on social security are neither recorded nor recognized based on the occurrence of a business event. Consequently the expenses were overestimated by BAM 290.730. In addition, the same obligations for the year 2022 were not recorded, which is why the obligations were underestimated by BAM 1.759.193.

Also, the Institute does not have documentation on ownership for the business premises it uses in Čitluk and Čapljina, which are shown in the financial records.

The Government of Herzegovina-Neretva Canton had on December 9, 2022 temporarily appointed Ana Vidačak as director of the Institute until the completion of procedure to select and appoint the direct, but not longer than three months. Following her appointment, the Management Board did not conclude a new employment contract with the temporarily appointed director, who is an employee of the Institute on the position of health insurance consultant. The Government of Herzegovina-Neretva Canton did not appoint the director of the Institute after the expiry of the three month period.

Everyone is doing the same, and ministry is without a minister

The auditors found that the Health Insurance Institute of Herzegovina-Neretva Canton keeps records of working hours in such a way that all employees have identical daily working hours recorded, 7 hours and 30 minutes, which is why they express doubts about record’s credibility. The report further states that the conditions for the Institute to draw up a health protection program have not been met, given that the plan and program of health protection measures on the territory of Herzegovina-Neretva Canton, which is adopted at the proposal of the Public Health Institute, has not been adopted by the competent Minister of Health. Let us remind you that HDZ’s Minister of Health Goran Opsenica has submitted his resignation, which Prime Minister Nevenko Herceg did not sign, and the ministry was on stand-by for a long period of time and no one cared too much about such a situation.

In addition to all that, the report states that the Institute finances capital investments in the health care institutions on the basis of the obligations it has assumed and is settling from Herzegovina-Neretva Canton (loans from the Saudi Development Fund and a loan from the Export-Import Bank of the Republic of Korea).

The Health Insurance Institute is entertained around millions without a plan and program

The report also established that this state institution did not draw up a plan and program of regular controls for the year 2022, which is why the execution of health care expenditures of the total value of BAM 134.998.121 were not monitored and controlled in accordance with the Rulebook on the manner of conducting supervision and control and concluded contracts with the health care institutions in Herzegovina-Neretva Canton.

“Fifth floor” – special story

Federation auditors and some Federation MPs have been for many years now warning that this kind of institution’s operations does not make any sense. Since it is not legally possible to impose a certain penalty on them for omissions or negligence in the state-owned enterprises, auditors often witness situations where documentation is either hidden from them or not submitted within the legally stipulated period or they are simply not allowed to do their work.

We would like to remind you that, according to some media reports, the former director of Institute and a prominent member of HDZ, Rade Bošnjak, had tried to create his own information system for patients by copying the existing one, which is heavily paid to the companies from Croatia, and which could be sold to other institutes in Bosnia and Herzegovina. That case is currently in the hands of investigative authorities as it is unclear what money he used to pay the IT experts who were working on it, whether he damaged the Institute’s budget and who else did take part in the parallel system that allegedly cost already 2 million marks.

The current acting director was an employee of the institute at that time, so it is very possible that she was familiar with the whole story that resulted in the hiding of complete documents and analyses. When the auditors asked for information about IHIS (Integrated Health Information System), they were told that it is a trade secret, although it is unfounded, and the auditors were given crumbs that could not possibly complete a clear picture of the current business operations.

Therefore the auditors claim that: “Inspection of the submitted documentation revealed that no new facts were presented, and that no documentation was submitted that would affect changes to the findings in the Report. The documents submitted do not give grounds to confirm statements of Institute’s responsible persons that the consultant in the “IHIS Analysis” had suggested that development of the current IHIS does not solve or is unlikely to solve the main issues of the current information system (quality of suppliers’ service, quality of data, impossibility of integration with other systems) and that the issues primarily related to the existing software architecture and service processes

Activists believe that operations of the Institute are absolutely illegal

“By operating outside the legal framework, they have undermined the foundations of the health care system and created their own parallel system, which is suitable only for placemen and hawks. The public procurement mechanism is not respected, so the best guaranteed service by law has never been provided. We filed a criminal complaint a year and a half ago against Rade Bošnjak, minister of health, the Prime Minister and others, because they illegally spent 500 million marks over a period of five years. We note that this establishment has managed our health care for more than nine years,” said for Inforadar Marin Bago, president of the Futura Association from Mostar that is engaged in the quality of citizens’ lives in Herzegovina-Neretva Canton.

 They consider the newly ordered audit of the Institute to be mocking the state.

“We have been in court with Bošnjak for five years already because he does not allow the public to view the contracts that Institute concludes with the health care institutions on our behalf. We neither know where to get health care nor under what conditions, and neither doctors nor health care staff are paid for performance as required by law. This is much more detrimental to health than the “Fifth Floor” affair. They covered up and still are covering up a lot. The Prosecutor’s Office of Herzegovina-Neretva has been silent on this issue for more than a year,” said Bago, who believes that the Institute is still managed by Rade Bošnjak through his people.

The Institute’s operation were discussed by the Herzegovina-Neretva Canton Assembly and criticized by the members of the ruling HDZ and SDS

It is unimaginable to see intra-party criticism in Herzegovina, especially in the public, but it is difficult to remain immune to the work of the Institute. The Minister for Veteran Affairs Oliver Soldo (HDZ BiH) was fierce at the mention of this institution.

“We have reversed the order of things. The Health Insurance Institute is a system that should take care of the users, their needs and rights and should be fully directed towards the users who pay for it. We have been subordinating it all the time to the needs of a poorly organized health care system, trying to patch holes that are mostly bottomless holes”, emphasized Soldo at the continuation of the November session of the Cantonal Assembly, which actually started in March, but was never completed in accordance with the Statute.

Member of the Assembly, Harun Kurtović from SDA concluded that budget revision is usually done when there is bad planning, and he called the representatives of the Institute to account.

“As for the revision, it was made on March 14, meaning that we already had the first revision in March, and revisions are usually done when planning is bad. If the situation had been different and the revision had not been postponed until today, it seems that we would have had two more revisions this year with this kind of dynamics that has apparently become a standard in the Institute. When we look at the management structure alone, we see a director, an assistant and nine sector managers. In addition to all that, we had a revision in March and planning that is apparently fundamentally wrong and irregular. The starting points in the very planning of the budget and spending of money in the Institute need to be addressed urgently,” said Kurtović.