Montenegro Airlines falsified financial reports

Audit exposes major cover-up at Montenegro Airlines

Consultancy firm MV Konsalt, which recently completed its audit of Montenegro Airlines’ 2013 financial report, has concluded that the carrier’s previous management, headed by Zoran Djurišić, falsified financial reports and recorded significantly reduced losses over the past several years. Montenegro Airlines ended 2013 with a 41 million euro loss. Once long term liabilities are added, such as loans for the purchase of aircraft, the carrier’s balance sheets were in the red by 68.980.608 euros last year. Mr. Djurišić, who was at the helm of the company for nineteen years, resigned on November 28, 2013 after he was dismissed as CEO in July that same year. According to MV Konsalt, the Montenegrin carrier falsified its reports for several years including 2013 when Mr. Djurišić presented the airline’s loss at twenty million euros. Earlier this year, Montenegro Airlines’ new management, headed by Daliborka Pejović, alarmed authorities of creative accounting which took place at the airline in the past.

Montenegro Airlines issued a brief statement saying it has handed over documents to the state prosecutor. “No further comments will be made on this issue”, the carrier said. In its report, the auditor found Montenegro Airlines owes more money than it is worth, urging the government to act in order to save the carrier. “The airline cannot cover its losses from its existing revenue. The company’s ability to continue operating depends on its efforts to restructure its liabilities and establish a satisfactory level of liquidity. The possibility of improving its financial performance is limited and almost entirely dependent on government support and restructuring”, the auditor said in its analysis.

The Montenegrin carrier falsified its financial reports for several years by showing conflicting and inaccurate figures, designed to improve its financial performance. Furthermore, the airline has not been consistent in calculating the value of its depreciating assets. “Depreciation is not calculated at the same rate. In addition, the residual value is presented for some assets while it is overlooked for others”, the report reads. Allegations of corruption and nepotism have been rife at the Montenegrin carrier for years. In 2012 a report by the Montenegrin State Audit Institution indicated the airline had covered up millions of euros worth of debt. The Institution found that Montenegro Airlines withheld losses in its financial reports and struck off debt owed to Airports of Montenegro, Jat Airways, the Serbia and Montenegro Air Traffic Services Agency, Lovćen Insurance Company and the State Health Fund. The State Audit Institution concluded that a total of 2.085.000 euros worth of debt had been covered up. The airline has also been under investigation for corruption after trying to set up an airline in Niš, in south-eastern Serbia, and attempting to lease a Fokker 100 jet to an Albanian airline. However, court proceedings have since been dropped without explanation.