Police to launch Montenegro Airlines investigation

Montenegro Airlines to be investigated over multi million euro cover up

Police will launch an investigation into Montenegro Airlines' business over the alleged cover up of millions of euros in unreported losses. According to the "Dan" daily, investigators from the corporate crime unit will review several financial reports, which the carrier's previous management is believed to have modified in order to present better results. Zoran 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. In 2014, Montenegro Airlines’ new management, headed by Daliborka Pejović, alarmed authorities of creative accounting which took place at the airline in the past, noting that some sixteen million euros in losses were covered up in 2012 alone.

Montenegro Airlines falsified financial reports for several years leading up to the summer of 2013. No one has been held accountable, nor questioned in relation to these claims until now. In 2012, the carrier reported a net loss of 19 million euros, while independent auditors later found its actual loss amounted to 35.3 million euros. The carrier is yet to publish its 2014 financial report, however, Ms Pejović said the airline recorded a net loss of 9.5 million euros, while its losses for the first six months of this year totalled 6.5 million. In addition, its accumulated debt stands at 71.5 million euros. "It is important to note that all our financial reports are now genuine, balanced and objective", the CEO said recently. The investigation comes following a dramatic month at the airline which saw five pilots quit their job and the carrier's Executive Director resign following thirteen years at the carrier.

Montenegro Airlines falsified its financial reports for several years by showing conflicting and inaccurate figures, designed to improve its financial performance. Furthermore, the airline has been inconsistent 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”, a recent audit 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. In the past, 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 illegally lease a Fokker 100 jet to an Albanian airline. However, court proceedings have since been dropped without explanation.