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April 26, 2018 12:00 am | FILED UNDER: politics

Police Investigate EGAP’s Extraordinary Losses

By ČTK Milos Zeman Ye Jianming

Mlade Buky, East Bohemia, April 26 (CTK) – The state-run Export Guarantee and Insurance Company (EGAP) saw its loss grow yr/yr from Kc1.25bn to Kc2.7bn in 2017 because of creating reserves for insurance claims, mainly the problematic project of Yunus Emre power plant of Adularya company in Turkey, EGAP head Jan Prochazka said today.

 

Last year’s results were approved by EGAP’s general meeting today, Prochazka said at the Export Forum in Mlade Buky. Unaudited results published earlier said EGAP made a Kc2.9bn loss last year.

 

EGAP signed Kc42.8bn worth of insurance contracts last year, an annual rise of roughly 30 percent. It supported export deals for nearly Kc32bn in 39 countries.

 

“We saw a record in recovery of old claims last year, over Kc2bn was recovered,” Prochazka said.

 

EGAP largely insures export deals in non-EU countries. The Finance, Industry, Agriculture and Foreign Ministries now exercise the state’s ownership rights in the two institutions.

 

EGAP and the state-run Czech Export Bank (CEB) should be managed by the Finance Ministry, the government decided in March.

 

However, legislation needs to be changed to make that possible. Changes in the CEB ownership structure must be evaluated by the Czech National Bank.

 

The two institutions’ operations have cost the state more than Kc32bn since 2006.

 

“We inherited CEB and EGAP in a poor condition and it is really necessary that they be under one roof because the experience with four shareholders is not good. So the Finance Ministry, which controls the state budget, should be the only shareholder,” Prime Minister Andrej Babis said in March.

 

CEB and EGAP grapple with loss-making business deals from the years 2007 to 2011, some of the deals are investigated by the police.

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