Serbia’s State Audit Institution has identified legal and procurement irregularities at the Commission for Protection of Competition, including its €7.224 million purchase of office space and parking facilities at Belgrade’s Prokop railway complex.
- Property acquisition at Prokop exceeded €7.2 million
- Additional expenditure required to complete the premises
- Dispute over public-property approval requirements
- Procurement procedures worth more than RSD 554 million examined
- Internal audit arrangements and financial controls
- Regulatory independence and institutional accountability
The acquisition from property developer Railway City d.o.o. involved approximately 2,167 square metres of office space and 20 parking spaces. Auditors concluded that the commission had not obtained the required prior approval from the Republic Property Directorate or followed the prescribed procedure for collecting written offers under the Law on Public Property.
The commission challenged the auditors’ interpretation, citing its institutional independence, financing arrangements and previous guidance from state authorities. The State Audit Institution (DRI) published its findings on October 29, 2026, identifying additional weaknesses in procurement planning, contractor selection, reporting and internal financial controls during 2024 and 2025.
The report does not establish that the property was purchased above market value, that public money was stolen or that the seller committed wrongdoing. Its findings concern compliance with legal and financial procedures.
Property acquisition at Prokop exceeded €7.2 million
The commission approved the transaction, before signing the agreement with Railway City d.o.o. on November 13. The acquisition covered office premises on the third, fourth and fifth floors of the development, with a projected net area of 2,167.28 square metres. The contractual price was €6.664 million excluding VAT, equivalent to approximately €3,075 per square metre.
A further €560,000 was allocated to 20 parking spaces, or an average of €28,000 per space. The total purchase price was therefore €7.224 million excluding VAT.
Railway City is a property-development company owned by businessman Branislav Grujić, according to company-register information cited by N1. It was also involved as an investor-financier in the wider railway station development. The location within a major transport and commercial complex offered potential advantages in accessibility, proximity to other institutions and office consolidation. These considerations do not replace the statutory requirements governing public-sector property acquisitions.
The contractual price per square metre also does not, by itself, establish whether the commission paid above market value. Such an assessment would require comparable-property data reflecting building specifications, construction stage, ownership conditions and the timing of the transaction.
Additional expenditure required to complete the premises
The offices were contracted for delivery in a shell-and-core condition, requiring further construction and interior works before occupation. The commission’s 2024 financial plan allocated RSD 235 million, approximately €2 million, for construction works and design documentation through a procurement framework agreement.
This allocation means that the overall cost of obtaining operational office premises extended beyond the original property purchase. Additional expenditure could include fit-out works, technical installations, furniture, information technology, property management and maintenance.
The RSD 235 million represents planned procurement expenditure, not independently verified completed spending. According to the audit, the property was formally taken over during 2025, and its use permit was issued in October of that year. A complete financial assessment would therefore need to reconcile the purchase payments, fit-out commitments, certified construction works and final capitalised property value.
Dispute over public-property approval requirements
The DRI concluded that the acquisition did not comply with the Law on Public Property provisions governing real-estate purchases by organisations established by the Republic of Serbia. The relevant rules require prior consent from the Republic Property Directorate and a procedure based on market value and the collection of written offers, unless a statutory exception applies.
The commission argued that its legal and financial independence distinguished it from ordinary state institutions. It also referred to a 2016 Ministry of Finance opinion, issued in connection with a proposed vehicle purchase, which it considered supportive of its position that prior Property Directorate approval was unnecessary.
The institution said it had considered alternative premises, assessed the suitability of the Prokop development and relied on financial and valuation documentation. It also maintained that other state bodies had acquired offices in the same complex at comparable prices. The commission said it would seek clarification from the Property Directorate for future transactions, without accepting that the 2023 acquisition had been unlawful.
The disagreement centres on how statutory public-property procedures apply to an independent regulator. The DRI identified the acquisition as an additional matter arising during an audit whose principal scope covered procurement and employee-related expenditure in 2024 and 2025.
Procurement procedures worth more than RSD 554 million examined
Beyond the property transaction, auditors identified shortcomings in procurement procedures with an estimated combined value of approximately RSD 554.25 million (€4.72 million) and a contracted value of RSD 542.22 million (€4.61 million). The deficiencies involved documentation of estimated contract values, publication of procurement notices, qualification requirements and the evaluation of submitted offers.
In two procedures, the required public procurement notices were not published on the procurement portal. Other cases involved selection criteria or supporting documentation that did not satisfy the applicable statutory requirements. The DRI also found incomplete or inaccurate procurement reporting.
One joint procurement covering facility management and maintenance services included requirements that auditors considered insufficiently connected to the services being purchased.
A separate procedure for specialist construction supervision raised concerns about documentation submitted by selected bidders. The contract was ultimately not concluded. The findings cover several stages of procurement management, including planning, market assessment, contractor qualification and reporting. However, the combined contract values do not represent proven financial damage. Procedural violations and actual monetary losses require separate evidence.
Internal audit arrangements and financial controls
The DRI found that the commission had not established internal audit arrangements in accordance with applicable requirements. Internal audit is intended to provide assurance over financial controls, procurement, asset management and expenditure decisions. Its absence can leave weaknesses unidentified until an external audit takes place.
The State Audit Institution issued 12 recommendations addressing deficiencies in procurement planning and implementation.
At the same time, the report found that salaries, employee reimbursements and other employee payments examined during the audit had been calculated and paid in accordance with applicable employment rules. The findings therefore identify specific weaknesses in procurement and internal controls rather than establishing that all categories of the commission’s expenditure were improperly managed.
Regulatory independence and institutional accountability
The case raises questions about the relationship between institutional independence and financial accountability. Competition regulators are expected to apply market rules consistently while remaining independent of commercial and political interests.
Independence does not automatically determine which public-property procedures apply to an institution, and approval of an annual financial plan does not necessarily replace the separate legal approvals required for an individual transaction.
For businesses operating in Serbia, the consistency between the standards imposed on market participants and those followed by regulatory institutions is relevant to institutional credibility. The findings also highlight the importance of clear rules for major investments by independent public bodies whose budgets and financing arrangements differ from those of conventional government departments.
The commission’s response to the 12 DRI recommendations, together with further clarification of the Prokop acquisition’s legal basis, valuation, alternative properties considered, completion costs and ownership documentation, will be relevant to assessing the corrective measures taken. The audit findings establish procedural deficiencies but do not determine criminal liability or demonstrate that Railway City received an unjustified financial benefit.
