Thursday

22nd Oct 2020

Auditors criticise EU spending for 16th year in a row

  • EU money spent on regional projects is often misused (Photo: Marfis75)

The EU's cohesion policy, accounting for one third of the total budget, continues to be the most prone to errors and fraud, although the situation is improving in comparison to previous years, the European Court of Auditors has said.

Over a third of the €35.5 billion allocated by the EU in 2009 for regional infrastructure projects were affected by errors, either unintentional, as EU funding rules are often too complex for regional authorities and small contractors to cope with, or as a sign of fraud, the annual report of the Court of Auditors says.

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The blame goes mostly to governments and local administrations, who are in charge of the projects and fail to double-check that all invoices and claims submitted to the European Commission are genuine.

"The Court estimates that almost a third of the errors found on the interim and final payments tested could have been detected and corrected by member states before certifying expenditure to the commission, as the audit shows they had the information to do so," EU chief auditor Vitor Caldeira told MEPs on Tuesday (9 November).

In a rush to "absorb EU funds" by all means, member states often allow other fake or erroneous bills to replace those detected as "ineligible," he added.

This is the 16th year in a row when the Court of Auditors, based on sample checks in all EU expenditure and revenue areas, is not able to give a clean bill of health to the overall budget.

However, the rate of errors has decreased in the regional policy field, falling from 54 percent in 2007 to 36 percent last year. According to the Court's rules, errors need to be below three percent to get a clean bill of health.

"We have to ask ourselves if we can continue to allocate more and more money to the EU commission, if year after year it is uncapable of managing the funds efficiently," said German Liberal MEP Jorgo Chatzimarkakis, responsible with drafting the Parliament position on this report.

The report is likely to fuel discussions about a planned increase in next year's EU budget, as well as the future of regional policy from 2013 on.

Poland is the main beneficiary of cohesion funding – a policy aimed at helping more backward regions catch up with the economic leaders of the bloc, mostly capital regions – and is pressing for it to be maintained at least at current levels.

But net payers to the EU budget, such as Germany, the Netherlands and Britain, which are also under pressure at home to cut national budgets – are now increasingly wary of the efficiency of this policy. Even recession-hit Spain, a long-time beneficiary of cohesion policy, is in favour of less national money flowing to the EU coffers in 2011.

Spain, Greece, Italy and the UK were also the four countries who had to pay the most money back in 2009, for erroneusly allocated funds.

But Poland has come under criticism as well, apparently for having misused EU regional funds to the tune of €10 million to have British tea producer Twinings shift its production site to Poland.

Twinings denied the accusations, claiming that its business decision was "not based on receiving any external funding." "We applied to the Polish ministry for a grant. The Polish authorities are satisfied we meet the eligibility criteria and have approved the grant," a spokesperson for the tea company was quoted as saying by Warsaw Business Journal.

In EU new member state Romania, journalists have uncovered that two cross-border centres funded with over €840,000 are actually being used by regional authorities for private parties and weddings.

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