29th Feb 2024

EU auditors probe commission's role in defending EU money

  • EU Commission president Ursula von der Leyen (l) in Sofia at the ceremonial approval of Bulgaria's Covid-19 recovery plan, with the country's ex-prime minister Kiril Petkov (Photo: European Commission)
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EU auditors are launching a probe into whether the European Commission has been effective in defending the bloc's financial interests against breaches of the rule of law in member states.

The auditors will examine steps the commission took to ensure that countries receive EU subsidies only when they respect the rule of law.

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The assessment will focus on the EU cohesion policy within the 2021-27 budget (worth some €361bn), and the bloc's €800bn Covid-19 recovery fund, the European Court of Auditors (ECA) said in a statement on Monday (23 January).

"Our audit will determine whether the commission's use of the tools at its disposal to protect the EU budget against breaches of the rule of law has been effective, in particular in cohesion and recovery funding," said Annemie Turtelboom, the ECA member who will lead the audit.

"Violations of the rule of law, such as failures to properly investigate corruption or a lack of judicial independence, can have major financial implications within the EU, and may lead to EU money being misused in the member states," she added.

Focus on six

The commission last year used a new tool, the so-called conditionality mechanism, for the first time. It allows the EU to suspend funds to a member state if there is a risk to EU money because of rule-of-law concerns.

Last December, the council has suspended 55-percent of cohesion funds to Hungary under the mechanism because of such rule-of-law deficiencies.

But the probe will not only look at how the EU executive used this tool, but also how it uses other controls available, for instance, the 'milestones' attached to the recovery fund as a condition for disbursing EU money.

The audit will analyse how the commission identifies rule-of-law breaches and assesses their potential financial impacts on the EU budget, a spokesperson from the ECA told EUobserver.

The probe will also assess how the commission determines which tool to use to protect the budget.

The auditors will look into the internal framework the commission has set up to put the conditionality mechanism into operation, and will also consult the European Parliament and council.

The auditors are set to focus on actions taken by the commission for six member states.

Bulgaria and Romania were chosen because at the time the audit was planned, they were still under a special rule-of-law surveillance scheme, the cooperation and verification mechanism, the EU Court of Auditors told EUobserver.

Hungary and Poland are also part of the audit as they are under the Article 7 sanctions procedure.

Italy and Greece were selected because of the recommendations on rule-of-law deficiencies the council had previously adopted on them: the World Bank indicators on rule of law, as well as fraud and corruption, and the amount of EU funds allocated to them, the ECA said.

Auditors are expected to publish their special report a year from now, and could set non-binding recommendations for the commission to "remedy any weaknesses identified".

If the auditors' report concludes the commission has not done enough, it could add fuel to the European Parliament — which has kept the political pressure on the commission to act on the rule of law conditionality.


When the EU found the political will to act on rule of law

In 2012, it was against Orbán's Hungary that the EU first proposed to suspend cohesion funds under strengthened budgetary rules, after Budapest failed to step up efforts to end the country's excessive government deficit. Then Orbán toed the line.

Auditors slam EU Commission on green investments

The European Court of Auditors called for more consistent EU action on sustainable finance. The European Commission, by its own estimation, will need to invest €1 trillion a year to transition to a zero-carbon economy by 2050.

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