Report: EU funds threatened

SLOVAKIA might lose billions of euros it receives from the European Union after an audit found mishaps in the projects funded from the European coffers.

SLOVAKIA might lose billions of euros it receives from the European Union after an audit found mishaps in the projects funded from the European coffers.

The European Commission (EC) criticised the Slovak government in late March 2014 concerning the auditing of projects financed from EU funds. This was not made public at that time. The public-service Slovak Radio however got a hold of the 50-page-long audit report and made some of its findings public on May 12.

The EC is threatening to suspend billions of euros for projects for some period of time unless the Slovak government improves its control over the flow of money from EU funds, the report reads, as cited by the Slovak Radio.

EC auditors found serious flaws that Slovak auditors overlooked, according to the report. The flaws include, for instance, tailoring the conditions of tenders to suit predetermined candidates, selecting a winner who did not fulfil the conditions of the tender, or dividing a purchase into two smaller parts that do not require a tender at all.

The EC’s DG Regio (Directorate-General for Regional and Urban Policy) found during the audit that “the Commission cannot rely on the results of the work and the conclusions of the audits”, Slovak Radio quoted the report as stating.

This goes for all operational programmes that draw EU funds, and could result in the temporary suspension of these programmes.

The Finance Ministry, which is responsible for the audit at the national level, now has until June to make improvements. The EC auditors could still change their minds. The Finance Ministry however did not specify for Slovak Radio how they would respond to the EC.

“It is not so much about the concrete findings but rather about the fact that despite the insane bureaucracy surrounding the EU funds, the governmental officials are unable or unwilling to see the key and serious mishaps in most projects,” said opposition MP Miroslav Beblavý, who had been trying to get a hold of the report, which he claims the Finance Ministry had been trying to keep secret. The Slovak Radio reporters shared the report with Beblavý.

Beblavý noted that all the EC auditors did was check on a randomly selected sample of projects that had previously been checked and approved by the respective ministries as well as the Finance Ministry auditors. The system of control at the national level is failing, Beblavý said, and warned that this could result in the funds being suspended, or worse, being permanently curbed for Slovakia.

Dušan Sloboda, an analyst with the Conservative Institute, told Slovak Radio that the national-level audit is performed as a formality, but “in fact, the auditors are not doing what they should be doing”.

Government under fire

In light of the findings of the report, the opposition has called on the government to take concrete steps to remedy the situation. If their call remains unanswered, opposition MPs Beblavý and Radoslav Procházka (who have recently teamed up to found a new, non-parliamentary political party) will initiate a special parliamentary session to debate the matter, the pair said.

Beblavý proposed two instant remedies: first, passing a new law on financial auditing and internal auditing “that would secure quality and mainly real independence of governmental auditors” in a fast-tracked legislative procedure. Second, Beblavý is calling for those who are responsible for the internal audit at the Finance Ministry, as well as the other concerned ministries (education, economy, and the Government’s Office), to be replaced.

Rumours confirmed

Rumours that Slovakia could face suspension from drawing EU funds first surfaced in April. The Hospodárske Noviny daily at that time reported that an audit of Slovakia’s drawing and spending of EU funds found shortcomings in almost all operational programmes.

“We need to deal with the differing interpretations of various directorates; two out of three directorates are completely satisfied with the quality of our audit,” Finance Minister Peter Kažimír said at that time, as quoted by Slovak Radio, adding that the ministry was not aware of any flaws in the process.

Deputy Prime Minister for Investments Ľubomír Vážny reacted by saying it was premature to discuss the matter.

Speaking in reference to areas in Slovakia’s drawing of EU funding that the EC has reportedly identified as problematic, Vážny said that “in essence, they are: inefficient pricing, selection procedures and public procurement itself”, as quoted by the TASR newswire.

“Slovakia has two months to respond now,” said Vážny, as quoted by TASR. He went on to deflect any blame for the issue, saying that the audit concerns spending in 2012, for which procurements took place one or two years before that.

As for the reasons for the errors and insufficient drawing of EU funding in general, he said that this is especially due to political processes when new governments replace old ones. Red tape is also to blame, he said, but stressed that notable advances have been made in the drawing of EU funding in general.

With press reports

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