EC delegation to Slovak cabinet: "Get on with the job"

In Brussels has received both good and bad news in the last several months concerning Slovakia.
The worst of it has been a scandal over the possible misuse of European Union (EU) funds sent to Slovakia through programmes like PHARE and ISPA, which sink EU taxpayer money into everything from the upkeep of cross-border hiking trails to maintenance of nuclear plants.
Under suspicion that an employee of the Slovak Office of Government, Roland Tóth, was abusing his influence on a tender process for PHARE and ISPA funding under the control of the European Commission (EC), an EU ruling body, Slovak Deputy Prime Minister for European Integration Pavol Hamžík fired Tóth on March 14.

EC Ambassador Walter Rochel has seen Brussels receive both good and bad news from Slovakia in the past month, with the country closing pre-accession law chapters, but also enduring a funding scandal.
photo: TASR

Brussels has received both good and bad news in the last several months concerning Slovakia.

The worst of it has been a scandal over the possible misuse of European Union (EU) funds sent to Slovakia through programmes like PHARE and ISPA, which sink EU taxpayer money into everything from the upkeep of cross-border hiking trails to maintenance of nuclear plants.

Under suspicion that an employee of the Slovak Office of Government, Roland Tóth, was abusing his influence on a tender process for PHARE and ISPA funding under the control of the European Commission (EC), an EU ruling body, Slovak Deputy Prime Minister for European Integration Pavol Hamžík fired Tóth on March 14.

The European Delegation in Bratislava, headed by EC Ambassador to Slovakia Walter Rochel, learned of the firing several days later, and informed its leadership in Brussels. On April 6, a letter was sent by the EC to Slovak representatives in Brussels and Hamžík back in Slovakia, saying the EC had decided to cut off new tendering and contracting for PHARE and ISPA projects until the Slovak authorities got to the bottom of the Tóth matter.

Unfortunately for him, Hamžík didn't tell his government superiors of the EC decision, and although he eventually popped a notice to the Foreign Ministry in the mail April 24, because of the Easter holiday it didn't reach its destination until April 27.

By that time it was too late - EC spokesman Jonathan Faull had been asked a question by a reporter April 26 if it was true that all funding to Slovakia had been cut off. He said it was, leaving the Slovak authorities in Bratislava scrambling to discover what was going on, and why they hadn't been informed. Hamžík lost his job in the uproar that ensued, and although the EC decided on April 27 to restore tendering and contracting temporarily, an investigation by the Slovak Supreme Audit Office began on May 22, in conjunction with the European Anti-Fraud Office.

Pointing the way. The EC Commission has said Slovakia has to move faster on its reforms.
photo: TASR

For the EU, however, a body which Slovakia hopes to join in 2004, it's not just taxpayer money but also valuable time that is being wasted by Bratislava. A conference on regional reform in the context of EU entry, which took place in Bratislava on May 18, was snubbed by Prime Minister Dzurinda, who attended a meeting in the High Tatras mountain range instead. Lord Paul Hanningfield, who had written to Dzurinda asking him to change his mind, was diplomatic but firm in his warning that regional reform, crucial to Slovakia's entry process, had fallen well behind schedule.

On the same day, however, a ray of sunshine peeked through the clouds - Slovakia in Brussels closed another four 'chapters' of the acquis communautaire, a document listing the legislative changes applicant countries must make to qualify for entry in 29 areas, or 'chapters'. The country, which was invited to begin entry talks only last year, has now 'closed' 16 of these areas, as many as or more than countries which began negotiating with the EU in 1998. Slovakia now hopes to have all 29 completed by 2002, a goal the EC itself said seemed realistic.

The Slovak Spectator spoke with Walter Rochel and EC delegation counsellor Onno Simons May 22 about the latest developments.

The Slovak Spectator (TSS): Were you satisfied with the press coverage of the April EU funding crisis in Slovakia?

Walter Rochel (WR): What's important here is that the matter is fully clarified. In the first instance it's the responsibility of the competent Slovak authorities to investigate the case; in this they are co-operating with the independent European Anti-Fraud Office. We need to identify facts and distinguish them from rumours.

TSS: Is the anti-fraud team already here and investigating?

WR: All I can say to this is that they are already working in Slovakia, but that the results of the investigation are protected by law.

TSS: How long do you expect the investigation to take?

WR: As I said, the investigation is protected by law.

TSS: To what extent did European Commission spokesman Jonathan Faull himself contribute to the chaos surrounding PHARE and ISPA funding in late April by saying that all payments for Slovakia had been stopped, rather than what in fact had happened, which was that tendering and contracting had been stopped?

WR: The action which was announced by the [EC] Director for Enlargement to the [Slovak] Deputy Prime Minister [for European Integration Pavol Hamžík] on April 6 was to suspend the tendering and contracting of PHARE and ISPA projects until some of the facts of the case were established. Following assurances from the Slovak authorities that this case would not have implications for PHARE and ISPA implementation in Slovakia, the EC decided on April 27 to allow the Slovak authorities to resume temporarily the tendering and contracting process. EC spokesman Jonathan Faull answered a very technical question with the knowledge he had at the time.

TSS: Was this case blown out of proportion at all? Did you expect Hamžík to be fired?

WR: Regarding the nomination and removal of officials from the Slovak side, it's an internal matter of the Slovak government and I can't comment. But the EC reacted in a timely fashion to protect the financial interests of the European Community.

TSS: The Slovak non-governmental community, as well as EC sources and Deputy Prime Minister for Minority Pál Csáky, had long been saying they suspected corruption was occurring in the use of EU funds in Slovakia. Why didn't you act before April 6, 2001?

WR: I was never presented with any proof or any substantial information that such misuse had occurred. Before this case broke, and before the dismissal of Roland Tóth gave an indication that something was wrong, there had been of course some rumours circulating, but they were never substantiated by facts. Furthermore, about a year ago I myself took the first measure which was to agree with the Slovak government that the selection of members to tender evaluation committees would be done through the lottery method.

TSS: That's virtually what Hamžík said before he was fired - that he had never had proof of wrongdoing, and therefore couldn't have taken action. Even though you had no proof, didn't you hear anything that might have caused concern?

WR: I didn't get information which made me believe that there was any misuse; regarding rumours, which were never substantiated, we took this action I told you about a year ago.

TSS: But you did hear rumours?

WR: In Slovakia there are rumours about everyone.

TSS: Notwithstanding your step to change the selection procedure for tender commissions, people close to Tóth have said the problem was more that he would offer expert counselling, and prepare firms for tenders in a way he knew would be acceptable to the EC. These firms would naturally win the tenders, and then when subcontracting the work would give out kickbacks to people who had helped them win in the first place. Can you confirm or deny this was the way things worked?

WR: I can just say the tender dossiers with which we were presented were correct, which is why we endorsed them. There was no substantial information to indicate the tender process was being manipulated.

TSS: An EC source also said there had long been tension between two EC aims - making sure accession countries like Slovakia got at least some structural funds from the EU, and making sure these funds were provided with the least corruption possible. Does this tension between increased distribution and greater transparency exist in Brussels, and did it have any role to play in Slovakia's case?

WR: Of course we want to help Slovakia on its way to accession, and it's clear that accession funds are a valuable instrument. There is a common interest that these funds are efficiently used. But transparency is a part of efficiency. The EC has a zero-tolerance policy for misuse of funds or corruption.

In this regard, the Slovak government has recently taken measures to increase transparency, such as the draft law on Financial Controls, the fact that the powers of the Supreme Audit Office have been enlarged, and that they will now monitor the financial flows of EU funds to Slovakia.

Regarding pressure to make sure funds are distributed to Slovakia, last year Slovakia used 97% of available funds, so I don't see a problem.

TSS: Last Friday, Slovakia closed another four chapters of the 29-chapter EU entry blueprint acquis communautaire, bringing it up to 16 chapters and putting it ahead of the Czech Republic and Poland - firmly among countries which began entry negotiations with the EU in 1998. Is the substance of Slovakia's entry process as good as the numbers seem?

WR: The commission has always said every country determines its own accession path, and this is evidence that countries can catch up to the front-runners. But it's not a numbers game. We still want to see Slovakia make substantial progress on some issues. It boils down to whether the government's intentions will be kept.

TSS: What are the main problem areas remaining?

WR: Public administration reform, environment and minority policy, particularly regarding the Roma.

TSS: Slovakia is hoping to get an invitation next year to join NATO. Will this have any impact on EU entry?

WR: Technically these are two separate processes, but both processes have political issues in common, so in some ways they reinforce each other.

TSS: It's an open secret that the success of large foreign investments, such as that of U.S. Steel into steel maker VSŽ Košice, can have a positive influence on integration aims. Is that also the case with the EU?

WR: Foreign direct investment underpins the development of Slovakia towards becoming a fully-functioning market economy which can face competition and market forces in the Union. But I don't see a direct link here.

TSS: EU membership is decided on by EU member states. Gerhard Schroeder, the German Chancellor, visited Slovakia for the first time in November 2000 to discuss the interest of Ruhrgas in buying Slovak gas utility SPP, and to suggest that a German-French-Spanish consortium could help out if Slovakia decided to upgrade its MiG 21s. This was after Deutsche Telekom had bought Slovak Telecomm in mid-2000. Don't those qualify as direct links?

WR: I can't answer that. You should ask the German Ambassador.

TSS: Germany and Austria now say they want seven-year delays to new accession countries being allowed free movement of labour; Italy and Spain want guarantees funding for their poorer regions won't be threatened by EU enlargement. Are EU members getting cold feet? Is 2004 still a realistic date for any applicant country to expect to join?

WR: The EU is internally prepared now for enlargement following the European Council in Nice [in December, 2000]. From the EU side it is now possible to take on new members whose populations will be able to participate in the next elections to the European Parliament in 2004. One has to distinguish between issues which are under discussion within the European Union, and those which are linked to the issue of EU enlargement.

TSS: What does that mean? Is 2004 a realistic date?

WR: What's realistic is that the populations of the first candidate countries to join the EU would be able to participate in elections to the European parliament in 2004.

TSS: What does it mean that these countries are able to participate in EP elections? Does that mean membership?

WR: Yes.

TSS: So what happens to demands for exceptions and delays in the free movement of labour, ability to buy real estate...

WR: It means all sides will have to agree during accession negotiations on transitional periods which then become part of the accession treaty, for example, between Slovakia and the EU.

TSS: Prime Minister Dzurinda decided not to attend a May 18 conference in Bratislava on regional reform in the EU context. What message was he sending EU delegates who attended?

Onno Simmons (OS): Lord Hanningfield [chairman of the EU's Joint Committee for Regions] had sent a letter to Dzurinda asking him to be there, but this regions meeting was organised with [regional interest groups] Únia Miest Slovenska [Union of Slovak Cities] and ZMOS [Združenie Miest a Obcí Slovenska - Association of Slovak Towns and Villages], and as you know they sometimes have different ideas. Officially ZMOS was one of the co-organisers, but actually wasn't there, and the Prime Minister chose to attend their meeting somewhere in the mountains, even though he was on the programme of the Bratislava conference.

TSS: How did Lord Hanningfield feel about this?

OS: He wrote a letter to Dzurinda saying he wasn't amused.

TSS: The EC has said if public administration reform isn't completed by June 2000, it could seriously endanger the country's entire entry process. Are matters really that serious?

OS: It is a very serious thing, because public administration reform is connected to absorption capacity for European funds, which will start flowing ever more, and if there is not a well-organised regional administration which could also come up with project ideas, then it's going to be difficult to do useful things with the money that's available.

TSS: While an outline for the public administration project was approved back in April 2000, it still hasn't been passed by parliament, and the government is still locked in a power squabble. What advice do you have for the coalition in its remaining 16 months in power?

OS: To get on with the job.

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