EC proposes not to reimburse money spent on social companies

Auditors from the European Commission have suggested that none of the money spent on Slovakia's so-called social companies will be reimbursed from EU funds, according to a draft report based on an audit of the companies they conducted in December last year.

Auditors from the European Commission have suggested that none of the money spent on Slovakia's so-called social companies will be reimbursed from EU funds, according to a draft report based on an audit of the companies they conducted in December last year.

The reason for their stance is the unauthorised amount of public aid, set at 95 percent of the start-up capital for social companies, which was provided by the state with EU funds being earmarked to cover 90 percent of the sum. "The aid for social enterprises is not in accordance with the policies on use of resources. It is therefore recommended that financing of social enterprises be abolished altogether, and all costs fully refunded," says the draft.

The Finance Ministry has so far paid €11.3 million to social companies, which come under a Labour Ministry scheme, with most of the money allocated from the public budget. However, it was the Finance Ministry which refused to approve a majority of the resources requested for the scheme in July 2009, due to concerns over the legitimacy of the spending. On July 22, 2009, the Finance Ministry sent a letter to the Labour Ministry in which it warned about disturbing amounts of personal expenditure, duplicate spending and other inconsistencies. Opposition Slovak Democratic and Christian Union (SDKÚ) MP and head of the Slovak Governance Institute think tank Miroslav Beblavý pointed out that the Finance Ministry was continuing to send money to the social companies months after these findings.

The EC auditors warn that unauthorised state aid to social companies might distort competition. According to EU rules, if resources from European funds are provided in contradiction to state aid policy, all money provided must be reimbursed, the TASR newswire reported. A spokesperson for the Ministry of Labour, Social Affairs and the Family pointed out that the draft in question doesn't represent the final version. The European Commission will draw up the final audit report after the Slovak Labour Ministry offers its comments on the draft.

Source: TASR

For more info, see: Tomanov·: No reason for EU not to pay for social companies and First Labour Ministry social company dissolved .

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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