On Tuesday had Ursula von der Leyen Reason to celebrate: the threshold of 400 billion euros in aid paid out by the reconstruction fund EU was exceeded. “This milestone is proof of Europe’s determination to turn a crisis into an opportunity,” said the President of the European Commission. “We are building a union that is greener, more competitive and fairer for everyone.”
But the next day, Ivana Maletić, a member of the European Court of Auditors, gave von der Leyen’s euphoria a cold shower. “It’s not about whether the money will be spent, it’s about whether we can see it, understand it and trust the process,” she said at the presentation of a new special report on the Recovery and Resilience Facility, the core part of the reconstruction fund worth 577 billion euros as of January this year. “This is where the problem begins. There is traceability – but it doesn’t work in practice. So timely and reliable supervision is not guaranteed.”
Transparency on paper but not in real life: how is that possible? To do this, you have to look at how this fund was created in the middle of the pandemic. Put simply, the Union usually finances projects by reimbursing their costs. Whether they achieve the intended political goals is beside the point. The Recovery and Resilience Facility turns the tables, so to speak. Member States will only receive the funds once they have reached milestones and targets agreed in advance with the Commission and among all Member States.
But once all the necessary lists have been checked off, the Commission does not concern itself with the actual costs of the funded projects. She argues that this increases the quality of the use of funds because she first checks that the projects are being implemented correctly before releasing the money for them. In a reaction to the Court of Auditors’ report, the Commission’s spokesman service even stated on Wednesday that it was not allowed to carry out cost-based controls on the use of budget funds because that would exclude the regulation in question.
This point is the subject of legal hair-splitting. The Court of Auditors expressed its opinion that the regulation leaves open the control of the use of funds on the basis of actual costs. Seven of the ten countries she examined for this report would record the actual costs of the Corona fund projects (but not Austria). However, the Commission does not request this data and it is not collected systematically.
That sounds esoteric. But it is a tangible political problem. The lack of systematically collected data on the actual use of funds from the EU Corona Fund makes it impossible for the Court of Auditors to answer two fundamental questions, said Maletić: “Are projects overfinanced? And are the funds used efficiently?”
According to the Court of Auditors, the second major error in the EU Corona Fund is that only its 100 largest recipients per member state are published. Firstly, this has only happened since 2023, i.e. with a two-year delay. And secondly, public bodies – whether ministries, other authorities or state-owned companies – make up more than half of these recipients and, at more than 80 percent, they receive the lion’s share of the funds paid out. These government agencies then distribute the Corona Fund funds to private companies through tenders. However, the member states do not publish how much money they receive, because the public bodies issuing the tender are considered the final recipients within the meaning of the regulation.
This creates false transparency, warns the Court of Auditors. There are lists of the 100 greatest receivers. But who the actual economic beneficiaries of these subsidies are remains under wraps. “Without this information, we cannot check whether the funds were distributed fairly, whether there are risks of concentration and whether EU money creates added value for citizens,” Maletić said.
In its reaction to the special report, the commission blocked all points of criticism. She could not support the auditors’ recommendations because she lacked the legal basis for doing so. However, the report could “serve as a valuable contribution to the evaluation of the Recovery and Resilience Facility and to the development of new financing instruments in the next multiannual financial framework”.
