European auditors have reported that they are currently unable to trace with clarity how billions of euros from a significant fund are being utilised to assist European Union countries in their recovery efforts following the economic impact of the COVID-19 pandemic.
The Recovery and Resilience Facility (RRF), established in 2020, provides a combination of grants and loans as authorities across the 27 member states implemented border closures, imposed lockdowns, and expedited vaccine distribution to mitigate the spread of the virus. At that time, the European Union was facing its most severe recession in history.
As of January this year, the funding through the RRF had reached an estimated €577 billion. However, a recent report from the European Court of Auditors has highlighted challenges in tracking how member states allocate funds. Notably, many recipients, including various businesses and large consortia, have not been identified.
Ivana Maletić, the court member leading the audit, stated, “Without this information, we cannot assess whether the funds are distributed fairly, whether there are risks of concentration, or whether EU money provides value for citizens.” She underscored that “transparency is not merely a technical matter; it is a vital condition for fostering trust and accountability.”
The European Commission has successfully raised funds through capital market borrowing, subsequently allocating these resources to projects that enhance economic resilience by fostering sustainability, environmental responsibility, and digital innovation. In a notable shift from previous practices, grants and loans are now disbursed only when specific conditions set for recipients are fulfilled.
According to the RRF regulations, national governments are mandated to publicly disclose the top 100 beneficiaries of these funds. An audit of 10 EU member states found that the primary beneficiaries were predominantly national ministries, agencies, and local or regional government entities, with limited public transparency into private-sector recipients. Maletić highlighted that EU lawmakers investigating potential misuse of funds routinely request data on financial transfers to various corporations and consortia; however, such information remains scarce.
The auditors encountered considerable challenges in obtaining details regarding recipients in France. French authorities commented that gathering information on final recipients and disbursed amounts—despite requests—was deemed administratively burdensome. As noted by Maletić, “In France, we have thousands and thousands of recipients.” Furthermore, instances of fund misuse have already been documented. Notably, two years ago, law enforcement agencies in Italy, Austria, Romania, and Slovakia apprehended 22 individuals as part of an investigation into the suspected misappropriation of €600 million in post-pandemic relief funds.
The European Commission has criticised auditors’ findings, stating its actions are limited by rules agreed upon by all 27 member countries. It supports the use of conditions and milestones for fund allocation, claiming that its processes for payment requests and progress reports are functioning effectively.
However, auditors express concern that growing support for this conditions-based approach could affect the EU’s next long-term budget, potentially impacting farm subsidies and infrastructure aid. Maletić described the milestones system as unclear, resulting in unequal amounts for recipients, and unsuitable for traditional policies.
The upcoming budget, running from 2028 to 2034, could total around €2 trillion. The Commission ultimately stated that the member countries and the European Parliament will determine the design of future proposals.
This article used information from The Associated Press.
