Image: 1suisse via Creative Commons

THE OFFICIAL AUDITOR of the European Union has complained about spending errors by the European Commission after uncovering an estimated €700m worth of incorrectly paid-out funds from the regional aid budget alone.

Although the audit noted marginal spending improvements in the budget for 2009, particularly in Agriculture and Natural Resources, governments and local administrations have been blamed for not ensuring that all claims made are genuine or admissible.

The biggest questionmark in the €120bn budget hangs over the incorrect spending of approximately €700m on regional aid – otherwise known as “structural and cohesion funds”.

The European Court of Auditors’ Annual Report found that over a third of the €35.5bn allocated by the EU in 2009 for regional infrastructure projects were affected by errors. It offered two reasons for this – straightforward fraud and unintentional error.

The Court of Auditors noted that EU funding rules are often too complex for regional authorities and small contractors to properly understand.

The report found that just two areas of expenditure were free of error: economic and financial affairs and administrative expenditure.

However, the president of the Court of Auditors, Vítor Caldeira, said that the €700m error estimate for regional aid was “significantly lower than in previous years” and added that – for the budget as a whole – “the Court’s estimate of error has fallen over recent years”.

EU Budget talks 2011

But while the EU called the findings as its “third clean bill of health in a row”, others were more perturbed. An analyst with a UK think tank Open Europe,  Stephen Booth, said:

Until member states and the European Commission resolve the inherent flaws in the EU’s spending there should be no talk whatsoever of budget increases.

Talks about the EU’s 2011 Budget will begin on Thursday, and will centre on parliament’s demand for a 5.9 per cent increase in the EU budget next year. Talks legally need to conclude by Monday; if they do not the budget for 2010 will be rolled over into 2011.

Meanwhile, the Irish Times quotes Irish member of the court, Eoin O’Shea, who said none of the “negative spending references” or examples of “inappropriate” spending related to Ireland. The report did, however, criticise the Irish government’s systems for preparing reports on customs duties payable to the EU, as well as for selecting targets for customs audits.

Ireland was also found to have the highest number of “VAT reservations” in the EU in 2009.

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