Court of Auditors criticism

Irregular EU spending and record debts

Every year, the auditors of the EU Court of Auditors scrutinize the EU's income and expenditure.

(Bild: stock.adobe.com/studio v-zwoelf)

The war in Ukraine and record debts of 458.5 billion euros are putting a massive strain on the European Union's budget. According to the EU Court of Auditors, another negative trend is also increasing: the error rate for expenditure in various policy areas is rising. According to the Court of Auditors' annual report, almost eleven billion euros of the total expenditure from the EU budget of 191.2 billion euros was spent irregularly in the previous year.

Irregular means that co-financing, loans, non-repayable grants and subsidies for certain projects in the EU member states were granted even though not all EU requirements were met or were not checked by the authorities responsible at national level or were contrary to national requirements. According to the annual report, which was presented on Wednesday, the highest error rates in 2023 were in the areas of "Cohesion, resilience and values" (cohesion and regional development) and "Single market, innovation and digital".

IT equipment in the Czech Republic ended up at subsidiaries
The report also contains a number of case studies. Among others, it mentions a company in the Czech Republic that received money from the regional development pot for IT equipment. However, a description of what everything was needed for was omitted from the company's application. Furthermore, not all of the equipment was used for project activities. Some of the equipment even ended up with a subsidiary that did not comply with the funding guidelines at all.

Cheating with direct awards in Hungary
A case in Hungary is also mentioned. There, a consortium of three institutions received financial aid to offer free legal advice to employees and employers. However, the national supervisory authority in the procurement process issued a negative opinion on the bidders. It said that they had unlawfully distorted the competition. The open procedure was split into several smaller contracts. However, these were then awarded directly - without a tender. The verdict of the Court of Audit experts in this case is clear: the consortium would be "ineligible" due to this behavior.

According to the auditors, there were also irregularities throughout the EU in some of the 48 billion euros that were paid out as part of the so-called Recovery and Resilience Facility from the reconstruction package following the coronavirus crisis. In addition, not all conditions that would have justified a claim for support were always met.

Tony Murphy has been President of the EU Court of Auditors since 2022.

(Bild: Lukasz Kobus/European Commission)

President of the Court of Auditors warns of loss of trust
"This issue highlights the need for robust oversight and accountability mechanisms at both Member State and EU level to ensure that we do not lose public trust and to safeguard future EU budgets," says the President of the EU Court of Auditors, Tony Murphy.

Suspected case of fraud in Austria
The high error rate is "definitely worrying", but "not a measure of fraud or waste", emphasized Austrian ECA member Helga Berger to journalists on Wednesday. It was an estimate of the amounts that were not paid out in accordance with regulations. 20 cases of suspected fraud were forwarded to the responsible EU authority OLAF, six more than in the previous year. One of these came from Austria and concerned the area of rural development.

"Significant financial risks for the EU"
According to the Court of Auditors, the war in Ukraine and a record high level of debt are "significant financial risks for the EU". Liabilities rose to 458.5 billion euros by the end of 2023. In 2022, the debt was still at 348 billion euros. The majority of this outstanding amount, namely 268.4 billion euros, relates to investments as part of the "NextGeneration" EU recovery program. This is the EU's largest economic stimulus package to date. 

Allies in the fight against Russia: EU Commission President Ursula von der Leyen and Ukrainian President Volodymyr Selenskyj

(Bild: AP/Ukrainian Presidential Press Office)

The war in Ukraine is also devouring a lot of EU money. After all, financial aid for the country, which has had the status of an EU accession candidate since June 23, 2022, "more than doubled" from 16 to 33.7 billion euros in 2023, according to the Court of Auditors' annual report. In view of these sums, the auditors warn that shifting the risk of payment defaults into the future could lead to a burden on the EU budget. After all, no provisions are required in connection with the Ukraine aid for tens of billions of euros.