Analysis: Why Greece’s hand-out might spell trouble

Greece could get about 700 Euros per man, woman and child from this deal.

Πηγή: The Bureau of Investigative Journalism
by Angus Stickler

September 14th, 2011

News that Greece is potentially to be fast-tracked €7.7 billion from the EU’s Structural Funds under easier terms should jar the sensibilities of any EU taxpayer. Last year the Bureau, along with the Financial Times, conducted an investigation into the current €350billion spending round of Europe’s funds. We revealed that billions have been lost in a trail of undetected waste, corruption and fraud.

The aim of the Structural Funds is to redistribute Europe’s wealth and lift the economies of its poorest regions: to revive “dormant” growth-boosting projects. Under the current economic crisis this money could and should be used to help countries like Greece back onto their feet.

But our investigation identified gaping holes in levels of scrutiny with Structural Funds. A forensic examination of individual schemes revealed that money was being handed over to profitable multi-nationals, non-existent projects, even into the hands of organised crime.

It is the term “fast-track” that sets alarm bells ringing: it implies that corners may be cut. Structural funds have always stood out as the most problematic spending area in the EU budget. The European Court of Auditors in Luxembourg assesses how Brussels spends its money. Virtually every year its verdict on structural funds is stark: “The payments . . . were affected by material error”. They range from minor mistakes, to more serious cases involving rigged contracts and out-and-out fraud.

The existing web of bureaucracy is so dense that it is almost impossible to track how the money is being distributed. There are only a score of anti-fraud investigators covering all 27 member states.

The €7.7 billion funding, which is not new money but fast-tracked aid already allocated to Greece under the 2007-2013 budget, will be handed over under easier terms. Greece has long been under-using Structural Funds, spending only 30 per cent of its current €20 billion allocation so far. The reason is that, until now, it has had to co-finance projects Euro for Euro and it simply hasn’t had the cash. The new terms will slash that contribution to just five per cent. And while this may be necessary to enable Greece to access its allocation, it could arguably remove the incentive to ensure money is properly spent – it will effectively be free cash.

German Chancellor Angela Merkel said, that all attempts should be made to avoid an “uncontrolled insolvency” in Greece, after it raised the spectre of a possible default and ejection from the eurozone. There is no argument that Greece is an exceptional case, but to reiterate the findings of our investigation last year: in the current economic climate making the structural funds work efficiently is crucial to getting Europe back on its feet.

The European Commission admits it has neither the authority nor the resources to police those that get the money. To simply ease terms and fast-track payments may expose millions more of tax payers money to fraud and waste.