The watchdog also scrutinised €46.9 billion of spending from the EU coronavirus economic recovery fund and issued a qualified opinion, which means problems have been identified.
An audit of an EU-funded project in Spain to buy face masks at the start of the pandemic found Spanish authorities used emergency laws to award the contract directly rather than go through usual procurement procedures, but failed to carry out required checks. The audit found one of the contractor’s administrators had a criminal conviction. The masks were not delivered by the deadline of the end of April.
In Italy, a Berlin-funded cultural centre was still not open to the public three years after it was renovated, and equipment and furniture delivered to it. When auditors visited, they found only a poster referring to building work in progress. Technology for a media library had been delivered in 2019 but it had still not been opened.
Auditors also visited sites outside the EU, which had received funding from Brussels. The European Commission (EC) had partnered with an international organisation for a €17 million programme to support technical vocational training. However, when auditors visited one school, they found the laboratory equipment bought under the agreement was not being used. Some of the items were still in storage and unopened, while others were missing.
Another EC agreement with an international organisation to give school children healthier food in Malawi was worth €19 million, with €16 million paid by the EU. The organisation rented a warehouse and charged €33,000 to the project, including €4,700 in VAT. However, deductible VAT is not classified as eligible expenditure and should not have been charged, the auditors said.
Auditors found problems in 11 out of 13 post-pandemic recovery grants paid out in 2022. Other errors found in money linked to EU programmes included 14 cases of suspected fraud. The report said the EU had liabilities of €577 billion, assets of €455 billion, and debts and exposure of €344 billion, which is likely to increase as more loans and aid are sent to Ukraine.
Auditors blamed the need to spend EU funds before they expire for the increased errors. Countries have until the end of this year to claim funds from the previous budget cycle and coronavirus funds must be spent by 2026.
Tony Murphy, the president of the ECA, told the Politico website: “The issue this time is that there’s so much more money around to be spent within a short period of time.”
He added that this increased “the risk of either errors, or suboptimal projects, or, at the worst end of it, it means fraud as well”.
Frank Furedi, executive director of the MCC Brussels think tank, said: “If auditors wrote such a damning report about a business, its chief executive and directors would be expected to resign.”
