In its report published on Wednesday 8 March, the European Court of Auditors (ECA) provides its review, through document analysis and interviews, of the control system established by the European Commission for payments under the ‘Recovery and Resilience Facility’ (RRF). The ECA warns, in particular, of weaknesses in the verification of compliance with European and national rules for RRF-related investments. These weaknesses or gaps may undermine the Commission’s ability to ensure the protection of the EU’s financial interests.
The RRF is the main instrument of the Next Generation EU recovery package, adopted at European level to support Member States in their recovery from the Covid-19 pandemic, by promoting reforms and investments, in particular in favour of the green and digital transition.
The RRF will have made available to Member States, according to a specific allocation key, between February 2020 and 31 December 2026, €723.8 billion at current prices, raised on the capital markets by the European Commission. The money reaches the Member States in the form of soft loans (€385.8 billion) and grants (€338 billion). Disbursements are conditional on the achievement of milestones and targets that Member States have committed to in their national recovery and resilience plans, verified by the European Commission.
ECA President Tony Murphy stresses the importance of the sums transferred to the States, which are in addition to other European programmes, and the increased responsibility for accountability to taxpayers due to the need to repay the loans over time.
One of the problems identified by the ECA is that Member States’ investment projects financed under the RRF must comply with European and national rules, but this is not a condition for disbursement. The checking of this compliance is the responsibility of the Member States.
However, the ECA considers that the European Commission’s verification system does not sufficiently check whether and how these checks are carried out at national level.
While it highlights the speed with which the verification system was set up to check that Member States had met the milestones and targets, the ECA identifies a loophole that could affect the EU’s financial interests.
If the Court notes the extensive nature of the system for verifying the effective achievement of objectives and milestones by Member States, it also notes that “the various stages in the preliminary assessment (preceding disbursements) were insufficiently specified and not fully documented”.
Furthermore, the ECA considers that the system of checks in place provides little verified information at European level, particularly during Commission audits, on the compliance of the investments financed by the RRF with European and national standards, including the fight against fraud. The Irregularity Management System, for example, does not contain centralised and standardised information on RRF-related fraud.
In addition, the Court notes that there is not yet a method for quantifying the impact of not meeting a milestone or target or for quantifying the impact of not achieving an investment or target.
The ECA therefore makes five main recommendations in the context of the RRF. It recommends improving the procedures for ex ante verifications. It would like to see guidance published on the reversal by a State of a measure related to a previously fulfilled milestone or target. In addition, the ECA recommends the implementation of measures to ensure that investments financed by the RRF comply with European and national rules, the improvement of the system for reporting possible fraud and the harmonisation of reporting on fraud. Finally, the ECA recommends that guidance be put in place on corrective action to be taken when gaps in the check system are detected.
Link to the report: https://aeur.eu/f/5p4 (Original version in French by Emilie Vanderhulst)