Thu. May 26th, 2022

Brussels, 25 March 2022

  • Influence of oligarchs in the EU is of unprecedented magnitude
  • Urgent harmonization of reporting and tighter rules against conflict of interest is needed
  • Introduce ceilings of EU budget payments per natural person

The EU’s capacity to stop oligarchs from receiving EU funds is limited, due to highly fragmented reporting systems and lack of cooperation by the EU countries.

In a text adopted by 409 votes to 61 and 42 abstentions on Thursday European Parliament points to the “unprecedented magnitude” of oligarchic groups which use government tools or criminal practices to benefit from the EU funds, with members of national governments and holders of political positions as part of the oligarchy in some Member States.

At the same time, EU’s capacity to stop oligarchs from receiving EU funds is limited, mainly due to highly fragmented reporting, MEPs say, by quoting “hundreds of regional, national and inter-regional reporting systems” that do not always reveal the final beneficiaries of EU agricultural and cohesion funds.

The report also points to problems in public procurement procedures, weak national control systems and lack of adequate protection of EU funds against conflicts of interest in some member states.

Quote

Rapporteur Petri Sarvamaa (EPP, FI) said: “We ask to increase transparency and to stop the flow of EU subsidies, our taxpayer’s money, into the hands of oligarchs. In the light of recovery and resilience facility and potential new instruments it is clear that the issue could not be more important. The most important thing is that the Commission must finally start using all tools it has to prevent the misuse of EU funds. For example it is clear that the rule of law conditionality mechanism must be applied without any delay, if other available tools are not sufficient”.

In order to strengthen the protection of the EU’s financial interests, the European Parliament:

  • reiterates the urgent call to Commission to establish a EU-wide interoperable, digital reporting and monitoring system that would reveal the ultimate and aggregated beneficiaries of EU funds;
  • asks to introduce an EU annual ceiling on budget payments to a natural person. They suggest, during the next revision of the EU Financial Regulation, to set the annual total amount per natural person for agricultural funds of EUR 500 000 for first pillar payments and EUR 1 000 000 for second pillar payments;
  • suggests to tighten the rules of EU Financial Regulation by including an explicit definition of a “professional conflict of interest” and strengthening conflict of interest provisions that apply to preparation of the budget;
  • urges the Commission to make “full and immediate use” of its instruments to protect the EU budget, including the Rule of Law Conditionality Regulation and the Article 7 procedure;
  • asks to oblige the EU countries to use EU specialized IT tools in their reports on beneficiaries of the EU funds (Arachne for data mining and EDES for early detection) that can help detect and prevent fraud. Currently those tools are only used by a small percentage of member states;
  • asks the Council to authorize resources for the “chronically understaffed” EU bodies that protect the EU’s financial interests, namely, the EU Anti-fraud office, the Europol and the EU Public prosecutor.
Next steps

The European Commission has announced that it will publish a legislative proposal to update the EU Financial Regulation, in order to to align it with the 2021-2027 multiannual financial framework and Next Generation EU, in the first quarter of 2022. In November 2021 the European Parliament adopted its demands for the upcoming revision.

In April 2022 Members of European Parliament will travel to Bulgaria, to follow up on the allegations about corruption and misuse of public funds affecting EU funds. In May a fact-finding mission has been planned to Rome, Italy, to look into the use of CAP subsidies in relation to the respect of labour standards and the fight against fraud and financial and economic crimes impacting the EU budget.