EC proposes that subsidies worth CZK 25bn are not paid to ČR

Prague, Sept 25 (CTK) - The European Commission (EC) has proposed that subsidies worth around EUR1bn (about Kc25bn) should not be paid to the Czech Republic owing to various errors found during audits of Czech subsidy programmes, Deputy Local Development Minister Daniel Braun told CTK Tuesday.

However, the amount is only a preliminary proposal and it will probably be lower in the end because talks with the EC will continue, Braun said.

Moreover, Czech authorities will be able to draw the money in substitute projects.

"The position of the examined programmes is difficult but I believe that this is not a final amount, but we have to prepare well for talks and the auditors of the European Commission," Braun said commenting on the EC's proposal.

The largest sum of money the blocking of which the EC has now proposed went to subsidy recipients through Operational Programme Transport. The EC also has doubts about the expenditures of subsidy programmes Environment, North-West and Education for Competitiveness.

The Local Development Ministry published an analysis for the government in spring already which said the Czech Republic is in danger of losing up to Kc33bn in subsidies in total.

But it will also depend on the results of further audits whether the sum of blocked subsidies will be as high in the end.

One of the audits is now being carried out in Regional Operational Programme Central Bohemia in relation to the bribery affair of the region's former governor David Rath.

The deficit of Czech public budgets would grow if the EC did not pay the subsidies to the Czech Republic, because the money received by subsidy recipients is paid from national sources first and only later is transferred to the country from Brussels. But EC officials can suspend subsidy payments if they detect errors.

"The money will not be lost for good, but it is of key importance that there is in these programmes enough projects with expenditures spent correctly that can be financed from European sources," Braun said.

Problems with subsidy drawing in the Czech Republic culminated in the first half of this year. The EC criticised Czech authorities above all for shortcomings in control and audit of the subsidies.

The Finance Ministry for this reason stopped sending requests for subsidy payments to Brussels as of March. This was followed by audits in several subsidy programmes, including the largest ones - Transport and Environment.

Information about financial risks stemming from audits were earlier published by server Aktualne.cz daily Mlada fronta Dnes.

The EC said in July that the Czech Republic had improved the state of subsidy drawing by implementing the so-called action plan, and can therefore start to apply for subsidy payments again.

Still, the EC blocked the flow of European money to eight from 18 operational programmes administered by Czech authorities in early September as it is trying to solve suspicions of various discrepancies with the programmes individually, according to information newly published by the Local Development Ministry.