FinMin halts payment of subsidies from EU funds

Prague, March 19 (CTK) - The Finance Ministry has suspended the payment of money from EU funds by regional programmes ROP South West, ROP North East, ROP Moravskoslezsko, OP Business and Innovation and the Integrated Operational Programme, ministry spokesman Ondrej Jakob told CTK.

The ministry's audit found more faults by these programmes than EU regulations allow.

The Czech Republic has already halted drawing of EU subsidies, for example, by programmes ROP North West and ROP Central Bohemia as of 2012 due to faults.

"Some 90 percent of the faults concern placement of public orders. Often there were unallowed splits of orders, changes in the course of tenders, discriminatory eliminations of bidders who met the criteria and non-elimination of those who did not," Jakob elaborated.

Apart from the public orders, some expenditures were not in order, he added.

Deputy Finance Minister Miroslav Matej added for radio station Cesky rozhlas Radiozurnal that the ministry does not have a complete analysis yet.

The faults concerned in particular qualification criteria, for example criteria set in a discriminatory way. Apart from unallowed split of orders when subsequently less strict conditions were set, there were also mistakes in changes in orders in the course of their implementation, he added.

Certification, that is sending of applications for the payment of money, can be renewed only when the faults are corrected, Jakob explained.

"We do not expect any impact on the recipients of subsidies where no faults have been found," he said.

Finance Minister Miroslav Kalousek stressed that his ministry had to defend the interests of the Czech budget and the EU budget in this case. If the faults are not corrected, drawing of the money cannot be renewed.

"Either the way of the placement of public orders meets the relevant standards or it does not. Whether it was negligence, intention, political pressure, manipulation, I cannot speculate about it," he added.

South Moravian governor and Association of Regions chairman Michal Hasek will be asking questions to colleagues from the regional operational programmes to see where the problem is.

"The amounts of money of the projects where potential corrections or corrective measures are to be made have not even been identified," Hasek told CTK and Cesky rozhlas.

"I think we will mow calmly make an analysis of the faults, if the Finance Ministry has more information available, and the individual regional operational programmes will react to it," he said.

Hasek added he had learned about the suspension of the payments from a press release and not directly from the minister.

"One year later it shows that the same mistakes are being repeated and the managing authorities of the individual programmes are unable to detect them," Kalousek said.

"On the other hand, the Finance Ministry bodies' activities have become more effective. The increasing number of problems in regional operational programmes clearly show that regional governors, unfortunately, have not drawn a lesson from the mistakes," he added.

The subsidies are first paid from the state budget and the EC then pays them retroactively. The EC tolerates a 2 percent fault rate at most. When a problem is found, the retroactive payment can be stopped.

In the years 2007 to 2013, the Czech Republic can gain around Kc780bn from Brussels.

The EC has been pointing at the problems with projects from regional operational programmes in the Czech Republic for a long time. The situation aggravated this year in February when the EC refused to pay for projects from ROP North West for Kc2.6bn in total.

Instead of subsidies from the EU, regions Ustecky and Karlovarsky will have to pay the proportional part. Their reps want half of the amount to come from the state budget but the government has rejected it.

For all seven regional operational programmes, EUR4.8bn (some Kc123bn) has been earmarked. The biggest part (over EUR762m (Kc20bn) is for ROP North West.