WRITTEN QUESTION E-1869/99

by Maria Martens (PPE-DE) to the Commission

(14 October 1999)

Subject: Suspension of subsidies to Dutch companies under the ESF programme

In recent months I have been alerted to problems regarding ESF subsidies for projects in the Netherlands. During the check made in Rijnmond and Gelderland (April 1999) shortcomings were discovered in the accounts and the Commission intends to halt the subsidies to the Dutch projects.

Does the Commission really intend to halt subsidies to all projects under the ESF programme in the Netherlands? If so, why?

Given that the Commission cannot intend that good projects should suffer as a result of bad ones, can the Commission ensure that not all projects fall victim to two possible instances of carelessness in a single project?

Can the Commission make an exception for the majority of the subsidised projects where it is certain that the accounts definitely satisfy the requirements?

The shortcomings often arise as a result of the complexity of the procedures and the Commission's slowness in making payments. How does the Commission intend to make the financial responsibility with regard to projects simpler and more transparent?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(26 November 1999)

An audit on the implementation of the European social fund (ESF) during the period 1994-1997 was carried out in the Rijnmond and Gelderland regions of the Netherlands by the Commission in April 1999. The audit was requested by the European Anti-Fraud Office (OLAF) on the basis of findings during previous audits conducted by the Commission. It was discovered that the accounting records and statements of expenditure related to ESF projects of six of the eight promoters audited (representing 95 % of the funds audited) proved to be incorrect.

On the basis of these findings, advance payments for ESF objectives 1, 2, 3 and 5b and the Community initiative employment have been reduced in order to safeguard the financial interests of the Community, on the basis of Article 21 of the Co-ordination Regulation Council Regulation (EEC) No 2082/93 of

20 July 1993 amending Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards co-ordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments(1) and Article 2 of the Financial Regulation Council Regulation (EC, Euratom, ECSC) No 2335/95 of 18 September 1995 amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities, with regard to the special provisions applicable to research and technological development appropriations(2) until, for all projects, the frequency of occurrence and the size of the error could be determined (based on a sufficiently large number of projects).

Subsequent to the Commission audit, the Dutch authorities have audited 83 % of the 1997 ESF projects for the above mentioned objectives. In the Dutch report on these additional checks, the erroneous amount has been calculated at HFL 58,4 million ( 26,5 million) which represents 22 % of the amount of the projects audited and 17,5 % of the ESF funding for 1997. An estimate of the amount of the irregularity for the years 1994, 1995 and 1996 still has to be finalised.

In reducing the ESF payments for the Netherlands, the Commission is unable to make a distinction between projects that comply with the European and Dutch ESF regulations and those that do not. Indeed, on the basis of the subsidiarity principle and the partnership between the Commission and the Member State, it is the Member State which draws up the record of all expenditure incurred and certifies it. Since the Dutch authorities have not yet produced a final payment claim for 1997 with corrected amounts, the Commission cannot, according to Article 21 of the Co-ordination Regulation and Article 2 of the Financial Regulation make advance final payments related to the subsequent annual instalments to the Netherlands.

Together with the Dutch authorities, the Commission is striving to find an appropriate and rapid solution for this payment problem.

(1) OJ L 193, 31.7.1993.

(2) OJ L 240, 7.10.1995.