Special Report No 7/2000 concerning the International Fund for Ireland and the Special Support Programme for Peace and Reconciliation in Northern Ireland and the border counties of Ireland (1995 to 1999), together with the Commission's replies
Date: 2000-02-24
Institutions: European Court of Auditors
Subjects: EU aid, EU programme, Northern Ireland, economic development, financial aid, peaceful co-existence

25.5.2000

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Official Journal of the European Communities

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I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 7/2000

concerning the International Fund for Ireland and the Special Support Programme for Peace and
Reconciliation in Northern Ireland and the border counties of Ireland (1995 to 1999), together
with the Commission(cid:146)s replies

(pursuant to Article 248(4), second subparagraph, EC)

(2000/C 146/01)

CONTENTS

Paragraph

Page

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE COURT(cid:146)S AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 to 2

3 to 5

THE INTERNATIONAL FUND FOR IRELAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 to 28

Summary of the main findings in respect of the IFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

Funding arrangements and regulatory framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 to 12

Administrative procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IFI(cid:146)s programmes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13 to 14

15 to 16

Project appraisal procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 to 20

Monitoring and evaluation of projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

Impact of the IFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22 to 27

Monitoring by the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28

THE SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION . . . . . . . . . . . . .

29 to 55

Summary of the main findings in respect of the P & R . . . . . . . . . . . . . . . . . . . . . . . . . .

29

Regulatory framework and funding arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30 to 33

Financial and budgetary execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34 to 38

The programme(cid:146)s administrative structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39 to 44

Project appraisal procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45 to 48

Subsequent monitoring of grant-aided projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49 to 50

Impact of the programme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51 to 54

Publicity and information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55

MULTIFUNDED ACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56 to 58

ADDITIONALITY OF FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59 to 65

CONCLUSION AND RECOMMENDATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66 to 71

ANNEXES 1 TO 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission(cid:146)s replies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

3

3

3

3

3

5

5

6

6

7

7

7

7

8

8

10

11

11

12

12

12

12

13

16

21

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SUMMARY

In 1986 the International Fund for Ireland (IFI) was created under the Anglo-Irish Agreement with the primary
objective of promoting reconciliation between the divided communities in Northern Ireland. In 1995 the Euro-
pean Commission created a Community initiative conceived as a special support programme for Northern
Ireland and the border counties of Ireland with the joint aim of reinforcing progress towards a stable society
and promoting reconciliation through economic development and employment. This report examines the
European Union(cid:146)s support of the activities of the IFI up to December 1997 and the implementation of the
Special Peace and Reconciliation Programme (P & R) in the period 1995 to 1997. The audit focused on the
legality and regularity of the Community funding and, by means of a broad sample of measures and projects,
examined the efficiency and effectiveness of procedures employed under both actions for the disbursement of
funds.

The circumstances in which both the IFI and P & R Community aid packages, designed to boost the peace
process in Northern Ireland and the border counties of Ireland, were developed and implemented were par-
ticularly difficult, given the distrust between the different communities.

In respect of the IFI, the Court underlines that the Commission(cid:146)s payment of grant aid in advance of need did
not ensure the most efficient use of EU funding (paragraph 12). The IFI(cid:146)s staffing arrangements and delega-
tions of power were not formally established in writing (paragraph 14). The evaluation of project applications
and the post-grant monitoring of projects did not ensure sound financial management in all cases (para-
graphs 17 to 21). The Commission failed to carry out verification and spot checks as required under Article 3
of the funding agreement with the IFI (paragraph 28).

In respect of the P & R, in a region where little opportunity for cross-community cooperation existed, it set up
important structures and incentives which encouraged cooperation. It provided opportunities for partnership
and dialogue and brought decision-making and responsibility for community development closer to the
people, thus contributing to the overall objective of improving social and economic conditions through the
direct involvement of local communities (paragraphs 39 to 40).

However, the Court underlines that the programme structure was complicated by the wide diversity of the
implementing bodies and by the differing needs of the two regions (paragraph 41). In particular, the decision
to place much of the management and decision-making functions in the hands of non-governmental bodies
led to difficulties in the selection of the implementing bodies (paragraphs 42 to 43). In some cases, inadequate
consideration was given by the implementing bodies to developing an effective methodology for targeting
community projects and social groups (paragraphs 52 and 53). The selection and appraisal procedures lacked
common criteria and, as a result, some appraisals were not adequately documented or contained inconsisten-
cies of treatment between projects (paragraphs 45 to 48).

The initial allocation of three years(cid:146) funding to a five-year programme caused difficulty in the planning and
management of the measures (paragraph 34) and delays in the programme(cid:146)s execution were noted (para-
graphs 35 to 37). Up to December 1997, inadequacies in financial and management reporting systems (para-
graph 49) and the lack of quantified targets in the programme document (paragraph 50) have affected the
effectiveness of the programme(cid:146)s control mechanisms and the measurement of the impact.

Finally, although the P & R programme(cid:146)s objectives and delivery mechanisms were substantially different, there
was significant overlap between the P & R, the activities of the IFI and Structural Funds support measures,
resulting in inefficiencies and delays in the execution of other programmes (paragraphs 56 to 58).

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INTRODUCTION

selection of the activities through which the IFI seeks to achieve
its objectives for the promotion of dialogue and reconciliation
and for economic and social advancement.

1. The International Fund for Ireland (IFI) is an international
organisation which was created under an agreement of 18 Sep-
tember 1986 (hereafter called (cid:145)the Agreement(cid:146)) to contribute to
the work envisaged in Article 10(a) of the Anglo-Irish Agreement
of 15 November 1985 (1), signed between the United Kingdom
and Ireland. The objectives of the IFI were to (cid:145)provide financial
support for measures designed to promote reconciliation between
the divided communities in Northern Ireland, cross-border coop-
eration and promote economic and social advance(cid:146). The IFI is cur-
rently supported by contributions from the European Union
(50 %, under Article B2-6 0 4 of the EU(cid:146)s general budget), the
United States of America (47 %) and Australia (3 %). The IFI pur-
sues its objectives through a set of programmes with annual bud-
gets which apportion 75 % of aid to Northern Ireland and 25 %
to Ireland.

2.
In September 1994, following the declaration of cessation of
violence in Northern Ireland, a Community initiative entitled (cid:145)The
Special Support Programme for Peace and Reconciliation in North-
ern Ireland and the border counties of Ireland(cid:146) (P & R) was agreed
between the Commission and the Member States. Its aim was to
(cid:145)reinforce progress towards a peaceful and stable society and to
promote reconciliation by increasing economic development and
employment, promoting urban and rural regeneration, develop-
ing cross-border cooperation and extending social inclusion(cid:146) (2).

THE COURT(cid:146)S AUDIT

3. The Court(cid:146)s audit covered an examination of the legality and
regularity of both of the abovementioned measures and involved
an examination of the IFI(cid:146)s activities up to December 1997, and
those of the P & R from July 1995 to December 1997. The effi-
ciency and effectiveness of both measures were also examined
and, in particular, under the P & R, the measures financed from
the European Regional Development Fund (ERDF). The review
period for the IFI covers a substantial period from 1989 when
political violence was at its height, well before the ceasefires and
peace initiatives in 1994. In respect of the P & R programme, the
audit period (July 1995 to December 1997) corresponds mainly
to its initial phase, during which time new implementing arrange-
ments were being established. The Court acknowledges the highly
specific circumstances in which the IFI and the P & R programme
have had to operate as well as the risks attaching to the execution
of development actions in a politically volatile environment. The
audit findings should be considered against this background.

5. With regard to the P & R, a broad cross-section of the meas-
ures financed under the P & R programme, representing eight of
the 70 implementing bodies, was selected for audit. From this, a
sample of 58 projects was examined in detail, of which seven
were visited on-the-spot.

THE INTERNATIONAL FUND FOR IRELAND

Summary of the main findings in respect of the IFI

6. The Court(cid:146)s audit findings, which are detailed below can be
summarised as follows:

(a) The IFI pioneered the joint management and delivery of pro-
grammes between Ireland and Northern Ireland and was
innovative in giving priority to disadvantaged areas for fund-
ing (paragraph 22);

(b) The IFI(cid:146)s role as the first funder of projects enabled grant
recipients to gain access to other funding (paragraph 23);

(c) The Commission(cid:146)s payment of grant aid to the IFI in advance
of need did not ensure the most efficient use of EU funding
(paragraph 12);

(d) The IFI should consider setting out staffing arrangements and

delegations of power in writing (paragraph 14);

(e) The evaluation of project applications and the post-grant
monitoring of projects should be improved to ensure sound
financial management in all cases (paragraphs 19 to 21 and
27);

(f) The Commission(cid:146)s failure to carry out verification and spot
checks as required under Article 3 of the funding agreement
with the IFI must be urgently addressed (paragraph 28).

Funding arrangements and regulatory framework

4.
In respect of the IFI, the Court(cid:146)s audit involved a detailed
examination of a sample of 34 projects, of which 10 were visited
on-the-spot. The sample was chosen to give a broad cross-

7. The European Community funding of the IFI was first approved
in 1989 (3), at which time the IFI had already been in existence
and operating for three years. However, the necessary legal frame-
work for Community funding was only established by Council
Regulation (EC) No 2687/94 of 31 October 1994 (4).

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8. During the period 1989 to 1994, the Commission made an
annual contribution of ECU 15 million to the IFI. In October
1994, the Council set Community financial contributions to the
IFI at ECU 20 million per annum for the years 1995, 1996 and
1997. Further annual contributions of ECU 17 million were pro-
vided for the years 1998 and 1999 (5), with the requirement that
a review of the performance of the IFI and its need for further
support should be made before April 1999. That review has since
taken place and, at the Berlin Summit of Heads of State or Gov-
ernment in March 1999, further annual contributions of ECU 15
million were approved for the years 2000 to 2002.

9. The 1994 funding regulation provided that the Commission
administer the contribution and that it submit an annual report
to the budgetary authority, including a detailed survey of the IFI(cid:146)s

activities, an assessment of the nature and impact of its interven-
tions and the results of on-the-spot verifications carried out by
the Commission.

10. Table 1 shows the budgetary execution in commitments and
payments of the Community contribution to the IFI. In the period
1989 to 1997, a total of ECU 150 million of Community funding
was committed to the IFI, of which ECU 146 million (97 %) was
paid. The Community(cid:146)s annual contribution is paid in two instal-
ments: a first advance of 80 % is made on the basis of a single
claim from the IFI and the 20 % balance is paid following receipt
of the annual accounts of the IFI by the Commission. These pay-
ment arrangements are in contrast to those applicable to the P &
R, in that payments to the IFI are on the basis of a fixed annual
contribution, unrelated to actual expenditure levels (see Table 2).

Budgetary execution of Community contribution to the International Fund for Ireland

Table 1

1989

1990

1991

1992

1993

1994

1995

1996

1997

Total

(million ECU)

Budget line
Type of appropriation

B-5 4 7
NDA

B-5 4 7
NDA

B2-6 0 4
NDA

B2-6 0 4
NDA

B2-6 0 4
DA

B2-6 0 4
DA

B2-6 0 4
DA

B2-6 0 4
DA

B2-6 0 4
DA

COMMITMENTS
Initial appropriations
Carried over from previous exer-
cises

Available appropriations

Commitments made during the
exercise

PAYMENTS
Initial appropriations
Carried over from previous exer-
cises

15,000

15,000

15,000

15,000

15,000

15,000

20,000

20,000

20,000

150,000

0,000

15,000

15,000

15,000

15,000

15,000

15,000

20,000

20,000

20,000

150,000

15,000

15,000

15,000

15,000

14,501

15,000

20,000

20,000

20,000

3,000

3,240

3,000

3,000

2,501

Available appropriations

15,000

18,000

18,240

18,000

17,501

17,501

20,000

20,000

20,000

Payments on commitments of cur-
rent exercises
Payments on commitments of pre-
vious exercises

Payments made during the exer-
cise

DA = Differentiated appropriations.
NDA = Non-differentiated appropriations.

12,000

11,760

12,000

12,000

12,000

12,000

16,000

16,000

16,000

119,760

n/a

3,000

3,240

3,000

3,000
NDA

3,000

3,000

4,000

4,000

26,240

12,000

14,760

15,240

15,000

15,000

15,000

19,000

20,000

20,000

146,000

Source: Revenue and expenditure account and balance sheet.

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Table 2

Commitments and payments of the EU to the International Fund for Ireland and to the Special Support
Programme for Peace and Reconciliation in Northern Ireland and the border counties of Ireland

IFI

P & R (1)

(million ECU)

Commitments made during
the financial year

Payments made during the
financial year

Commitments made during
the financial year

Payments made during the
financial year

1989

1990

1991

1992

1993

1994

1995

1996

1997

Total

15,000

15,000

15,000

15,000

15,000

15,000

20,000

20,000

20,000

12,000

14,760

15,240

15,000

15,000

15,000

19,000

20,000

20,000

150,000

146,000

(1) The Special Support Programme commenced in 1995.

27,385

95,561

53,311

176,257

10,609

61,800

72,409

11. The budgetary and accounting rules adopted by the IFI allow
for the carry-over from year to year, of funds committed to spe-
cific projects for which contractual letters of offer have been issued
and of non project-specific funds committed to programmes. This
practice of making commitments to be met from future donor
contributions, resulted in the Fund balance sheet at September
1997 recording a deficit of ECU 16,46 million. The IFI informed
the Court that the presentation adopted for the Fund(cid:146)s accounts
reflects the Fund(cid:146)s unique status.

12. Notwithstanding this, in 1995, 1996 and 1997, an average of
only 37 % of the total committed expenditure was spent, result-
ing in significant bank balances of ECU 64,85 million, ECU 88,91
million and ECU 78,75 million being held by the IFI. Although
Article 6 of the annual declaration made by the IFI to the Com-
mission provides for the reimbursement of unused funding, the
Commission(cid:146)s payment procedures which grant automatic pay-
ments of advances to the IFI, while accelerating the use of Com-
munity budget appropriations, do not include an assessment by
the Commission of the immediate financial needs of the IFI.

administrative structure, the IFI, which has a separate legal status,
is independent and is prohibited from taking any instruction from
either Government (see Annex 1).

14. Under Article 10 of the Anglo-Irish Agreement, the secret-
ariat of the IFI, which consists of two joint directors-general and
other officials from both Government administrations on second-
ment, is provided at no cost by both Governments. However,
such secondment is not covered by separate employment con-
tracts. While the Fund(cid:146)s Rules of Procedure refer to specific duties
and responsibilities of the joint directors-general, the responsibili-
ties and functions of other officials are not formalised in writing.
Moreover, the delegation of contractual powers by the board in
the signing of letters of offer and management contracts are not
specifically covered by the Fund(cid:146)s Rules of Procedure, but are
established through custom and practice.

IFI(cid:146)s programmes

Administrative procedures

13. The board of the IFI is appointed jointly by the British and
Irish Governments, with an observer at board meetings nomi-
nated by each of the donor countries and the EU. In terms of its

15. The IFI pursues its objectives through a set of programmes,
consisting of projects which are primarily sourced through open
advertisement. Up to the end of 1997 the IFI had provided part-
financing in respect of some 3 600 projects concerning (cid:145)Disad-
vantaged areas(cid:146), (cid:145)Communities initiatives(cid:146), (cid:145)Wider horizons(cid:146), (cid:145)Busi-
ness enterprise and technology(cid:146), (cid:145)Tourism(cid:146), (cid:145)Urban development(cid:146)
and (cid:145)Flagship projects(cid:146) (see Table 3).

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International Fund for Ireland 1997 (cid:151) Programmes and payments

Table 3

Disadvantaged areas initiative

16 642

11 137

Thousand
ECU

Thousand GBP

Communities initiatives

Wider Horizons

Business enterprise and technology

Tourism

Urban development

Flagship projects

Source: Annual report of IFI, 1997.

7 279

9 264

1 315

7 174

6 800

4 006

4 871

6 200

880

4 801

4 551

2 681

52 480

35 121

16. A preliminary assessment of each project is performed by
the IFI secretariat and/or programme teams followed by a formal
assessment by the managing government department or agency.
The projects are then considered by the designated board mem-
bers for submission to the full board of the Fund, which decides
on the projects following receipt of advice from the advisory
committee.

Project appraisal procedures

17. Under the terms and conditions of appointment of board
members and the Rules of Procedure and operating rules of the
board, the board may employ advisors and consultants to assist
in the evaluation of proposals submitted to it and generally in the
discharge of its functions. The Fund uses this facility and the man-
agement of projects is in general carried out by government ser-
vices or public sector agencies. In contrast to the free provision
of secretariat services by both Governments as provided for in the
Agreement, the IFI paid these organisations amounts of ECU 3,14
million, ECU 3,59 million and ECU 2,89 million in 1996, 1997
and 1998 respectively for this service. This represented an aver-
age of 5 % of programme expenditure.

(a) the decision to grant aid to a project without carrying out a
formal business appraisal, (e.g. an equestrian centre project (7);
while the IFI has informed the Court that it carried out an
internal assessment, a separate commercial business appraisal
was deemed unnecessary);

(b) a (cid:145)Disadvantaged areas initiative(cid:146) project; while business plans
were produced by the project in support of an application for
funding, the first formal project appraisal was only carried out
after the initial assistance of ECU 915,985 was approved by
the IFI (8);

(c) a project where the absence of a full commercial appraisal led
to the replacement of the proposed project by another (e.g. a
cultural and language centre project (9) was replaced by a cin-
ema and office building, used as rented accommodation for
the local council) and,

(d) a project (10) where the grant letter of offer, which was not
taken up by the applicant, was subsequently reissued,
in
advance of a second economic appraisal and despite the res-
ervations of the co-funders as to the value-for-money of the
scaled down project.

20.
In three of the 34 project cases examined (11), multiple fund-
ing of projects was provided to meet cost overruns and repay
loans. For example, in the case of a multimedia exhibition centre
project (12), the IFI contributed an initial ECU 1 494 268, with
further grants of ECU 373 566 and ECU 522 993 in subsequent
years. Despite this however, the project, which was not self-
sustaining, was at 31 December 1997 in search of an on-going
subsidy to enable it to continue. Without calling into question the
overall merit of these projects, all three projects had not achieved
economic viability at 31 December 1997, which was the basis on
which the IFI funding decision was taken.

Monitoring and evaluation of projects

18. Under the Rules of Procedure and operating rules of the
Board, specific project assessment criteria are laid down for the IFI
which include the requirements that value for money be obtained
and that projects be subject to ex ante evaluations, including risk
assessments.

19. Although the majority of projects examined met the objec-
tives of the IFI, the rigour of the risk assessment and appraisals
carried out were found to be inadequate in eight out of 34 projects
examined by the Court (6). Examples of weak procedures were:

21. Weaknesses were observed in six of the 34 cases exam-
ined (13). These weaknesses in monitoring and evaluation were
compounded by inadequate management on the part of the
project owners. Examples of these were:

(a) the non-compliance with grant conditions (e.g. in the case of
a rural development project (14), which was awarded assis-
tance totalling ECU 1 084 834. While the IFI commissioned
three consultancy reports for 1995, 1996 and 1997 high-
lighting serious management problems with the project, the
original grant was released without the required community
contribution being in place and further grants were released
without significant improvement in control systems);

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(b) delays in taking direct action to safeguard the IFI(cid:146)s investment
(e.g. the investment in an accommodation/activity centre
project (15) which was awarded ECU 793 200, was unsuccess-
ful due to on-going financial difficulties. An internal note on
the project by the IFI stated that (cid:145)total expenditure on the
property is ECU 1 541 175, which to anyone who has seen
the property in either incomplete or complete condition, (is)
almost impossible(cid:146). While the IFI informed the Court that a
part of the project has now been sold and is operating, it
remains that this community project failed due to poor project
management and cost controls).

Impact of the IFI

22. The IFI(cid:146)s establishment in 1987 pre-dated the reform of the
Structural Funds and initiated certain principles which would later
become the main elements of the reform, such as the programmed
approach to economic development and the importance of cross-
community partnership. Similarly, it pioneered the joint manage-
ment and delivery of programmes between Ireland and Northern
Ireland and was innovative in giving priority to disadvantaged
areas for funding.

25. The Fund(cid:146)s project database records estimates of the ultimate
employment in assisted projects at the time of the projects(cid:146)
approval. However, the commissioned impact study assessed the
actual number of jobs on the ground to be 85 % of the jobs
potential claimed by the IFI, which it stated compared favourably
with that achieved by other agencies. In the case of two projects
examined on audit, the estimated jobs far exceeded the actual
employment on the ground (e.g. an aquaculture research cen-
tre (18) where an estimated increase of 2 000 jobs was recorded as
jobs attributable to the project, where in fact the actual figure was
four. Similarly under a (cid:145)Fishing villages initiative(cid:146) project (19) only
10 jobs were actually created compared with an estimated 41 full-
time jobs)

26. The impact study indicated the positive effect of the IFI (20)
and in particular its (cid:145)Wider horizons(cid:146) programme, which has a
cross-border/cross-community dimension. However, the study
also identified the difficulty in finding a satisfactory modus oper-
andi for cross-border projects, resulting in the predominance of
government organisations and professional bodies as beneficiar-
ies of cross-border projects.

27. Evaluation studies provide useful information regarding the
impact of activities at a strategic planning level, i.e. the setting of
objectives and the allocation of resources. However, the lack of
up-to-date operational information or information on the achieve-
ment of indicators on the projects being funded by the IFI (as in
the case of jobs created), constitutes a weakness in management
control and presents the risk that the organisation may not be
accomplishing its objectives efficiently and effectively.

23. The Commission(cid:146)s evaluation report on the IFI of March
1997 (16) assesses the IFI(cid:146)s role as the first funder of projects,
enabling grant recipients to gain access to other funding. While
this leverage ratio is quoted as 1,8: 1 for the period 1994 to 1996,
no analysis is given as to what percentage of this figure relates to
EU part-financing and what percentage is private investment. Fur-
thermore, by solely attributing this leverage effect to the IFI(cid:146)s
assistance, it ignores the volume of public (including EU) funding
which would be available anyway, particularly within an Objec-
tive 1 area. Moreover, the lack of real analysis as to the attribut-
able impact and synergy between the funders, often obscures the
substantial role and impact of other project co-funders, both
national and EU.

Monitoring by the Commission

28. Although Article 3 of the governing regulation assigns to
the Commission the role of monitoring the activities of the IFI,
the Commission has not fulfilled its role in all respects. Notwith-
standing the requirement from 1995 onwards, to prepare an
annual report on the activities of the IFI, the first such report was
only presented in 1997. Furthermore, no on-the-spot checks or
verifications were carried out by the Commission during this
period.

24.
In a study commissioned by the IFI in 1994 on the impacts
of its programmes, it was estimated that the employment created
in IFI-assisted projects was 23 787 jobs as at 30 September 1994.
This figure was reduced to 11 186 when displacement and dead-
weight effects (i.e. an estimate of the likelihood of projects obtain-
ing alternative funding or proceeding without assistance), were
taken into account. This estimate was further reduced to 7 000
jobs in a subsequent study in 1996 covering the same period (car-
ried out by consultants (17) who collaborated on the first study).

THE SPECIAL SUPPORT PROGRAMME FOR PEACE AND
RECONCILIATION

Summary of the main findings in respect of the P & R

29. The results of the Court(cid:146)s audit findings can be summarised
as follows:

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(a) The P & R was effective in providing opportunities for part-
nership and dialogue and gained acceptance by both commu-
nities by bringing decision-making and responsibility for com-
munity development closer to the people (paragraphs 39 and
40);

(b) Programme implementation was complicated by the wide
diversity of the implementing bodies and by the differing
needs of the two regions (paragraph 41);

(c) In some cases inadequate consideration was given by the
implementing bodies to developing an effective methodology
for targeting community projects and social groups (para-
graphs 52 and 53);

(d) The allocation of three years(cid:146) funding to a five-year pro-
gramme caused difficulty in the planning and management of
the measures, resulting in delays in the programme(cid:146)s execu-
tion (paragraphs 34 and 35);

(e) The decision to place much of the management and decision-
making functions in the hands of non-governmental bodies
led to difficulties in the selection of the implementing bodies
(paragraphs 42 and 43);

(f) The selection and appraisal procedures lacked common cri-
teria and, as a result, appraisals were often limited in scope,
not adequately documented or contained inconsistencies of
treatment between projects (paragraphs 45 to 48);

(g) Up to December 1997 the lack of appropriate control mechan-
isms, weaknesses in computerised databases and inadequacies
in financial and management reporting systems led to inac-
curate reporting of financial and management information
(paragraph 49);

(h) Measurement of the impact of the programme was adversely
affected by the lack of quantified targets (paragraph 50);

(i) Although the P & R programme(cid:146)s objectives and delivery
mechanisms were substantially different, there was significant
overlap between the P & R, the activities of the IFI and Struc-
tural Funds support measures, resulting in inefficiencies and
delays in the execution of other programmes (paragraphs 56
to 58).

28 July 1995, the Special Support Programme for Peace and Rec-
onciliation. The creation of the P & R, which is a multi-funded
Community initiative (CI) under the governing regulations of the
various Structural Funds and the EIB, was achieved after extensive
consultation with all interested parties both in Ireland and North-
ern Ireland. The P & R(cid:146)s strategic objectives are (cid:145)to reinforce
progress towards a peaceful and stable society and to promote
reconciliation by increasing economic development and employ-
ment, promoting urban and rural regeneration, developing cross-
border cooperation and extending social inclusion(cid:146). Unlike other
Structural Fund programmes, the P & R programme was designed
not just to bridge the gap of an economically lagging-behind
region, but was intended to focus on those areas and sections of
the population most adversely affected by the violence and con-
sequently suffering most acute deprivation.

31. The P & R consists of seven subprogrammes, divided into 30
measures, of which 20 apply jointly to both Northern Ireland and
the border counties of Ireland (see Annex 2a and Annex 2b). The
structure of the programme is outlined in Annex 3. A sum of ECU
300 million was set aside for an initial period from 1995 to 1997
and a further ECU 100 million was subsequently approved by the
Commission for each of the years 1998 and 1999.

32. The opportunities arising from the cessation of violence
were described in broad terms in the programme document, as in
the example of the opportunity to bring about economic adjust-
ments in the balance between public and private sectors, while
mitigating against the adverse employment effects of a reduction
in the security sector. However, the nature and specificity of such
opportunities were not fully identified or defined, so as to be
effectively addressed by the programme. Furthermore, although
the P & R aimed to prioritise cross-community projects and to
target marginalised social groups, it did not elaborate on the
method of identifying such groups or of establishing priorities.

33. These characteristics together with the requirement for an
immediate and visible impact on the ground, the short time-frame
for the execution of the first phase and the desirability of includ-
ing as many local community interests as possible in the decision-
making and implementation procedures, required a considerable
administrative effort on all involved in the P & R(cid:146)s implementa-
tion.

Regulatory framework and funding arrangements

Financial and budgetary execution

30.
In a further response to the developments in the peace pro-
cess in Northern Ireland during 1994, the Commission, in wish-
ing to identify ways to assist the peace process, approved on

34. The Commission(cid:146)s initial funding decision, which allocated
only three years(cid:146) funding to a five-year programme was badly
devised, in that the uncertainty over future funding caused dif-
ficulty in the planning and management of the subprogrammes
and measures. This uncertainty contributed to the delays experi-
enced in the selection of actions for funding.

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35. Delays in the programme(cid:146)s execution, reflected in Table 4,
resulted in a lack of use of appropriations by the P & R. Signifi-
cant amounts of commitment appropriations were cancelled at
the end of 1996 and 1997, respectively ECU 14,9 million (13,5 %
of appropriations) and ECU 106,6 million (66,7 % of appropria-
tions). These cancellations represented more than 40 % of appro-

priations for the period 1995 to 1997. Similarly, at the level of
payments, ECU 34,9 million, representing more than 20 % of
appropriations, was cancelled during the same period. Notwith-
standing the low absorption rate of the programme, further
financing of ECU 100 million was made available for each of the
years 1998 and 1999.

Budgetary line B2-1 4 1 2 (cid:145)Special programme for regions in both parts of Ireland(cid:146) (cid:151) Special Support
Programme for Peace and Reconciliation

Table 4

1995

1996

1997

Total

(million ECU)

COMMITMENTS
Initial appropriations

Transfer of appropriations

in % of initial appropriations

Available appropriations

Commitments made during the financial year

in % of available appropriations
in % of initial appropriations

Cancellations of appropriations

in % of available appropriations

PAYMENTS
Initial appropriations

66,000

117,900

159,900

343,800

(cid:150) 38,615
58,5

27,385

27,385

100,0
41,5

0,000
0,0

(cid:150) 7,390
6,3

0,000
0,0

110,510

159,900

95,561
86,5
81,1

14,950
13,5

53,311
33,3
33,3

106,589
66,7

(cid:150) 46,005
13,4

297,795

176,257
59,2
51,3

121,538
40,8

40,000

69,100

93,900

203,000

Transfer of appropriations

(cid:150) 10,425

(cid:150) 14,918

Available appropriations

29,576

54,182

(cid:150) 6,133

87,767

(cid:150) 31,475

171,525

Payments on commitments of current financial
year
Payments on commitments of previous financial
years
Payments made during the financial year

in % of available appropriations
in % of initial appropriations

Cancellations of appropriations

in % of available appropriations

Source: Revenue and expenditure account and balance sheet.

13,693

31,071

19,357

64,120

n/a
13,693
46,3
34,2

15,883
53,7

10,609
41,680
76,9
60,3

12,502
23,1

61,800
81,157
92,5
86,4

6,610
7,5

72,409
136,530
79,6
67,3

34,995
20,4

36. Although the Commission(cid:146)s accounts show a 100 % utilisa-
tion of the available budgetary credits for 1995, this was achieved
through the transfer of ECU 38,6 million (58,5 % of the initial
appropriations for this year) to other CIs. In fact, over the period
1995 to 1997, more than ECU 46 million, representing some
13 % of initial appropriations, was transferred to other CIs.

37. As at 31 December 1997, the Commission had advanced
ECU 61,4 million of the ECU 148,3 million sourced from the
European Regional Development Fund for the years 1995 to 1997
period, 41,4 % of the allocated amount. At the same date, the
expenditure declared on projects amounted to only 20 % of the
amount budgeted in the financial plan for 1995 to 1997 (see
Table 5).

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Financial situation as per 31.12.1997 concerning ERDF for the Special Support Programme for Peace and
Reconciliation

Table 5

Commission decisions

1. Envisaged intially (1)

1.1. Public expenditure
1.2. ERDF

2. Modification (2)
2.1. Public expenditure
2.2. ERDF

Realised transactions

Commitments

1995

1996

1997

1998

1999

Total

(million ECU)

20,02
15,01

79,85
59,51

99,16
73,77

199,02
148,29

0,40
0,28

11,91
8,98

86,90
65,15

73,92
54,58

26,21
19,54

199,35
148,53

3. Commitments, ERDF (ECU)

3.1. Commitments, ERDF (in % of point 1.2)

15,01
100,00

52,11
87,57

7,29
9,88

Payments

4. Payments, ERDF (ECU)

4.1. Payments, ERDF (in % of point 1.2)
4.2. Payments, ERDF (in % of point 3.1)

Certified expenditure (3)

5. Certified expenditure (ECU)

5.1. Certified expenditure (in % of point 1.1)
5.2. Certified expenditure (in % of point 2.1)

(1) Decision C(95) 1789 of 28.7.1995; 1995 prices.
(2) Decision C(97) 3224 of 5.12.1997; 1996 prices.
(3) Certification of expenditure received by the Commission 12.12.1997.

7,51
50,00
50,00

19,96
33,54
38,29

33,92
45,98
465,45

0,35
1,7

12,98
16,3

26,64
26,9

74,42
50,18

61,39
41,39
82,49

39,96
20,1
20,0

38. The additional allocation of ECU 100 million for each of the
years 1998 and 1999 was conditional on the presentation of a
progress report by the Commission. This report was presented in
November 1997 as a communication to the Council, the Euro-
pean Parliament, the Economic and Social Committee and the
Committee of the Regions (21). The report shows that at the end
of 1997, ERDF commitments were expected to reach ECU 74,4
million with payments estimated to amount to ECU 61,4 million.
As a result of this slow uptake of funds, a new Commission de-
cision on 5 December 1997, spread expenditure over five years
with a significant reduction for the period 1995 to 1997. At the
Berlin Summit in March 1999 it was decided that the P & R pro-
gramme would be renewed for a further five years with an alloca-
tion of ECU 500 million for the period.

The programme(cid:146)s administrative structure

departments and agencies) had a key role in the implementation
of the programme. This innovative (cid:145)bottom-up(cid:146) approach was
deemed politically necessary for the overall success of the pro-
gramme despite the risk of management difficulties and delays in
implementation. Thus, in contrast to the IFI(cid:146)s operating proced-
ures, the P & R placed much of the management and decision-
making functions outside of central government departments and
agencies.

40. The success of this approach was most notably demonstrated
in the case of the District Partnerships in Northern Ireland, which
consist of cross-community representatives. Similarly, the setting
up of a (cid:145)consultative forum(cid:146) overseeing the implementation of the
entire programme, ensured representation from a wide range of
partners.

39. The CI contained some novel features, in that, it applied to
both Northern Ireland and the designated border counties of Ire-
land and provided a model for the widening of local participa-
tion through the promotion of cross-community and cross-
border cooperation. Consequently, decentralised implementing
bodies, such as non-governmental organisations and District Part-
nerships (in addition to the traditional channels of government

41. The implementation of the programme(cid:146)s strategy was, how-
ever, complicated by a number of factors. Firstly, compared with
other EU programmes, the scope of the P & R programme was
very wide and the number of implementing bodies very large.
Furthermore, the implementation was affected by the attempt to
address within one structure, the distinctive needs of the two
regions, whose divergence was most pronounced in the area of
cross-community reconciliation and social reconstruction.

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42. With some 70 bodies with widely differing administrative
practices involved in implementing the programme, difficulties
arose in the selection of implementing bodies. For example, it was
observed that no competitive selection procedure took place for
the selection of IFBs for the management of the global grant ele-
ment of the programme, which due to the urgency of its launch,
commenced without the corresponding contracts being in place.
Furthermore, one case was noted where the actual delivery mecha-
nism was different to that foreseen in the programme docu-
ment (22).

cies in Northern Ireland generally used a deprivation index (27) for
the allocation of funding, in the absence of any formal govern-
ment or Commission guidance. The border counties of Ireland
did not systematically apply a deprivation index for the allocation
of funds. This lack of a common definition did not give adequate
assurance that investments were being made in the areas of most
need.

It was also noted in the case of one measure examined (23),
43.
that a public company appointed under the programme delegated
its full powers to independent companies (second tier bodies),
without the approval of the Monitoring Committee or the Com-
mission. The responsibilities of these agents were defined in a let-
ter of offer and an operating manual was provided by the delegat-
ing body. However, while a tendering procedure was carried out
for the selection, two of the seven managing bodies (24) were
appointed outside of this procedure and in contravention of
Council Directive 92/50/EEC relating to the award of public ser-
vice contracts. Furthermore, the selection of one of these bodies
led to an incompatibility of function, in that the public com-
pany (25) was already a subscriber of that body.

44.
In the period up to 31 December 1997 an inconsistency of
treatment leading to inaccurate financial reporting took place in
respect of the definition of final beneficiary of grant aid. In July
1997 the Monitoring Committee of the P & R proposed to the
Commission that the situation be formalised with the recognition
of implementing bodies as final beneficiaries of grant assistance
solely for the purpose of speeding up drawdowns from the Com-
mission. This treatment was not however universally adopted by
all
implementing bodies. Moreover, as the ERDF regulations
require the reporting of actual expenditure incurred by final bene-
ficiaries for final claim purposes, considerable work will be
required in terms of detailed reconciliations at the time of the P &
R(cid:146)s closure.

Project appraisal procedures

45. The selection and appraisal procedures applied by eight (26)
of the implementing bodies examined varied considerably, as
demonstrated by the deficiencies uncovered, as detailed in the fol-
lowing paragraphs. Thus, despite the stated wishes of the delivery
agencies, a common approach to assessing projects and issuing
letters of approval was not achieved between Northern Ireland
and the border counties of Ireland.

46. With the aim of the P & R to ensure that its funding targeted
the areas most affected by the conflict, the implementing agen-

47. Project selection and appraisal procedures were deficient in
nine of the 58 projects examined. For one measure, no procedure
existed to assess the comparative merits of the applications (28),
while for the majority of projects examined, there was no rank-
ing of projects by scoring or weighting their merits (29).

48.
In the case of one implementing body (30) which managed
five of the selected projects (31), no project appraisal documenta-
tion was made available, while in one such case (32), there was no
division of costs in respect of the different phases of the project.
Furthermore, the implementing body was not in possession of a
formal project application at the date of the project(cid:146)s approval.
Moreover, project applications received prior to the body(cid:146)s formal
establishment in July 1996 were not formally appraised. As a
result the transparency of the procedures was inadequate.

Subsequent monitoring of grant-aided projects

49.
In the context of the decentralised nature of the P & R and
the importance of key financial management and monitoring sys-
tems, suitable control mechanisms were not established at all lev-
els in the initial period. For instance, it was a requirement of the
P & R that a centralised database of approved projects be made
available as essential information to the general public and as an
anti-fraud system. However, as at 31 December 1997, due to the
complexity of the implementation structure and the absence of a
proper project design and development plan, the required data-
base had not been established. Moreover, while it was the inten-
tion of the programme(cid:146)s Monitoring Committee that expenditure
claims be subject to separate audit, no such control was in evi-
dence up to 31 December 1997. Nevertheless, in the period since
the end of 1997, the required central database has been created.

50. Notwithstanding the provisions of the regulations that quan-
tified objectives must be identified, the P & R programme estab-
lished no quantified physical and impact targets or target popula-
tions for its measures. Neither was the requirement for all
implementing bodies to gather performance indicator data for
their projects uniformly carried out, with only four of the eight
implementing authorities audited having monitoring procedures
in place.

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Impact of the programme

for the programme in the promotion of its peace and reconcilia-
tion objective.

51. The impact of the programme(cid:146)s global grant approach was
curtailed by the way in which funding was allocated. For example,
the attempt to channel funding through community-based non-
governmental bodies in Northern Ireland was sometimes compli-
cated by the fact that, while European Social Fund grants were
primarily disbursed by community-based intermediaries, ERDF
grants were predominantly managed by government depart-
ments, thus obliging a single beneficiary to apply to both, for
access to such grants.

52. Deficiencies were noted in the procedures for targeting poten-
tial beneficiaries. For example, while the P & R had, as one of its
objectives, the distribution of grants to first-time beneficiaries,
this objective was not always achieved, as illustrated in one mea-
sure (33), where 92 % of the beneficiaries were estimated to be
already in receipt of EU co-financed assistance from the relevant
State agency. While this action aimed to provide seed capital to
SMEs for new businesses, the deficiencies in definition and target-
ing resulted in short-term loans being provided to existing busi-
nesses.

53. Similar weaknesses in targeting were found in the Interest
Relief Scheme (IRS), which was the largest single action funded
under the P & R, modelled on the European Investment Bank(cid:146)s
Global Grant Scheme. The broad eligibility criteria allowed large
corporations to benefit from the subsidy. Furthermore, some
investments receiving the subsidy (34) for the building of indus-
trial units were wrongly regarded as productive investments under
the eligibility criteria.

54. Due to the slow progress in implementing the programme
up to the end of 1997 and in establishing adequate monitoring
and evaluation systems, little accurate measurement of impact up
to 31 December 1997 was possible. No mechanism existed for
recording actual job creation figures and impact indicators in
many cases consisted of estimates, the accuracy of which varied,
thus heightening the risk of duplication of attributable impact
between the P & R and other EU programmes. This was con-
firmed by the mid-term evaluator, who reported in July 1997 that
at that time (cid:145)relatively little evidence of impact on the ground
(existed) arising from specific output of assisted projects(cid:146).

Publicity and information

MULTIFUNDED ACTIONS

56. Many of the actions contained within the subprogrammes of
the P & R and the programmes of the IFI, the Interreg Community
initiative and the Northern Ireland single programme (1994 to
1999) showed a high degree of similarity and a significant degree
of duplication of activities in some cases. Furthermore, due to the
limited resources available to county councils in the border region
of Ireland, it was necessary to combine several funding sources
such as LURD (Local Urban and Rural Development OP) and
Interreg to finance projects (35). The co-funding of projects under
different programmes also presented the risk of double counting
in the attribution of projects(cid:146) impact and publicity to individual
programmes.

57. One IFI project (the development of an electronic informa-
tion reservations system by the tourism boards), which was
awarded ECU 1 494 266 in 1989, also received funding from EU
sources (36). Despite total expenditure on the project in the period
1990 to 1995 of ECU 11,37 million (of which 52 % derived from
EU and IFI sources), the original project was not a success, due to
flawed systems architecture and deficiencies in management. In
1997 a majority share of 74 % of the project was sold for only
approximately 3 % of the original proportionate cost.

In the case of the P & R, although the potential for overlap
58.
of actions was recognised, priority was given to the P & R financ-
ing for a different and distinctive reason, that is, (cid:145)embedding the
peace process and promoting reconciliation(cid:146). This distinction how-
ever, failed in operational terms to prevent a duplication of activi-
ties, with the introduction of P & R funding leading to a slow-
down in the execution of other programmes, in particular Interreg.

ADDITIONALITY OF FUNDING

59.
It is a condition of the Commission(cid:146)s funding approval that
the Community(cid:146)s contribution to the IFI be used as a priority for
cross-community projects, thereby encouraging dialogue and rec-
onciliation, and that it should have a genuine additional impact
and not be used as a substitute for other public or private expen-
diture.

55. The P & R lacked a coherent plan of co-ordinated publicity
activity. In fact, the introduction of the P & R created consider-
able public confusion as to the relationship between it and other
EU programmes. Despite the establishment of a committee on
information and publicity in 1996, no significant improvements
were noted by 31 December 1997. This deficiency was all the
more significant, given the obvious benefit of a high public profile

60. However, in a small number of cases (three out of 34 projects
examined), displacement of government-funded activities took
place, resulting in a reduced specific impact for the IFI, as in the
case of the financing of two government departments in the cre-
ation of an econometrics model of the agrifood industry (37).

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61. Similarly, with the P & R, two measures, 5.2 (cid:145)New Industrial
Development Services(cid:146) and 5.3 (cid:145)Trade Development(cid:146), contained
actions indistinguishable from mainstream Structural Fund pro-
grammes. In this respect, the mid-term evaluator commented in
his report on one such project (38), (cid:145)it is not clear why it has been
transferred (to the P & R) as it was originally funded under the
Economic Development subprogramme of the Northern Ireland
single programme(cid:146).

sewerage works, were thus sourced, with only two projects hav-
ing the direct involvement of the local community. In another
case (46), concerning the replacement of street lighting in a coun-
cil housing estate, for which the council had previously unsuc-
cessfully sought government funding, the application was not
submitted until after the works were approved and started and no
formal appraisal of the project was carried out.

62.
In eight of the 58 projects (39) examined under the P & R,
funded activities were found to be mainstream economic develop-
ment activities of a type already being funded and carried out by
government departments and other EU programmes and which
could equally have been absorbed into mainstream Structural
Fund programmes.

In the case of some implementing agencies of the P & R (40),
63.
projects originated from within the agencies themselves. For
example, three projects (41) with total grants amounting to ECU
6,2 million had approval dates preceding the official commence-
ment date of the P & R. This reduced the additional benefits and
impact of peace funding, by the absence of direct community
involvement. Similarly, one project (42), which aimed to exploit
the natural fishing resources of Northern Ireland, was originally
proposed and rejected for national funding in 1989 on the basis
that it did not demonstrate value for money. However, an identi-
cal project was subsequently proposed and accepted as a joint-
funded project with the IFI and Interreg. This project only com-
menced on being awarded P & R funding, and without any
separate detailed proposal or value-for-money appraisal for the
scheme being made under the P & R(cid:146)s specific criteria.

64. A UK/Irish parliamentary committee report in 1996 on (cid:145)EU
aid for peace and reconciliation(cid:146) (43), recommended that P & R
funds should not be used for pre-existing projects nor substituted
for funding which would ordinarily be provided by governments.
However, the audit revealed instances of pre-planned projects
being assisted, as well as projects which could have proceeded
without assistance. In respect of one measure, a survey (44) car-
ried out under the mid-term review showed that a total of 53 %
of beneficiaries would have proceeded without funding, albeit at
a reduced rate or scale. In the same measure, loans approved by
the intermediary banks a considerable time prior to their applica-
tion for the interest subsidy were also approved for assistance
under the programme.

CONCLUSION AND RECOMMENDATIONS

66. The circumstances in which both the IFI and P & R
community-aid packages, designed to boost the peace process in
Northern Ireland and the border counties of Ireland, were devel-
oped and implemented were particularly difficult, given the dis-
trust between the different communities.

In such circumstances a decision was made by the Commis-
67.
sion and Member States (cid:145)to take risks for peace(cid:146). The fact that the
stability of the regions had not yet been fully established meant
that there was still a strong reluctance to make commitments to
capital investments and this fact resulted in relatively few viable
project proposals involving entirely risk-free investment oppor-
tunities. While acknowledging the constraints that this situation
placed on the advancement of the programmes, greater effort
should have been made to identify promising actions and reach
new beneficiaries, in attempting to meet more fully the specific
criteria of the actions (paragraphs 32, 52 and 53).

68. However, in a region where little opportunity for cross-
community cooperation existed, the P & R provided important
structures and incentives which encouraged cooperation. It pro-
vided opportunities for partnership and dialogue and brought
decision-making and responsibility for community development
closer to the people. In spite of the considerable difficulties encoun-
tered, the P & R gained acceptance by both communities through
the work of community-based funding bodies, thus contributing
to the overall objective of improving social and economic condi-
tions through the direct involvement of local communities (para-
graphs 32 and 41).

69. Nevertheless, these difficult circumstances, far from dispens-
ing with the need for introducing appropriate measures for the
management and control of the Community funds made avail-
able, reinforced the necessity to do so. The Court(cid:146)s audit revealed
that the control procedures should be strengthened in order to
improve the effectiveness of the funding (paragraphs 19, 20, 22,
47 and 48).

65. With regard to the county council-led task forces which were
specially established under the programme, funds were generally
applied to projects which arose out of the county council(cid:146)s con-
sultation procedure for its five-year development plan and not by
direct applications from the public, with the result that little pri-
vate funding materialised. For example, in one case (45), nine of
the 12 projects realised, concerning footpaths, sign-posting and

70. Specifically, in the case of the IFI, the Court recommends the
following:

(a) Before payments are made to the IFI, the Commission should
carry out an assessment of the IFI(cid:146)s immediate financial needs.
The Commission(cid:146)s payment procedures will need to be
amended to reflect this new requirement (paragraph 12).

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Official Journal of the European Communities

25.5.2000

(b) Delegations of authority by the board of the IFI should be
formalised and job descriptions should be compiled for all
staff in order to clarify responsibilities (paragraphs 13 and 14).

(c) The Commission should ensure through its representation at
board meetings of the IFI that the criteria for the evaluation
of project applications are appropriate, consistently applied
and adhered to (paragraphs 18 to 20).

(d) The Commission should routinely monitor the appropriate-
ness of Community expenditure incurred on IFI projects, with
a view to evaluating the merits of funded projects and pre-
senting the findings to the IFI Board, for appropriate consid-
eration (paragraph 21).

71. Specific recommendations relating to the P & R programme
are as follows:

(a) In the context of the partnership principle, the Monitoring
Committee for the P & R should give further assistance to
implementing bodies, so as to ensure the consistency of selec-
tion criteria in the selection of community projects and social
groups. Guidance and resources should also be given to ensure
that community projects and social groups maximise their
contribution to the programme(cid:146)s decision-making and imple-
mentation (paragraphs 32 and 33).

(b) The Commission should ensure that the financial needs of the
P & R are accurately assessed and that the projected activity
levels on which financial needs are based are realistically
achievable (paragraph 37).

(c) As much of the management and decision-making associated

with the programme is performed by non-governmental bod-
ies, it is essential that the Monitoring Committee reviews the
work carried out by these bodies to ensure that their involve-
ment is as fully envisaged under the programme (para-
graphs 42 and 43).

(d) Project appraisals across the P & R should be carried out
according to specific, written criteria to ensure consistency of
treatment between different projects. The results of project
appraisals should be clearly documented (paragraphs 45 to
48).

(e) Given the complexity of the P & R and the large number of
implementing bodies, the Monitoring Committee of the P &
R should ensure that appropriate control mechanisms are in
place for safeguarding Community funds. For instance, decla-
rations of expenditure from implementing bodies should be
subject to a separate audit review (paragraph 44).

(f)

In the context of multifunded actions and in conformity with
Council Regulation (EC) No 2614/97 on IFI funding, the Com-
mission services responsible for the management of Commun-
ity support measures in Northern Ireland (including the activi-
ties of the IFI) should regularly assess proposed activities in
order to ensure synergy and coordination and where neces-
sary determine which entity is best placed to administer the
activity in order to avoid unanticipated overspending and
bureaucracy (paragraphs 56 to 58 and 62 to 65).

(g) The Commission should ensure that sufficient publicity is
given to measures implemented under the P & R programme
in order to maximise their impact. The recently formed sub-
monitoring committee on publicity should result in increased
public awareness of activities undertaken under the P & R
programme; the effectiveness of any initiatives introduced by
this group should be monitored (paragraph 55).

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 23 and 24 February 2000.

For the Court of Auditors

Jan O. KARLSSON

President

25.5.2000

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Official Journal of the European Communities

C 146/15

NOTES

(1)

Irish Treaty Series No 62 (1985). (cid:145)The two Governments shall cooper-
ate to promote the economic and social development of those affected
areas of both parts of Ireland which have suffered most severely from
the consequences of the instability of recent years(cid:146).

(2) Special Support Programme for Peace and Reconciliation in Northern
Ireland and the border counties of Ireland (1995 to 1999) (para-
graph 3.16).

(3) Letter of 21 February 1989, SG(89) D/2399 from the European Com-

mission President.

(4) Case-C-106/96 UK v Commission.
(5) Council Regulation (EC) No 2614/97 of 15 December 1997.
(6) See Annex 4, projects Nos: 2 (cid:151) Lough Foyle; 4 (cid:151) Carolls Warehouse;
5 (cid:151) Jones Brothers; 8 (cid:151) Lifford Castle; 14 (cid:151) Seeconnell; 15 (cid:151) Turf
Lodge; 17 (cid:151) CMAR; 31 (cid:151) Navan at Armagh.

(7) See Annex 4, point 5 (cid:151) Jones Brothers.
(8) See Annex 4, point 14 (cid:151) Seeconnell.
(9) See Annex 4, point 8 (cid:151) Lifford Castle.
(10) See Annex 4, point 15 (cid:151) Turf Lodge.
(11) See Annex 4, project Nos: 11 (cid:151) Rathlin Island; 14 (cid:151) Seeconnel; 31

(cid:151) Navan.

(12) See Annex 4, point 31 (cid:151) Navan.
(13) See Annex 4, projects Nos: 8 (cid:151) Lifford Castle; 9 (cid:151) Gulliver; 11 (cid:151)
Rathlin; 14 (cid:151) Seeconnell; 24 (cid:151) Mount Errigal; 31 (cid:151) Navan.

(14) See Annex 4, point 14 (cid:151) Seeconnell.
(15) See Annex 4, point 11 (cid:151) Rathlin.
(16) (cid:145)The International Fund for Ireland, an evaluation report(cid:146), COM(97)

130 of 25 March 1997.

(17) NIERC (Northern Ireland Industrial Economic Research Centre).
(18) See Annex 4, point 17 (cid:151) CMAR.
(19) See Annex 4 point 16 (cid:151) Portavogie.
(20) (cid:145)The International Fund has operated as a major and distinctive force
in supporting contact, dialogue and reconciliation between the com-
munities in Northern Ireland and between Northern Ireland and the
South and in the creation of employment in Fund supported projects(cid:146).

(21) COM(97) 642 final, of 26 November 1997.
(22) The Industrial Development Board (IDB)

(23) Subprogramme 5, measure 1, Seed capital (Revolving loan scheme).
(24) Local Enterprise Agencies (LEAs).
(25) LEDU (Local Economic Development Unit), Northern Ireland.
(26) Department of Environment, Northern Ireland; Department of Agri-
culture, Northern Ireland; ADM/Combat Poverty Agency; Task Force
1 Monaghan; Task Force 2 Navan; DED Northern Ireland (managing
agents); Emerging Business Trust; Cooperation North, Northern
Ireland/Ireland.

(27) Robson deprivation index, based on a Manchester University study.
(28) Measure 2(B)2: Economic and rural development (cid:151) Farm and coun-

tryside enhancement scheme (FACES).

(29) Emerging Business Trust (Measure 2(B)2: Economic and rural devel-

opment).

(30) Monaghan County Council-led task force.
(31) See Annex 5, project Nos: 10 (cid:151) Mullaghmatt; 11 (cid:151) Killyroan.
(32) Clones Diamond (cid:151) Phase II, Monaghan, also Killyroan housing estate.
(33) Seed Capital Fund.
(34) See Annex 5, point 18 (cid:151) Combra Ltd, 19 Kelly Bros.
(35) See Annex 5, point 13 (cid:151) Clones Diamond.
(36) STAR, Impact, Telematique and Interreg.
(37) See Annex 4, point 32.
(38) Mid-term Evaluation Report, July 1997, page B 114 (cid:145)Competitive

Analysis Model(cid:146).

(39) See Annex 5, project Nos: 8 (cid:151) Belturbet pedestrian links; 9 (cid:151) Balli-
nagh sewerage; 10 (cid:151) Mullaghmatt; 11 (cid:151) Killyroan; 12 (cid:151) O(cid:146)Neill(cid:146)s
pack; 34 (cid:151) Advance factory; 35 (cid:151) Advance factory; 53 (cid:151) Salmon
enhancement.

(40) Rivers Agency and the Department of Agriculture, Northern Ireland.
(41) See Annex 5, points 56 (cid:151) Forest service, 57 (cid:151) Equiova breeding, 58

(cid:151) Food business units.
(42) See Annex 5, point 53.
(43) EU Aid for Peace and Reconciliation, July 1996, Committee of the

British/Irish Parliamentary Body.

(44) Mid-term Evaluation Report.
(45) Cavan County Council-led task force.
(46) See Annex 5, point 10 (cid:151) Mullaghmatt.

C 146/16

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Official Journal of the European Communities

25.5.2000

MANAGEMENT STRUCTURE AND PROGRAMMES OF THE INTERNATIONAL FUND FOR IRELAND

ANNEX 1

BOARD MEMBERS (7)

OBSERVERS(cid:13)
European Union(cid:13)
USA(cid:13)
Australia

Advisory(cid:13)
Committee

Secretariat(cid:13)
of the Fund

Development(cid:13)
consultants

The Fund’s programmes

Disadvantaged(cid:13)
areas

Communities(cid:13)
initiative

Tourism

Wider(cid:13)
horizons

Urban(cid:13)
development

Flagship projects

Business enterprise

25.5.2000

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Official Journal of the European Communities

C 146/17

ANNEX 2A

SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION

Allocation of funding between subprogrammes

Productive investment(cid:13)
15 %

Partnership(cid:13)
15 %

Social inclusion(cid:13)
22 %

Technical assistance(cid:13)
2 %

Employment(cid:13)
14 %

Cross-border development(cid:13)
15 %

Urban and rural regeneration(cid:13)
17 %

ANNEX 2B

SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION

Allocation of funding between Structural Funds

European Regional Development Fund(cid:13)
49 %

European Social Fund(cid:13)
43 %

Financial Instrument(cid:13)
for Fisheries Guidance(cid:13)
1 %

European Agricultural Guidance(cid:13)
Guarantee Fund(cid:13)
7 %

C 146/18

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Official Journal of the European Communities

25.5.2000

STRUCTURE OF THE PEACE AND RECONCILIATION PROGRAMME (ERDF RELATED ONLY)

ANNEX 3

Strategic objectives

To promote social inclusion 

To boost economic growth and stimulate economic and social inclusion

Subprogrammes and(cid:13)
Measures(cid:13)

Subprogrammes and(cid:13)
Measures(cid:13)

EMPLOYMENT

SOCIAL(cid:13)
INCLUSION

CROSS-BORDER(cid:13)
DEVELOPMENT

URBAN(cid:13)
REGENERATION

RURAL(cid:13)
REGENERATION

PRODUCTIVE(cid:13)
INVESTMENT

PARTNERSHIP

Boosting growth

Grass-root capabilities(cid:13)
Inclusion of women

Business and cultural(cid:13)
links

Belfast and(cid:13)
 Londonderry

Community-(cid:13)
based actions

Investment(cid:13)
promotion

ERDF- actions

Actions for jobs

Prevent exclusion

Infrastructure

regionwide

Rural(cid:13)
economic(cid:13)
development

New industrial(cid:13)
development services

ESF- actions

Accessibility of training

Inclusion(cid:13)
of children

Cooperation between(cid:13)
public bodies

Water-based(cid:13)
tourism

Trade(cid:13)
development

EAGGF- actions

Infrastructure(cid:13)
and equipment

Vulnerable groups

Cross-border(cid:13)
reconciliation

Pathways to(cid:13)
reconciliation

Infrastructure(cid:13)
and equipment

(cid:13)
(cid:13)
 
(cid:13)
(cid:13)
 
AUDIT SAMPLE OF PROJECTS OF THE INTERNATIONAL FUND FOR IRELAND

ANNEX 4

Project Name

Programme

Project description

1

Inishowen Rural Regeneration Partnership

Rural development

Lough Foyle Camp Park
Carlingford Lough Aquaculture Association
Carroll(cid:146)s warehouse, Dundalk
Jones Brothers Irish Equestrian Centre

2
3
4
5
6 Multimedia Interactive systems (Information Technology Centre)

7

Communities in Action

Camp Park, Quigley(cid:146)s Point
Science and Technology
Urban Development programme
Tourism programme
Technology-based economic development in
the border regions
Communities in Action

Lifford Castle (McGrehagham and Barrett)

8
9 Gulliver Reservations
10 Multi Wire Gamma Camera Project
11
12

Rathlin Island Trust
Jobspace (NI) Ltd, Saul Road

13 Department of Informatics

14
15

Seeconnell Initiative Ltd
Turf Lodge Enterprises Ltd

Portavogie District Community Development Association
CMAR (Irish Aquaculture Centre of Excellence)

Knockloughrim Windmill
Community Information Technology Unit Belfast

Frankfurt bookfair

16
17
18 Marine Institute Dublin
19
20
21 Human Resource Development
22
23 Mentor Counselling scheme
24 Mount Errigal Hotel
25 Ulster Farmers Union
26
Tyrone Guthrie Centre
27 Acumen
28
29
30
31 Navan at Armagh
32 Agrifood Model
33
34

Cooperation North
Farset Enterprise Park
Springvale University Campus

Irish Genealogical Centre
Season Extension Pilot Programme

Total

Special projects
Tourism programme
Science and technology
Tourism
Business enterprise

Technology-based economic development in
the border regions
Rural development
Special projects

Fishing Villages initiative
Technological cooperation
Technology innovation centres
Tourism
Special projects
Product development
Marketing
Business enterprise
Tourism programme
Agricultural programme
Tourism programme
Business enterprise
Community relations
Business enterprise
Flagship
Flagship
Technological cooperation
Tourism programme
Tourism programme

An initiative to support community economic development in disadvantaged rural areas in
Northern Ireland and the southern border counties
Provision of an activity centre
Shellfish environment and resource survey
Conversion of Caroll(cid:146)s warehouse into cultural centre and museum
Development of centre for the non-thoroughbred horse industry
Development of multimedia interactive systems

A programme to fight social exclusion of young people and to develop the social and
personal role of women.
Conversion of industrial buildings into Language School and leisure amenity
Reservations system
Research programme in anticipation of commercial development
Visitor amenities
Support scheme for business organisations which administer revolving funds providing
loans for small businesses
Establishment of an interactive systems centre to assist commercial exploitation of technol-
ogy in Derry/north west area
Rural regeneration project
Provision of workspace units to provide employment opportunities for the long-term
unemployed
An initiative to support the economic development on the fishing industry
Establishment of an Irish Mariculture Centre of Excellence at Portaferry
Feasibility study on marine technology and engineering
Restoration of windmill and development of a visitor amenity
Development of an area-based consultancy for IT services
Joint training for tourist information staff
Exhibition costs

Conference and leisure

Visiting artists(cid:146) centre
Cavan Enterprise Board
Schools links programme
Business development officer

Visitors centre
Economic model
Genealogical project
Tourism promotion

.

.

2
5
5
2
0
0
0

IFI Financing
ECU

1 063 101
292 221
154 705
462 793
145 449

132 227

255 197
416 514
2 115 624
298 121
277 978

149 427

1 631 514
915 985

522 993
1 067 205
1 000 172
37 357
134 484
112 070
268 968
149 427
324 256
269 117
298 853
186 783
1 246 726
518 510
74 713
7 471 329
1 068 400
448 278
2 248 689
(cid:151)

25 759 186

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
1
4
6
/
1
9

C 146/20

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Official Journal of the European Communities

25.5.2000

AUDIT SAMPLE OF PROJECTS OF THE PEACE AND RECONCILIATION PROGRAMME

ANNEX 5

Programme

Project

1 Urban and rural regeneration, 2C:2 (cid:151) Community-led development
2 Urban and rural regeneration, 2C:2 (cid:151) Community-led development
3 Urban and rural regeneration, 2C:2 (cid:151) Community-led development
4 Urban and rural regeneration, 2C:2 (cid:151) Community-led development
5 Urban and rural regeneration, 2C:2 (cid:151) Community-led development
6 Urban and rural regeneration, 2C:2 (cid:151) Community-led development
7 Urban and village renewal and tourism, 2C1:A
8 Urban and village renewal and tourism, 2C1:A
9 Urban and village renewal and tourism, 2C1:A
10 Urban and village renewal and tourism, 2C1:A
11 Urban and village renewal and tourism, 2C1:A
12 Urban and village renewal and tourism, 2C1:A
13 Urban and village renewal and tourism, 2C1:A
14 Urban and village renewal and tourism, 2C1:A
Productive investment, 5.1 (cid:151) Interest relief scheme
15
Productive investment, 5.1 (cid:151) Interest relief scheme
16
Productive investment, 5.1 (cid:151) Interest relief scheme
17
Productive investment, 5.1 (cid:151) Interest relief scheme
18
Productive investment, 5.1 (cid:151) Interest relief scheme
19
Productive investment, 5.1 (cid:151) Interest relief scheme
20
Productive investment, 5.1 (cid:151) Interest relief scheme
21
Productive investment, 5.1 (cid:151) Interest relief scheme
22
Productive investment, 5.1 (cid:151) Interest relief scheme
23
Productive investment, 5.1 (cid:151) Interest relief scheme
24
Productive investment, 5.1 (cid:151) Interest relief scheme
25
Productive investment, 5.1 (cid:151) Interest relief scheme
26
Productive investment, 5.1 (cid:151) Interest relief scheme
27
Productive investment, 5.1 (cid:151) Interest relief scheme
28
Productive investment, 5.1 (cid:151) Seed capital
29
Productive investment, 5.1 (cid:151) Seed capital
30
Productive investment, 5.1 (cid:151) Seed capital
31
Productive investment, 5.1 (cid:151) Seed capital
32
33
Productive investment, 5.1 (cid:151) Seed capital
34 New industrial development services, 5.2
35 New industrial development services, 5.2
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55 Urban regeneration, 2A.2 - Regionwide
56
57
58

Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Cross-border development, 3.1 (cid:151) Business and cultural linkages
Rural regeneration, 2b:2
Rural regeneration, 2b:2
Rural regeneration, 2b:2
Rural regeneration, 2b:2
Rural regeneration, 2b:2
Rural regeneration, 2b:2

Rural regeneration, 2b:2
Rural regeneration, 2b:2
Rural regeneration, 2b:2

Total

Community centre
Development society
Community development company
Community training and audit
Genealogy centre
Community centre
Conversion of a gate lodge
Pedestrian links
Sewerage scheme improvements
Public lighting improvements
Public playground
Public playground
Paving of town centre
Graveyard restoration
Foods company
Electronics company
Youth hostel
Property rental operators
Building construction company
Hotel
Fish processor
Self-catering operators
Food company
Plastics manufacturer
Textiles manufacturer
Computer components manufacturer
Food company
Hotel
Publishing company
Food company
Food company
Giftware manufacturer
Transport company
Advance factory
Advance factory
Farming support
Angling marketing
Farming support
Tourism company
Meat(cid:151)processing company
Arts feasibility study
Tourism feasibility study
Marketing company
Historic buildings survey
Electronics company
Business forum
Tourism feasibility study
Peace organisation
Waterways feasibility study
Lifeboat
Waterways feasibility study
Waterways feasibility study
Angling development initiative
Waterways feasibility study
Community regeneration
Forestry
Fish breeding
Food company development

(ECU)

P & R financing

92 558
10 882
66 113
11 207
76 691
19 834
37 685
54 543
54 543
49 585
49 585
52 891
105 782
14 875
74 713
177 818
40 345
242 070
388 507
10 460
17 931
5 977
64 253
288 393
448 280
400 463
58 276
50 805
8 966
22 414
14 943
29 885
29 885
896 559
896 559
198 146
114 816
1 494 266
11 207
308 570
6 280
6 038
11 879
73 010
138 593
220 752
5 230
89 656
44 828
59 771
280 175
50 431
3 959 804
36 423
(cid:151)
1 570 000
1 510 000
3 140 000

18 194 151

25.5.2000

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C 146/21

THE COMMISSION(cid:146)S REPLIES

SUMMARY

the Court(cid:146)s remarks and refers to its detailed response under the
relevant points in the report.

In respect of the IFI, the Commission refers to its detailed response
to these remarks made under points 14, 19 and 20.

Funding arrangements and regulatory framework

As regards the findings on the P & R programme (1995 to 1999),
which are drawn from an audit the Court carried out as early as
1997, the Commission notes that, in many cases, action has been
taken in the meantime by the Monitoring Committee and by the
implementing bodies to rectify such early difficulties.

With the privilege of hindsight, the Commission now believes
that this very ambitious and innovative Community initiative (cid:151)
both in terms of objectives (peace and reconciliation) as well as
delivery mechanisms (a truly (cid:145)bottom-up(cid:146) approach) (cid:151) has proved
to be successfully implemented.

11 and 12. The Commission does not consider that the bank
balances held by the Fund represents (cid:145)unused monies(cid:146) as the mon-
ies are already committed to programmes. The IFI(cid:146)s accounts in
fact show that for 1995, 1996 and 1997 contractual commit-
ments to projects exceeded balances held. This arises because the
Fund phases the release of its assistance to projects as they progress,
and in sequence with the provision of matching funding. Conse-
quently, the Fund has to be sure of donor contributions well in
advance of final disbursement to projects. However, the Commis-
sion will examine the matter and explore the scope for making
payments to the Fund in more than the current two annual instal-
ments.

The political and financial support of the European Union through
IFI and the P & R programme has thus helped to underpin the
peace and reconciliation process in the region, thereby contribut-
ing to the progress at political level.

Administrative procedures

THE COURT(cid:146)S AUDIT

13 and 14. The Commission accepts the Court(cid:146)s comments on
the need to review the IFI(cid:146)s present arrangements concerning
staffing and delegation of powers and has raised the matter with
the board of the Fund.

3. Concerning the P & R programme, the actual implementation
of projects mainly began in 1996 and thus a longer period would
be necessary for drawing definite conclusions on the overall effi-
ciency and effectiveness of the programme. As the reply of the
Commission shows, most of the areas for improvement identified
in the report were addressed in the course of the following years.

THE INTERNATIONAL FUND FOR IRELAND

Summary of the main findings in respect of the IFI

Project appraisal procedures

19 and 20. The Commission has asked the Fund to re-examine
its procedures for appraising projects in the light of the com-
ments made by the Court. The Commission understands that
with regard to the cases cited by the Court, assistance was pro-
vided by the Fund on the basis of preliminary assessments of the
projects and in accordance with the Fund(cid:146)s principle of (cid:145)first
money on the table(cid:146), so as to help attract other funding sources
to projects.

6. The Commission wishes to emphasise the unique role and sta-
tus of the Fund and its operational arrangements. The Fund is an
independent legal entity and operates according to funding rules
that are different from any EU initiative such as the P & R pro-
gramme, which is administered by the Commission and the two
Governments. The Commission is concerned that the examina-
tion of both vehicles in the same report should be treated with
care in order to avoid misunderstandings. The Commission notes

Monitoring and evaluation of projects

21. Similar findings on weaknesses in monitoring and evalua-
tion were described in the audit report of DG-Audit following the
check of October 1998; subsequently the IFI proposed to take a
number of measures to rectify this situation.

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Official Journal of the European Communities

25.5.2000

Impact of the IFI

(For specific comments, see relevant paragraphs)

23. This point should be considered against the background that
the IFI is a first funder in many areas precisely because the politi-
cal and social circumstances are such as to make access to other
public funding very difficult without the sort of pump-priming
possibilities offered by the Fund.

24. The estimate of 7 000 jobs created can indeed be taken as a
measure of performance in strictly economic terms. It does not,
however, reflect the total number of jobs arising from projects
supported by the IFI for which it claims a leverage function. The
study carried out by KPMG in 1995 would seem to support this
approach.

26. The reference to the predominance of government organisa-
tions and professional bodies as beneficiaries of cross-border
projects should be seen in the context of the sociopolitical situa-
tion, particularly in the earlier part of the reference period of this
report.

27. The Commission has received assurance from the Fund that
this matter is receiving its particular attention.

Monitoring by the Commission

28. A detailed financial audit on the management and control
system of the IFI and implementation by project managers was
carried out by its services in October 1998 in conjunction with
an on-the-spot exercise to monitor projects. The audit report con-
firmed that the maximum grant rates had been complied with in
cases where projects had been co-funded by Structural Funds. A
similar on-the-spot audit is under consideration for 2000.

Regulatory framework and funding arrangements

32. Given the (cid:145)bottom-up(cid:146) approach followed by the P & R pro-
gramme, the nature and specificity of opportunities arising from
the cessation of violence was left to the evaluation of the imple-
menting bodies themselves and not a priori defined in detail by
the programme itself. Implementing bodies thus were required to
use appropriate methods of targeting social groups and projects
in line with the broad objectives set out by the Programme docu-
ment. One obvious example is the case of District partnerships,
which received allocations from the Department of Environment
on the basis of a ranking determined by the Robson index of dep-
rivation combined with regional statistics (population, violence,
etc) (1).

33. The efforts by all implementing bodies involved in the P &
R programme have proved to be quite efficient, as the analysis of
community uptake in Northern Ireland made by T. Haase (2)
shows: the programme has achieved an impressive coverage
throughout Northern Ireland with over 80 % of electoral districts
generating applications; the distribution of both project applica-
tions and funding followed the distribution of the population,
being particularly concentrated in urban areas. In the border
counties, the final evaluation of the programme is expected to
confirm that they have also successfully done so.

Financial and budgetary execution

THE SPECIAL SUPPORT PROGRAMME FOR PEACE AND
RECONCILIATION

Summary of the main findings in respect of the P & R

29. As regards the Court(cid:146)s findings drawn from the inquiry it
carried out as early as 1997, the Commission notes that, in many
cases, action has been taken in the meantime by the Monitoring
Committee and by the implementing bodies to rectify such defi-
ciencies.

34. The financial plan foreseen by the Member States and pro-
posed by the Commission in 1995 reflected the decision of the
European Council to allocate ECU 100 million per year for the
period 1995 to 1997. The Commission agrees that the allocation
of funding for a shorter period of time than the foreseen pro-
gramme duration may have caused difficulty in the planning in
some projects. However, it was not entirely negative, as it helped
to create a sense of urgency and a momentum in all who partici-
pated in the implementation of the programme. Furthermore,
given the potentially unstable political context in the region as
well as the special nature and scope of the P & R programme, the
Commission(cid:146)s proposal (3) for a review of progress after three
years as a condition for further financing was fully justified.

With the privilege of hindsight, the Commission believes that this
unique Community initiative (cid:151) both in terms of objectives (peace
and reconciliation) as well as delivery mechanisms (a truly (cid:145)bot-
tomup(cid:146) approach) (cid:151) has proved to be an overall success.

(1) See also the reply to paragraph 46.
(2) T. Haase and J. Pratschke: (cid:145)EU Special Support Programme for Peace
and Reconciliation: Analysis of Community Uptake(cid:146), NISRA, 1999.
(3) Communication from the Commission to the Council and the Euro-

pean Parliament of 7 December 1994, COM(1994) 607.

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35 to 37. The process of selecting and contracting intermediary
funding bodies and of establishing district partnerships and the
Northern Ireland Partnership Board necessarily took time and fur-
ther time was required by these implementing bodies to become
fully operational. Furthermore, the P & R programme attracted a
high number of applications (cid:151) over 22 000 in the period up to
31 December 1997 (cid:151) to be examined by the implementing bod-
ies. Under such circumstances, the amounts of commitments and
payments, as well as expenditure on projects at the end of 1997
were significantly lower than expected when the programme was
adopted in mid-1995.

The transfers and cancellations of appropriations that took place
in 1996 and 1997 were budgetary exercises with the view to real-
locating to other Community initiatives the amounts that had not
been spent on the P & R programme line. This is normal practice
in EU budget management.

38.
In its 1997 progress report, the Commission considered that
further funding was required to meet existing and future demand
and recommended that the budgetary authority approve addi-
tional EU funding of ECU 100 million for 1998 and later a similar
amount for 1999. The validity of this choice is confirmed by the
fact that the programme(cid:146)s resources were fully committed at the
end of 1999, benefiting some 12 600 projects.

Taking into account the slow uptake of funds for the reasons pre-
sented in point 35, the Commission decision on 5 December
1997 was a necessary correction, which aligned financial plan-
ning and the execution of the programme.

The Commission welcomes the decision of the conclusion of the
Berlin European Council, in March 1999, which set the amount
to be allocated to the PEACE II programme for the entirety of the
new period (2000 to 2004).

With regard to the selection of intermediary funding bodies (IFBs),
while no competitive selection procedure took place, the Com-
mission engaged consultants to evaluate potential candidates. In
addition, much discussion with the national authorities and with
others, such as the community and voluntary sector, preceded the
final selection of IFBs and also the establishment of the Northern
Ireland Partnership Board and the district partnerships.

While the IDB was foreseen to be delivery mechanism in the Pro-
gramme Document (subprogramme 5, measure 2 (cid:145)New industrial
development services(cid:146)), the measure was in the end administered
by its parent department, the Department of Economic Develop-
ment.

43. With a view to ensuring widespread take-up of the Seed
Capital Fund under subprogramme 5, measure 7, LEDU engaged
a number of agents located in various parts of Northern Ireland.
An audit by the Department of Economic Development(cid:146)s Internal
Audit Service concluded that LEDU(cid:146)s monitoring arrangements
were adequate to fulfil their responsibility for the management of
the Fund and that the agents(cid:146) arrangements for delivery of the
funding were satisfactory. Information on the names and the
activities of the delivery agents was provided in progress reports
to the Monitoring Committee.

44. Advance payments are claimed by Member States on the
basis of expenditure reported by final beneficiaries. To remove
any doubt, the final beneficiaries were definitively identified (1) in
the Commission(cid:146)s decision of 10 July 1998 which followed the
mid-term review of the programme (2). All implementing bodies
are now reporting expenditures on the same basis.

The programme(cid:146)s administrative structure

Project appraisal procedures

41. Although the scope of the programme is indeed wide and
the number of implementing bodies is high, one must bear in
mind that the P & R programme is as much about content as about
process: from the outset, the programme(cid:146)s administrative structure
was therefore designed in order to establish as close contact as
possible with grass roots needs within a truly (cid:145)bottom-up(cid:146)
approach.

42. Although administrative practices may have varied greatly
due to the decentralised nature of the delivery mechanisms, the
Monitoring Committee confirmed the validity of the objectives,
priorities, and implementing mechanisms. It also provided com-
mon guidelines to all implementing bodies.

45.
In such a wide-ranging programme, a variety of approaches
to project selection is to be expected. An attempt to achieve com-
plete standardisation would have lengthened significantly the
period required to launch the programme. This does not excuse
the absence of adequate appraisal procedures in certain cases and
the Court(cid:146)s comments on this point are noted.

(1)

In accordance with Commission Decision 97/324/EC of 23 April
1997 modifying the decisions approving the Community support
frameworks, the single programming documents and the Community
initiative programmes in respect of Ireland: datasheet No 1.

(2) Commission Decision of 10 July 1998, C(1998) 1632.

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46. With regard to targeting in Northern Ireland, the designa-
tion of eligible areas by government departments used the Rob-
son deprivation index, sometimes complemented by other indica-
tors if the assistance had a special focus (health, environment,
employment, etc.). In the border counties, some IFBs applied a
deprivation index in the allocation of assistance. An updated ver-
sion of the Gamma studies deprivation index was generally used
as criteria for assessing the merits of individual projects.

47 and 48. The Commission notes the findings. It will ensure
that specific and written criteria for project selection and appraisal
procedures by the implementing bodies, particularly as regards
methods for assessing the comparative merits of applications and
the ranking of projects by scoring or weighting their merits, will
be provided in the future P & R programme (2000 to 2004).

Subsequent monitoring of grant-aided projects

49. Until the end of 1997, pending the establishment of a central
database, IFBs created their own database to control the applica-
tions submitted to them.

In the period since the end of 1997, central databases required by
the programme have been created, which contain data on project
applications and approvals as well as the information provided by
project promoters in accordance with the optimum monitoring
questionnaire (OMQ). These data have been used in the prepara-
tion of progress reports for the Monitoring Committee and have
also been used in analyses made by the external evaluator.

50. No quantified physical and impact targets were set in the
programme document to reflect the non-prescriptive nature of
the programme at that stage. In the course of its execution, a
comprehensive set of monitoring indicators has been developed
and is now in use to report progress to the Monitoring Commit-
tee, drawing on the data provided by the use of the OMQ. With a
view to the ex post evaluation of the programme, a strategic evalu-
ation model has been drawn up by the external evaluator and
other work is in progress to prepare the final evaluation.

Impact of the programme

52 and 53. On the issue of targeting as regards the overall objec-
tives of the P & R programme, see the reply to paragraph 46.

The Commission notes the findings and will examine this further.

54. From 1998 onwards, an adequate monitoring and evalua-
tion system was set up in the form of a comprehensive database,
with regular input through the OMQs, recording job creation fig-
ures and impact indicators (see also the replies to paragraphs 49
and 50).

Publicity and information

In the early years of the P & R programme, little informa-
55.
tion and publicity activity at programme level occurred as the
main requirement was to inform potential applicants about the
subprogrammes and measures. Information dissemination was
however undertaken by implementing bodies for this purpose,
with a certain success since the Programme generated a very high
level of applications (some 29 000 applications), which is a meas-
ure of people(cid:146)s awareness of it and of its relevance to their needs.

Increased attention is now given to information and publicity at
programme level, with the assistance of experienced consultants
specialised in media communication, regularly reporting to the
monitoring committee (1).

MULTIFUNDED ACTIONS

56. Compared with other EU programmes, the P & R pro-
gramme(cid:146)s objectives were substantially different both in terms of
overall aims and in the targeting of assistance. As compared to the
IFI programmes, the P & R programme was also different with its
(cid:145)bottom-up(cid:146) approach to delivery of the programme and the man-
agement of a major part of the funds by non-governmental
implementing bodies.

51. Separate measures administered by separate implementing
bodies is a common feature of Structural Funds programmes. In
some cases, this may indeed imply that potential beneficiaries
must apply to different bodies in order to finance a multifold
project. However, subprogramme leaders (government depart-
ments) have played a role in ensuring the implementation of meas-
ures was carried out in a complementary manner.

The risk of double-counting in the attribution of projects(cid:146) impact
and publicity to individual programmes is also a matter of con-
cern for the Commission.

(1) Some 400 press articles and over 50 appearances on television and
radio for the period of the programme were reported to the Monitor-
ing Committee on 2 December 1999.

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57. The Commission has taken note of the Court(cid:146)s observations
on this project which states that 52 % of the expenditure on the
Gulliver project was derived from EU and IFI sources. It would
point out however that only half the IFI funding has an EU origin.
The Gulliver project was highly innovative and thus inevitably
contained a risk factor.

CONCLUSION AND RECOMMENDATIONS

58. See the reply to paragraphs 61 and 62.

ADDITIONALITY OF FUNDING

60. The Commission agrees that displacement of government-
funded activities as a result of IFI funding is exceptional: only one
such case is identified in the report, which is also a case which
was clearly signalled to the IFI board by the Commission observer
at the time and recorded as such in the board minutes.

61 and 62. Overlaps for certain actions were foreseen and will-
ingly accepted from the outset: it is normal that some projects
may be both eligible under government or EU programmes as
well as fulfilling the requirement for a more stable and peaceful
society under the P & R programme. It is expected that such
projects financed under the P & R programme have a stake in
peace and reconciliation, and are thus better targeted.

63.
In the Commission(cid:146)s view, projects which comply with P &
R programme criteria should not be excluded because they ema-
nated from government departments or agencies but it is agreed
that they should be evaluated on the same basis as other projects.

66 to 69. The Commission appreciates the Court(cid:146)s recognition
of the difficult circumstances in which the P & R programme was
initiated and of its value in providing important and innovative
structures and incentives, which encouraged cooperation and the
involvement of local communities.

70.(a) The Commission will examine the matter and explore the
scope for making payments to the Fund in more than the current
two instalments.

70.(d) As regards the Court(cid:146)s recommendation, the Commission
fully agrees. It would point out that a detailed monitoring exercise
of projects was carried out by its services in 1998 and 1999. The
report on this exercise also covers arrangements in place designed
to prevent any overlap between IFI funding and Structural Funds
operations. A similar on-the-spot evaluation will be carried out in
the second half of 2000.

71. The Commission welcomes the specific recommendations
concerning the P & R programme. It notes that action has already
been taken by the P & R Monitoring Committee and implement-
ing bodies on several matters to which the Court refers. However,
the Commission intends and will ensure that all the Court(cid:146)s re-
commendations will receive careful attention in the preparation
and approval of the successor programme PEACE II for the period
2000 to 2004. In particular:

64. The Commission shares the Court(cid:146)s view that programme
funding should not be substituted for normal government or local
authority expenditure.

(a) An examination of experience in the implementation of the
programme (including matters such as project selection and
targeting) will be made by the external evaluator and his report
(early 2000) will feed into the design of PEACE II.

As to whether projects that could proceed without support should
be assisted ((cid:145)dead-weight effect(cid:146)), the Commission recalls that, with
a view to consolidating progress towards a peaceful and stable
society, an accelerated rate of growth or a wider scale of develop-
ment might be particularly desirable. Furthermore, one of the
positive effects of the P & R programme being its delivery mecha-
nisms, such projects may also generate benefits from the pro-
cesses involved in preparing and implementing them.

(b) The Commission agrees with this recommendation. Given the
experience of the P & R programme, it expects the spending
pace of PEACE II will be more in line with other Structural
Funds operational programmes.

(c) The Commission agrees with this recommendation which is

applicable to all implementing bodies.

65. The Commission notes the findings and will be attentive to
this matter when the new PEACE II programme is drawn up.

(d) The Commission agrees with the fact that project appraisals
across the programme should be carried out on the basis of
specific written criteria and be clearly documented.

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(e) The Commission agrees with the recommendation of the first
sentence and recalls the setting up of the programme(cid:146)s central
databases after 1997.

(g) The Commission agrees with this recommendation. It will
pay close attention to the publicity provisions introduced in
the forthcoming PEACE II programme.

(f) The Commission will take action in order to reinforce the
coordination between its departments on the Community(cid:146)s
involvement in the International Fund for Ireland and the
PEACE II programme. Synergy between their respective pro-
grammes will also be sought in their definition.

Despite early difficulties in setting up this very ambitious and
innovative Community initiative, the Commission believes that
the P & R programme (1995 to 1999) has been successfully
implemented. The political and financial support of the European
Union has helped to underpin the peace and reconciliation pro-
cess in the region, thereby contributing to the progress at politi-
cal level.