Now that Brussels is disbursing the first tens of billions from the covid Recovery and Resilience Facility, it appears that the Member States have made it virtually impossible to check how the money is spent and who benefits from it. Despite the risks of fraud and corruption with EU funds being above average, several countries are doing their utmost to avoid public scrutiny.
For a moment, it seemed as if the big boss of the covid Recovery and Resilience Facility (RRF) did not understand the question. Last February, Céline Gauer, a top European Commission official, looked at two journalists in despair as they persistently questioned her about transparency regarding the hundreds of billions that Brussels is to distribute amongst the Member States. These billions are intended to help Europe get back on its feet after the devastating Covid-19 pandemic, but it must be done in keeping with the European Union’s green and digital ambitions.
‘It’s not in the legal basis of the RRF to publish the beneficiaries,’ Gauer finally said when asked whether it wouldn’t be better if the Member States published who was benefiting from the enormous subsidy pie. ‘So we may want it, or not want it, it’s just not there.’
This top official sees to it that the 723 billion euros of the covid recovery fund end up in the right places
It is a remarkably nonchalant attitude considering that Gauer sees to it that the 723 billion euros of the covid recovery fund end up in the right places. In the past, it has regularly emerged that EU funds have been tampered with, even by European governments.
The Hungarian Prime Minister, Viktor Orbán, takes first place. He had a football stadium built in his native village with taxpayers’ money and used EU funds for the useless railway line to the stadium. He also managed to steer lucrative EU projects so that his business friends could enrich themselves, in exchange for which they bought up media that now praise Orbán’s rule 24/7.
Research shows that the risks of fraud and corruption with EU funds are above average, compared to subsidies from national budgets. The Hungarian researcher Mihaly Fazekas obtained his doctorate by researching this problem. For years, he observed how valuable billions were being squandered in his country.
Fazekas identified three notions that contribute to Brussels’ money being wasted relatively ‘easily’: the size of the European funds, the feeling that it is ‘free’ money, and the broad definition of the type of projects for which the grants are intended. ‘Of course, the idea for the RRF is that we match those risks with extra controls,’ he said to Follow the Money. ‘But in the RRF, that is not arranged for. There are no extra requirements on project level for spending the RRF money.’
This call for openness coincided with fierce debates about Member States that play tricks with the rule of law
However, when the Recovery and Resilience Facility – that consists of grants and cheap loans – was designed and the ground rules were being drawn up in September 2020, none other than French President Emmanuel Macron remarked that ‘all stimulus packages should be available in open data, allowing citizens to follow the money, and to prevent inefficiency and corruption’.
This call for openness coincided with fierce debates within the European Union about Member States that play tricks with the rule of law. The European Commission and the European Parliament wanted to prevent such Member States, notably Poland and Hungary, from continuing to receive EU money while trampling basic European principles. The ensuing row was settled by the European Court of Justice in favour of the Commission last February.
Despite these high-profile debates and noble intentions, the corona recovery fund legislation did not include an obligation to ensure transparency about the allocation of funds. As Commission official Gauer said in her interview with Follow the Money: there was simply nothing agreed upon.
That’s why Follow the Money’s Recovery Files network investigated the matter itself. With journalists from more than 15 Member States, we investigated in the past months how it is possible that the spending of over 723 billion euros of tax money completely eluded public scrutiny – and the consequences thereof.
The Recovery Files is a pan-European research project investigating the Recovery and Resilience Facility for the months to come. For this investigation, Follow the Money joined forces with journalists across Europe. You can read more about the project, the mediapartners and participating investigative journalists on this page: https://www.ftm.eu/recoveryfiles.
This investigative project is important because of the massive amount of money concerned – almost 725 billion euros – and the worrying lack of involvement of national parliaments. How this enormous pile of cash will be spent is obviously a matter of great interest to the European citizenry.
Although Brussels cheered in the summer of 2020 after the recovery fund was agreed upon, negotiations on the fine print had yet to begin. Member States were eager to spend these billions on their economies, which had been severely damaged by Covid-19, but the European Parliament was wary of fraud and corruption. The European Parliament argued for a unified database in which all information about the beneficiaries would be collected.
Tana Foarfă, policy advisor to the Romanian Liberal MEP Dragoș Pîslaru (Renew Europe), attended these negotiations with the Member States, united in the Council of the EU, and the European Commission in the autumn of 2020. Despite covid, the talks between the negotiators took place in person, everybody wearing masks, in as large a room as possible. Video conferencing was not an option: ‘That would not work because we had to be able to discuss the latest state of affairs with our colleagues between meetings’.
Despite the efforts of the European Parliament, it soon became clear that the Member States were not very keen on transparency. Germany, which held the Council Presidency at the time, supported them in this. Interviews with various sources show that Germany did not tolerate any room for manoeuvring on this issue.
For example, a senior official from the European Commission’s finance department told us (on condition of anonymity) that the German government was not at all comfortable with an obligation to collect information in central databases and make it publicly available. German MEP Damian Boeselager (Greens), who also took part in the negotiations, confirmed this assessment. ‘Representatives of the German government were against the publication of the names of the recipients and even against the obligation to use interoperable data formats.’
Germany did not only block openness, it also refused to answer our questions about its motives. The other Member States desisted from forcing Germany to change its position.
Boeselager finds this unacceptable. ‘This runs on the principle: don’t look at my cards, then I won’t look too closely at yours. In doing so, you accept that there will be corruption.’
A broken promise
The first tens of billions have by now been distributed to the Member States; 66 billion euros in subsidies and 33 billion euros in loans, to be precise. On Monday, June 27, the European Commission advised the Member States to approve new payments: 12 billion to Spain and almost 400 million to Slovakia. But who will receive these billions is a mystery – thanks to the obstinacy of the Member States.
A check-up by journalists affiliated with the Recovery Files project reveals that only a few countries – including Slovakia and Lithuania – are prepared to disclose all beneficiaries of the fund via a single, transparent website. According to internal documents that Recovery Files partner Die Welt reviewed, even Germany played with this idea for a while last year. However, when the government consulted various ministries, that notion quietly perished. Why? The German government refuses to answer questions about this, too.
Some countries – including the Netherlands – hide behind arguments such as privacy regulations for not (yet) wanting to provide transparency. But according to transparency advocate Krzysztof Izdebski of the Open Spending EU Coalition, that’s a straw man: it’s not about making private information public. The beneficiaries of the RFF receive public money, and oversight must be enabled. ‘In general, everyone who is receiving support from governments shouldn’t have a right to do it in secrecy.’
Hungarian researcher Fazekas, too, states that it might be complicated to publish information about natural persons (or how that information is disclosed) but that there certainly should be an obligation to transparency regarding companies that receive public funding. ‘I think that whoever gets big amounts of public funds could be asked to reveal his identity. Fair and simple, and proportionate.’
But even French President Macron, who spoke so fervently in favour of openness, appears to have difficulty living up to his own principles. When a journalist from the French newspaper Le Monde asked the government where the information about the beneficiaries could be found, the departments concerned sent him on a wild-goose chase.
Finally, the French Ministry of Economic Affairs reported that no single database of information would be set up but that the data would be spread across at least 25 Ministries dealing with the 400 individual components of the French national plan. So far, none of them have been willing to share this information with Le Monde.
In other countries, too, the information is at best spread across various levels of government and, in the worst case, can only be retrieved via the laborious route of a freedom of information request.
Even the European supervisory authorities, who are obliged by law to have access to the accounts, are facing a huge challenge
This lack of information and its fragmentation makes it very difficult for journalists to find out where the money ends up. But even the European supervisory authorities, who are obliged by law to have access to the accounts, are facing a huge challenge.
Last year, the European anti-fraud agency OLAF warned of major corruption risks if the Member States refuse to cooperate in unambiguous information collection. When asked, the European Court of Auditors said it did not yet know how it would be able to check the RRF-accounts in the future. ‘Regarding the technical details of these audits, we are somehow in unchartered territories,’ the spokesperson stated. ‘So today, we cannot say for sure how it will work in practice, but probably the MS [Member States, eds.] will have to provide us with the data sets we need. Depending on the audit area/focus, we might also contact MSs authorities at different levels.’
Transparency advocate Krzysztof Izdebski of the Open Spending EU Coalition insists that countries must be more open in order to uncover corruption, conflicts of interest and other types of cheating with public money. It has been shown before that when more information about tenders is made public, there is less chance of money being wasted.
For all these reasons, Follow the Money has decided to take up the task left unfinished by the EU. We will expand the Recovery Files investigation, to uncover as much data as possible and bring abuses to light.
Meanwhile, almost forty journalists from more than twenty European Member States have by now joined this mission: in the coming years, we will map where the 723 billion euros of the covid recovery fund have ended up.
As Macron so eloquently put it: ‘All stimulus packages should be available in open data, allowing citizens to follow the money, and to prevent inefficiency and corruption.’
In collaboration with Ada Homolová and Peter Teffer
Translation: Delia Burggraaf