EU Auditors Report Difficulty Tracing Billions in COVID Recovery Funds

European auditors said Wednesday that they are unable to clearly trace how billions of euros have been spent from a fund established to help European Union countries recover from the economic damage caused by the COVID-19 pandemic. The Recovery and Resilience Facility was set up in 2020 as the 27 member countries closed borders, imposed lockdowns and worked to obtain vaccines.

At the time the bloc was experiencing its deepest recession on record. By January, the fund had reached an estimated 577 billion euros, equivalent to about 679 billion dollars. In a new report the European Court of Auditors said it is difficult to trace how countries allocated part of the money.

Thousands of recipients, including many businesses and large consortiums, are not identified. "Without this information, we cannot assess whether funds are fairly distributed, whether risks of concentration exist, whether EU money delivers value for citizens," said Ivana Maletic, the court member who led the audit.

"Transparency is not a technical issue. " The European Commission raised the money by borrowing on capital markets. It disbursed the grants and loans for projects intended to make economies more sustainable, environmentally friendly and digital. The payments were made only after recipients met certain conditions, a change from the previous system in which funds were usually released based on project costs.

Under the rules national governments must make public their biggest 100 beneficiaries. The auditors examined 10 EU countries and found that the top 100 recipients were almost exclusively national ministries, agencies and local or regional governments.

Almost no public information is available about private sector recipients. Ivana Maletic said EU lawmakers regularly request details about transfers to companies and consortia when examining possible misuse of funds. The auditors had particular difficulty obtaining information on recipients in France.

French authorities told auditors it was too administratively burdensome to provide information on final recipients and amounts paid. "You can imagine in France we have thousands and thousands of recipients," Maletic said.

Cases of misuse have occurred.

Two years ago police in Italy, Austria, Romania and Slovakia arrested 22 people in an investigation into the suspected diversion of 600 million euros in post-pandemic relief funds. The European Commission said its hands were tied because the rules governing the fund were agreed upon by all 27 member countries.

It defended the use of conditions and the achievement of milestones for receiving funds. The commission stated that its system of payment requests, progress reports, detailed analysis of payment decisions and ongoing engagement with member countries to address inconsistencies is functioning.

The auditors expressed concern that support is growing for the conditions-based approach and that it could be applied to the EU's next long-term budget from 2028 to 2034, which could total around 2 trillion euros. That budget includes significant spending on farm subsidies and infrastructure aid.

The commission responded that the design of future legislative proposals is a matter for the member countries and the European Parliament.