NextGenerationEU was supposed to be the “unprecedented” lifeline thrown to Member States hard-hit by COVID-19 restrictions.
It was supposed to “futureproof” Europe and to inspire companies to transform in order to reach a more resilient, innovative, digital and sustainable economic model across the continent.
A whopping €806.9 billion package of financial opportunities.
Instead, it became yet another bureaucratic and administrative nightmare package – the perfect case study in everything wrong with the current system of granting European funds and loans.
Efficiency is lost somewhere below the enormous pile of documents required for all sorts of administrative purposes, the exact same way as all previous EU funding did.
The result?
A system of grants that proceeds at snail’s speed and focuses on ticking all the boxes on the list of requirements instead of real results.
In which, with the help of a little bit of “creative bookkeeping”, millions of NexGenerationEU euros, that were supposed to be used to help green transition mysteriously transformed into yachts, saunas and other luxury objects. In the name of “diversifying against future crises”, of course.
In a different case, this time targeting the European Regional Development Fund (ERDF), crafty Italian criminals falsified documentation, “including formal declarations, technical reports and photographic reports”, to unlawfully obtain over €4.5 million.
This is merely the tip of the iceberg.
One country, two cases – two examples on how projects, that were supposedly in the clear (have filed all the necessary documentation and supposedly meet all the required targets, thus got the approval stamps from EU’s all-knowing bureaucrats) were used to embezzle scarce resources. Projects got started, only never to be finished, or not even that, only existed on paper while the money simply disappeared within an intricate web of shell companies, conmen, and accounts.
A mountain of “half-baked results that have cost a lot of money”, as Belgian MEP Johan van Overtveldt warned before the NextGenerationEU funding was accepted.
All the same time, the administrative requirements cripple the system, making decision-making annoyingly slow, hindering legitimate business’ genuine efforts to use the available funds. With the current levels of inflation, by the time a project gets the green light from the EU, its target expenses can easily all be far off the mark.
Control is scarce, at best. Given the sheer number of projects, the Union is unable to follow in each case, where the money goes.
One estimate puts the annual cost of corruption within the EU at a shocking amount: €990 billion – and alas, EU funds are not immune to this.
At least, the amount of work justifies the existence of OLAF and EPPO.
It’s a shame, that OLAF’s investigations take years to finish and often end without any consequence at all – and, as it is often proved, the imagination of investigators is less vivid than that of the criminals’ and they can’t foresee all the creative approaches, leaving ample space for fraud.
The European Public Prosecutor’s Office’s 2024 report indicates that the EPPO has found over three hundred cases of alleged misuse of the pandemic recovery funds alone, worth billions of euros. The European Court of Auditors has repeatedly warned the EU about “assurance and accountability gaps” in safeguarding European funds. EPPO has acknowledged that “serious organized crime continues to feast on EU revenue”.
Not to mention the fact that the EU’s procurement rules apply only above certain thresholds, thus most direct awards fall outside these offices’ control.
At the same time, the current system can be used for a different, far less noble, purpose: to settle political battles and cause scandals. Size, lobby power and even political families have a great influence on who gets how much from the common pot, whereas those who are, for whatever reasons, at odds with the European Commission, can see their funds withheld or delayed. Think Poland or Hungary, the two countries that have often found themselves at odds with Brussels during the last decade and, as a consequence, have often seen the taps turned off temporarily.
Out of EPPO’s 307 cases tied to the Recovery and Resilience Facility, 228 is linked to Italy. Either French or German criminals operate far more efficiently than the Italians and can sail under the radars, or the hands of justice reach for the least resistance.
