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EU: Audit Suggests Aid Allocated To Russia Ineffective

  • Ahto Lobjakas

http://gdb.rferl.org/CF7DFDBA-F6B1-4A8F-BD66-A0587C5DCA7B_w203.jpg --> http://gdb.rferl.org/CF7DFDBA-F6B1-4A8F-BD66-A0587C5DCA7B_mw800_mh600.jpg (ITAR-TASS) The European Court of Auditors said today that the use of TACIS funds provided to Russia between 1991-2003 -- amounting to nearly 3 billion euros -- was largely ineffective. What the court described as a "representative audit" gave a positive assessment to only five EU-funded projects out of a total of 29 audited. However, the court and the European Commission insist there is no evidence of fraud and that things have improved since 2003.

BRUSSELS, April 20, 2006 (RFE/RL) -- The EU auditors' findings make embarrassing reading for the European Union, which has long been beset by charges that it spends taxpayer money inefficiently.

The official who lead the audit, Jacek Uczkiewicz, summarized his findings as follows.

"Overall, the court concluded that in the case of 12 audited projects, [out of] 29, the objectives were not achieved at all, and the results of only five projects were sustainable," Uczkiewicz said. "This shows that [the] effectiveness of the use of TACIS funds in the Russian Federation has been very low. And thus the court cannot assess the performance of TACIS projects in [that] country positively."

Overall, he said, the situation is "poor." He said that even the five projects that received a positive assessment were not managed effectively -- they stand out mainly because they made a measurable difference that outlasted their lifespan.

Uczkiewicz said he believes the results of the audit of 29 projects are representative of Russia's share of the EU's TACIS (Technical Aid to the Commonwealth of Independent States) program. Since 1991, the EU has channeled 7 billion euros via the program, of which 40 percent has been given to Russia.
In many cases, equipment purchased with EU money was never used for its intended purpose.


A press release issued by the EU court of auditors says the individual projects awarded EU funds were not evaluated thoroughly. Their objectives were often imprecise and not measurable. Worst of all, the statement says, "in some cases the beneficiaries accepted assistance which they actually did not want."

Auditors described a case where the Russian applicants had set up a fictitious company to qualify for funds. In another case, the Russian side -- involving a ministry and two regions in Siberia -- boosted the scale of their environmental project aimed at limiting the effects of oil spills by adding sub-projects dealing with "fish hatcheries" and communal heating. EU funding was secured in both cases.

In many cases, equipment purchased with EU money was never used for its intended purpose. EU auditing team head Uzckiewizc said today this was "poor expenditure, not fraud."

Uczkiewicz also said his audit had uncovered no evidence of fraud. He noted in a different context, however, that his audit only dealt with the EU side of the projects and that Russian auditors had handled inquiries relating to the details of expenditures on the ground.

Uczkiewicz ascribed the problems to poor communication between EU and Russian institutions and "vague objectives" for projects.

European Commission spokeswoman Emma Udwin told RFE/RL today that the commission -- which oversees the TACIS program -- believes that in a majority of cases the required "level of effectiveness was there."

She also noted political issues in Russia that complicated the preparation of the audited projects.

"It's important to remember that the cases they looked at -- the projects they audited -- were prepared in the period between [19]97 and 2000," Udwin said. "That was a very particular period for Russia when the political climate was not at its most constructive and there was a financial crisis which made it very difficult to have the kind of dialogue that we would have wished to have with the Russian authorities. And that impacted as well on Russia's sense of ownership and Russia's involvement and cooperation in the projects we're talking about."

A senior commission official dealing with Russia, Gerhard Lohan, told the European Parliament's budgetary oversight committee today that Russia's mushrooming bureaucracy was partly to blame for the problems.
"That was a very particular period for Russia when the political climate was not at its most constructive and there was a financial crisis which made it very difficult to have the kind of dialogue that we would have wished to have with the Russian authorities." -- European Commission spokeswoman


Udwin also stressed that the situation has changed significantly since 2003.

"But I think it's also important to point out that we ourselves identified a long time ago that there was need for improvement in some areas of the way that we deliver our external assistance," she said. "And that is why, under the last commission [1999-2004], some very important reforms were brought in and the court recognizes this in its report as well, that the performance -- our performance -- including through TACIS, has improved very much with the implementation of those reforms."

EU auditor Uczkiewicz rejected interpretations that large amounts of EU aid money have been misspent or wasted, saying instead the money was "used ineffectively." He did add, however, that what he described as a "political debate" within the European Parliament must now establish whether anyone should be held responsible for the problems.
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