The PiS government will spend billions from the EU in secret. And the EU will let them do this
Mateusz Morawiecki’s government will not publicize who exactly will receive money from the EU Recovery Fund. EU regulations enable it to do this, as they do not prevent embezzlement. In Poland’s case, this applies to more than 164 billion zlotys
The Council of the European Union approved Poland’s National Recovery Plan on 17 June 2022, which ended a year-long process of approving the NRP. We have written extensively in OKO.press about the course of the negotiations and how the government finally managed to convince the EU to approve the Polish Plan.
Poland, as the 25th out of 27 EU Member States, can now apply for support from the EU Recovery Fund – according to the NRP, this will be 35.4 billion euros, which is over 164 billion zlotys, to help combat the effects of COVID-19 and modernize the economy. The total value of the Fund is EUR 728.3 billion. At the current exchange rate, this is PLN 3.4 trillion – seven times more than Poland’s annual budget.
The first disbursements from the Fund have already been made to most of the EU Member States. Poland will also probably receive them this year.
Who will benefit from the transfers of billions of euros from Brussels? The public might have expected the government to publicize the data on the Fund’s beneficiaries in order to prevent corruption and abuse – it is already doing this, for instance, in the case of farmers receiving EU grants. But this will not happen this time.
‘[…] The data will be gathered and made available for audits and inspections and will not be made public. The public will be given collective, aggregated information on the progress of the implementation of the NRP,’ writes the Ministry of Funds and Regional Policy in response to OKO.press’s questions.
The Polish government is no exception within the EU. As revealed in the investigation conducted by the #RecoveryFiles journalism collective led by the Dutch organization, Follow the Money, in which OKO.press*, among others, is participating, the EU has decided not to force its members to publish beneficiary data. In doing so, it is risking the new Fund falling prey to fraudsters.
Who is afraid of transparency?
In September 2020, when the Fund was just taking shape, French President Emmanuel Macron said publicly that ‘all stimulus packages should be available in open data, allowing citizens to follow the money, and to prevent inefficiency and even corruption.’
The European Commission made the assurance that it would ensure that every euro is well spent and that governments would be held accountable for any cases of corruption and fraud. The European Parliament especially required transparency.
‘We wanted a single database to collect information on beneficiaries,’ Tana Foarfă, adviser to Romanian MEP Dragoș Pîslar, who was at the negotiations on the Fund between the Parliament, the Commission and the EU Council, says in an interview with Follow the Money.
Despite the EP’s efforts, it soon became clear that the Member States were not at all convinced of the transparency.
The work of the Council was then led by Germany. And, according to the findings of Follow the Money, it was Germany that torpedoed the obligation to provide information on the beneficiaries. But, other than the Netherlands, the other Member States did not push the German government to take a different stance on the matter.
‘This runs on the principle: don’t look me in the cards, then I won’t look you so deeply in the cards. In doing so, you accept that there will be corruption,’ comments German MEP Damian Boeselager, who also took part in the negotiations.
The final text of the regulation introducing the Fund (Article (22) (2) (d)) only contains the obligation to collect the data of the entities that receive the grants and ‘provide access to them’. Member States can therefore make such a database public, but do not have to.
In a resolution adopted last week, the European Parliament called on transparency from the EU Member States, arguing that the publication of the data will increase public trust. However, EP resolutions do not have binding legal force. With a few exceptions, the Member States do not intend to take advantage of this option.
Governments guard secrets
So far, only Slovakia and Lithuania have confirmed their intention to publish the data on a dedicated website. Interestingly, as the daily ‘Die Welt’ established, this was also being considered for a moment by… Germany. However, they eventually gave up.
In turn, the daily ‘Le Monde’ revealed that President Macron has problems with keeping his promise. The French government informed journalists that the announced list of beneficiaries will not be published, while the information will be gathered by the departments delegated to implement the French NRP. The data that ‘Le Monde’ found proved to be selective. There is also no full list of governmental units dealing with the Fund.
It looks like most Member States will, at best, go down the French route and provide fragmented and incomplete data. In the worst case, the beneficiaries of the Fund will only become known after time-consuming requests for access to public information are submitted and individual tender procedures are tracked.
It arises from the PiS government’s statements that Poland will go down this second route.
Member States argued that the creation of a single system followed by the collection and posting of detailed data in it would be excessively time-consuming. Some also referred to the GDPR, namely the regulations protecting personal data. However, Krzysztof Izdebski, a lawyer and government transparency activist, an expert at the Batory Foundation and the Open Spending EU Coalition, believes that the EU and its Member States are abusing these regulations.
‘We can observe the increase of the trend of using the GDPR to restrict the access to data not only of the final recipients of public funds but also companies’ representatives and their beneficial owners.
While I am fully supporting the GDPR and the need of protecting private life of citizens, I can’t find the justification for restricting access to data of recipients of public funding.
This is beyond their activity in private life […] it is a matter of the transparency and accountability of public money, and the way public institutions are performing their public tasks. In general, everyone who is receiving support from governments shouldn’t have a right to do it in secrecy.’ says Izdebski.
The European Commission does not seem to see the problem.
‘There is no legal basis for the RRF to publish the beneficiaries; whether we want it or not, it’s just not there,’ Céline Gauer, who is responsible for the Fund on behalf of the EC, admitted in February 2022 in an interview with Follow the Money. ‘ I really don’t see how having a list of all the people who are renovating houses would benefit anyone. I understand what can be relevant, if there is a conflict of interest. And that is being checked,’ she added.
Will the Union keep an eye on the Fund?
The experts are of a different opinion. They say the size of the Fund and the rush in public tenders and contests for subsidies can result in mistakes and corruption being more frequent than to date. Meanwhile, research shows that the more information about a tender is made public, the less likely it is that money will be squandered.
‘Of course, the idea for the Recovery and Resilience Facility [Recovery Fund] is that we match those risks with extra controls. But in the RFF that is not arranged for,’ laments Hungarian researcher Mihaly Fazekas, who has been working on the topic of embezzlement of EU funds for years.
In the case of Poland, which has already suffered a delay in the launch of the Recovery Fund, the rush and risk will be even greater.
This is because the deadline for planning expenditure remains fixed – all Member States must do this by the end of 2023. The last transfers from the Fund will flow to the recipients in 2026.
In June 2021, the head of the European Anti-Fraud Office (OLAF), Ville Itälä, recalled that, at the negotiation stage, the Member States torpedoed the idea of creating a single data collection system and warned of the ‘high risk’ of corruption. The European Court of Auditors, asked by Follow the Money, admitted that the principles on which the audit of the Fund will take place are still unclear.
The Union has been fighting with the problem of embezzlement for years. Although the scale of fraud varies from country to country, the whole of Europe has heard about high-profile cases. It is known, for example, that Hungarian Prime Minister Viktor Orbán transferred EU funds to his influential friends, who now manage media companies. And former Czech Prime Minister Andrej Babiš’s private companies were fattened up on funds from EU grants for farmers.
The European Commission makes the assurance that it has sufficient tools to control the Recovery Fund, especially referring to the system of milestones. How will it work in practice and will the EU not lose its haste? This will probably only come to light after 2026.
The European Commission also reiterates that it has equipped itself with the so-called conditionality mechanism, namely the famous ‘money for the rule of law’ regulation. This mechanism enables the EU to suspend disbursements from the budget (and the Fund) if a country is breaching the rule of law. In addition, the European Public Prosecutor’s Office (EPPO), a new body with powers to prosecute perpetrators of embezzlement, joined OLAF in 2021. However, like Hungary (as well as Ireland, Sweden and Denmark), Poland has not joined the EPPO and has so far been refusing to cooperate with the European prosecutors.
These tools have a major drawback: they are punitive measures for abuses already committed, which can take many months to set in motion. From the EU’s point of view, prevention would be much more effective than treatment.
The article was published in Polish at OKO.press. It is the result of cooperation between the investigative department of OKO.press and the investigative magazine FRONTSTORY.PL.
* The Recovery Files team includes, among others: Adrien Sénécat (France, “Le Monde”), Ante Pavić (Croatia, “Ostro”), Attila Biro (Romania, “Context Investigative Reporting Project Romania”), Ben Weiser (Austria, “ZackZack”), Gabi Horn (Hungary, “Atlatszo”), Giulio Robino (Italy, ‘IRPI’), Hans-Martin Tillack (Germany, ‘Die Welt’), Jarno Liski (Finland, ‘iltalehti’), Lars Bové (Belgium, ‘De Tijd’), Lois Kapila (Ireland, ‘Dublin Inquirer’), Maria Pankowska (Poland, OKO. press), Maria Karell (Estonia), Matej Zwitter (Slovenia, ‘Ostro’), Nikolas Leontopoulos, Sotiris Sidiris and Eurydice Bersi (Greece, ‘Reporters United’), Petr Vodsedalek (Czech Republic, ‘Denik N’), Staffan Dahllöf (Denmark, Sweden), Thomas Klein (Luxembourg), Lise Witteman, Peter Teffer and Tom Bolsius (Follow The Money), Alexander Abdelilah (France), Alexander Fanta (‘Netzpolitik’), Darío Ojeda, Kike Andres Pretel and Maria Zuil (Spain, ‘El Confidencial’), Helena Spongenberg (Spain), Jean Comte (France, Contexte. com), Jose Miguel Calatayud (Spain), Piotr Maciej Kaczyński (Poland, Onet.pl), Steven Vanden Bussche (Belgium, ‘Apache’), Thomas Gam Nielsen (Denmark ‘Eastern Jutland’), Martina Urso (Malta, Daphne Foundation) and Karin Kőváry Sólymos (Slovakia, icjk.sk).