The EU’s Committees on Budgets and Budgetary Control have endorsed proposed laws to strip EU funding from governments enabling corruption and fraud.
According to the proposals, the European Commission will be responsible for determining “generalised deficiencies as regards the rule of law” in affected Member States with the aid of a panel of independent experts. Where it is determined by the Commission and the panel that governments enabling corruption has occurred, the European Parliament and Council will be asked to approve further measures, including the suspension of EU budget payments or reduced pre-financing. Funds will then be unlocked once the offending government has taken concrete action to address the deficiencies.
The Commission will consider the rule of law to be at risk of governments enabling corruption or other misconduct in a Member State where one or more of the following principles is undermined:
- The functioning of authorities implementing the EU budget and other official financial controls;
- The functioning of authorities investigating fraud, including tax fraud, and corruption;
- Effective, independent judicial review;
- The prevention and penalising of tax evasion or failure to recover funds which have been unduly paid; and
- Full official cooperation with European Anti-Fraud Office and the European Public Prosecutor’s Office.
Budgetary Control Committee rapporteur Petri Sarvamaa (EPP, FIN) said: “Proper implementation of sound financial management can only be expected from governance and judicial systems that respect the rule of law. [Governments enabling corruption] should not be allowed to implement the EU budget – the European taxpayers’ money – as they wish. If the judicial and governance systems of a Member State cannot be trusted, why should we entrust them with the common EU budget? The most important aspect of this mechanism is protecting the final beneficiaries – in our model, this is strengthened as compared to the original Commission proposal. We have also included the European Parliament in the decision-making procedure, thus strengthening the democratic accountability of any measures taken.”
The proposals to address governments enabling corruption come as Czech Prime Minister Andrej Babiš faces calls to suspend EU funding to the holding conglomerate he owns, Agrofert, after allegations of a conflict of interest between Babiš’s ownership of Agrofert and his chairmanship of the council administering EU funding.