Europe’s post-Covid recovery plan: a perilous lack of transparency

EU countries are now required to publish a list of their 100 top beneficiaries of the EU’s post-Covid recovery plan. It is a welcome step, but not enough.

The first major problem is that there is still no precise definition of “final beneficiary”.

“Clarification is needed”, says Eulalia Rubio, a researcher at the Jacques Delors Institute. ”It doesn’t make sense for intermediary public bodies to be included in this list. It should mainly feature private actors, or else public entities but only where they directly implement projects.”

Such a case might be where the public body uses the money to, for example, boost their budget for recruitment. However, “most of the time, public actors receive funds to award a public contract, or to redirect it to other entities, and only then can the money be said to reach its final beneficiaries” says Eulalia Rubio. ”It is not the Ministry of Transport that builds a bridge.”

Indeed, France’s Union des Groupements d’Achat Public (UGAP, a state purchasing agency) is quick to point this out: “We are not a beneficiary of European funds, they only pass through us.” UGAP nevertheless ranks 8th on the French list with €245 million.

Voies Navigables de France, the national rivers agency, took €175 million, putting it in 9th place on the list (the latest version dates from December). VNF claims that its projects that used funds from NextGeneration EU were “carried out by 250 companies”. But which companies?

As for France Travail (the jobs agency, in 6th place with €278 million), it used its allocation to launch a tender for 91,000 additional places in distance learning. This benefited “14 recipients”, about which we are left in the dark. For its part, the Centre des Monuments Nationaux states simply that “numerous companies were involved in the work of the recovery plan”

In addition to this shortcoming concerning the definition of the final beneficiary, the other reason to improve the transparency of funding is related to the specific vagaries of the Recovery and Resilience Facility (RRF), the main instrument of the EU’s post-Covid recovery plan.

The RRF’s decentralized management makes it more difficult to trace the money than with an instrument such as the Common Agricultural Policy (CAP). In France, for example, disbursement of CAP funds is the responsibility of a single body, the State Services and Payments Agency. This makes it relatively simple to monitor the amounts allocated.

By contrast, “within the framework of the RRF, multiple public entities distribute the money, which constitutes a technical obstacle to transparency”, worries Kévin Gernier, anti-corruption advocacy manager at Transparency International France.

“The national secretariat for the recovery plan, attached to the French Ministry of Economy and Finance, referred us to intermediaries for information on the final beneficiaries”, explains this specialist. That makes for a herculean task.

This is especially so given that the various links in the chain are good at passing the buck.

“When a customer places an order with UGAP, it is not possible to identify the source of funding” explains Olivier Giannoni, UGAP’s secretary general. ”Is it national or European? The only case in which the information can ultimately reach us is when we have to provide supporting documents as part of an audit by the Commission or the European Court of Auditors, which check the compliance of public-procurement contracts related to the use of European funds. But this is not systematic.”

Another specific feature of the RRF is that its funds are paid to member states not on the basis of invoices, as is traditionally the case for other European funds, but according to pre-defined objectives, such as the number of homes renovated.

This poses a problem, reports Eulalia Rubio: “The European Court of Auditors believes that this system makes it much harder for it to monitor what has been financed with European money. The relationship between funds and the situation on the ground becomes vaguer and more ambiguous.”

Indeed, this situation is a source of tension between the two European institutions, since the European Commission seems satisfied with the system and plans to extend it to other budgets. Yet, observes Karolis Granickas of the NGO EU Open Spending, “it is hard to imagine that the standards in terms of transparency might no longer be the same for all European funds” That is all the more so if the least transparent method of financing were to gain ascendancy, which would amount to a deterioration in European standards.

“With the change sought by the Commission, the capacity for monitoring would rest more with the member states”, notes Rubio. ”That is not necessarily a bad thing because Brussels does not have the capacity to supervise every tiny item of European expenditure. But the EU Parliament explains that Brussels can only agree to lose this part of the monitoring if the member states give more guarantees on transparency in return.”

Unfortunately, national standards are today far from equivalent. Some countries have decided, on their own initiative, to include additional information in the list of their 100 largest beneficiaries. Instead of simply providing overall amounts, countries such as Lithuania, Croatia and Latvia, for example, provide information on the amounts received by the type of project, or even project by project.

In Spain, “the government recently set up an online tracking tool which has considerably improved tracing”, reports Jorge Galindo, deputy director of the Spanish think tank EsadeEcPol and co-author of a recent study on the deployment of the RRF in Spain.

In France, on the other hand, monitoring is made more complex by the fact that in 2020 Paris set up a €100 billion national recovery plan that used €60 billion of its own funds and €40 billion from the EU. This makes it hard to discern the breakdown of funding for a particular project included in the French recovery plan, since the top-100 list is strictly limited to projects funded by NextGenerationEU.

Increased transparency would make it much easier to fight any corruption. No large-scale cases have come to light, but the European Public Prosecutor’s Office nevertheless reported in its latest annual report that 15% of all the cases of fraud that had been reported to it concerned the budget of the post-Covid recovery plan. That equates to 206 ongoing investigations involving €1.8 billion.

“Another major challenge”, points out Karolis Granickas, “is to prevent the funds from being used for political purposes and ultimately serving to strengthen autocratic regimes.”

In Hungary, the RRF payments to Victor Orban’s regime are blocked until significant progress is made on issues of corruption and transparency in public procurement.

That is unlikely to happen before the parliamentary elections of April 2026, when Orbán will face a strong opposition party (Tisza) for the first time.

“In the meantime, the government would rather give up ten billion euros than put an end to organized theft in the country” regrets Péter Magyar, Tisza’s leader (and an MEP since June), who was contacted by the independent Hungarian outlet HVG, a partner of this investigation.

“In addition to this well-known case” adds Karolis Granickas, ”it would be a win if more subtle forms of autocracy could be better identified, in Slovenia or Slovakia, for example.”

Is there a trade-off to be made between rapid disbursement and transparency? “The administrative bodies have clearly opted for speed”, comments Kévin Gernier. He points to the ever-present risk of an emergency being used to remove safeguards, first temporarily and then permanently.

In France, the threshold for advance advertising of public-works contracts was raised in 2020 from €40,000 to €100,000. It was the tenth such rise since 2009. And not the last, notes Gernier: “This temporary increase decreed by the government and justified at the time by the pandemic has since been extended several times, most recently by a decree of 28 December 2024.”

Original source: https://www.alternatives-economiques.fr/plan-de-relance-europeen-une-opacite-augmente-risque-de-fraude/00114306