Government set to lose €15.5m in EU funds due to claims irregularities

THE Government is set to lose over €15.5m in EU funding due to irregularities in the way claims for grants under the European Social Fund (ESF) were processed.

The European Court of Justice recently indicated it will throw out a legal challenge by the Government to a decision of the European Commission to withhold money due under the ESF.

The Government launched proceedings against the EC in 2003 after it cut the agreed level of assistance for a package of almost €1.9 billion. It claimed the decision should be reversed as any irregularities were “technical”.

The ESF funding was designated to specific programmes related to human resources, development, tourism and industrial development during 1994-1999. Implementation of the projects was required to be overseen by the Department of Enterprise, Trade and Employment.

In late 2000, EC officials carried out spot checks in Dublin to ensure amounts paid out by Brussels were reconciled with sums claimed by the different beneficiaries. They discovered irregularities in operations carried out by both the department and the National Training and Development Institute which led to breaches in the audit trail of the various programmes and overclaiming for the EU’s contribution to such projects.

There is a maximum ceiling of 75% for the contribution from the EC’s ESF towards grant-assisted projects. However, EC officials claimed the NTDI failed to disclose that there was more money available from the Government’s own funds than the minimum 25% it had to contribute to a programme for human resources development.

As a result, the commission announced in February 2003 that due to the irregularities it had uncovered, it was reducing the amount of ESF assistance to Ireland by €15,614,261. Last week, an advocate-general of the European Court of Justice said the commission was not mistaken in its findings of systematic failures since they had been “expressly acknowledged by the Irish authorities themselves”.

Although the opinion of an advocate-general is a preliminary, non-binding ruling of the Luxembourg-based court, it is considered a reliable indicator of the ultimate judgment following a full hearing in the case.