Brussels warns on corruption threat to taxpayer trust

EU taxpayers’ trust in the bloc’s ability to safeguard their money will be damaged if Brussels fails to wield new powers to withhold funds from countries that misuse them, a top European Commission official has warned. 

The “river of money” created by the EU’s €1.8tn pandemic economic recovery package highlighted the need for the extra safeguards, said Vera Jourova, a commission vice-president, as she vowed to move quickly to assess capitals’ compliance with the rules.

EU leaders last week finally approved rule of law checks on payouts from the bloc after Poland and Hungary dropped opposition that threatened to delay the entire budget. The two countries lifted their veto after receiving concessions on the application of the new mechanism, which was a response to concerns about growing authoritarianism and corruption in some member states. 

Ms Jourova told the Financial Times that the EU now had “plenty of work” to do to convince citizens that “we are doing proper things with their money” as it attempted to revive the region’s coronavirus-ravaged economies.

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“When you distribute more money, you should also bring in more guarantees so people can trust you will protect it,” she said. “If you don’t have that trust, the willingness of taxpayers to contribute to the European budget will go down.”

Ms Jourova acknowledged the way the commission used its new powers would put it under “incredibly severe scrutiny” from member states, the European parliament and the public. “It will be a stress test also for us, but I am sure we can do it,” she said.

She said Brussels would not use its powers in an “activist” way, but would be “precise and transparent”. The commission plans to begin analysing member states’ adherence to the rules as soon as the new regulation comes into force in the new year, she added, while working in parallel from “day one” to create detailed guidelines on their operation. 

“There is a big demand for accountability from EU institutions,” she said. “And one of those biggest demands for accountability is: ‘We are giving you the money, but you need to make sure that it will not pay for the wrong things, the wrong people, the wrong systems’ — I mean political systems.”

The rule of law plan won the go-ahead last week after EU leaders agreed to a non-binding declaration to assure Hungary and Poland that they would not be singled out under the new rules. Both countries are the subject of so-called Article 7 disciplinary proceedings which have stalled because each has vowed to veto action against the other.

The rule of law compromise also gives the European Court of Justice a role in judging the legality of the new mechanism, should it be challenged by a member state in court even before it is used. 

The outcome has sparked criticism from observers including George Soros, the billionaire backer of liberal causes, who branded it a cave-in to “extortion” from Hungary and Poland. Some European parliamentarians have also questioned whether it breaks EU law because it constrains the commission’s ability to act. 

Ms Jourova said she hoped the ECJ would not take years to decide on the matter. She added that she hoped the existence of the mechanism would in itself act as a “very strong” deterrent to wrongdoing by member states.

“I do not leave anyone in any doubt that I am ready to use this tool when necessary,” said Ms Jourova, adding that the rule of law played an essential “unifying role” in holding the European bloc together. “If we have failures in some member states, then the degradation of the system is obvious.” 

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