How abusive practices of state officers in Poland lead to EU taxpayer’s losses
Where does EU taxpayers’ money go?
07.04.2013 - 23:02
Europe is going through difficult times. Economic growth is negative, and the outlook on the future uncertain. At the same time the EU keeps supporting economies of certain European countries by efforts of the leading member-states.
The big net-winner when it comes to the EU budget is Poland. According to the European Commission, during the sevenyears between 2007 until 2013 Poland was to receive €67.3 billion out of total €347.4 billion of financial assistance via EU cohesion policy. In comparison, Czech Republic was earmarked €27.3 billion, Hungary - €25.3 billion, and the Baltic States altogether €14.95 billion.
The EU should pay more attention to how this money is allocated. Analysis of the European press and Independent organisations reports reveal cases regarding corruption and abuse of power by politicians in the subsidised countries. According to Transparency International, the corruption risks are especially high in Hungary and Poland, but they show different patterns. While in Hungary economic actors can capture the state, in Poland “state captures the business”. If Hungarian interest groups are able to extract public money from the system, then in Poland the top-level public officials abuse the resources of state companies, local and EU funds, wasting the taxpayers’ money.
In November 2012, the Polish newspaper Puls Biznesu published a “shame list” of politicians as well as members of their families and acquaintances that over the last five years allegedly spent considerable sums from state funds and government company budgets. The list includes four Civic Platform Senators, 11 MPs, 11 deputy Ministers, and two former Ministers - Aleksander Grad and Zbigniew Derdziuk. In this situation, personnel replacements seem to be due. However, we observe that these changes are hard to implement even by the Prime Minister Donald Tusk.
The Grad example is a vivid illustration of a high-ranking official who continues to climb the career ladder despite his shortcomings. Numerous scandals concerning Grad have been reported relating to MGGP (Małopolska Grupa Geodezyjno-Projektowa), a company he founded, and his wife managed. By 2009 MGGP won more than 30 tenders for providing services under the major EU “Infrastructure and Environment” program in Poland which controls a budget of approximately €28 billion. Media also linked the ‘Grad’ name with the abuse of resources of state owned companies. For instance, in 2007, fertiliser producer Azoty Tarnow withdrew a claim for US$640,000 against Mieczyslaw Grad, Aleksander’s brother.
Grad is portrayed as the main obstacle to a real privatisation in Poland. This civil servant reportedly promoted pseudo-privatisation schemes where government assets were privatised by government affiliated structures allowing him and a group of close allies to maintain control over the financial flows. This inefficient practice is paid for by the EU taxpayers.
One of the recent and widely-covered scandals in Poland is linked with the President of the Warsaw Stock Exchange Ludwik Sobolewski, who allegedly has been accused of using his position to raise funds for his personal interests.
Not only corruption but also promotion and development of ambitious and economically, technically, and economically unreasonable (given their budgets) projects such as shale gas and nuclear power. Poland lacks the required technology, human resources and infrastructure, and faces ecological collateral to achieve these projects. One industry insider remarked that Poland seeks to achieve in the nuclear industry in 10 years what took Germany and France over 40 years. These programmes are examples of how inefficient projects are promoted, overestimated budgets are financed, and business competition gets weaker due to a lack of external control.
According to the European Commission, the economic costs incurred by corruption in the EU possibly amount to €120 billion per year. At the end of January 2013 the EU suspended almost €838 million related to an alleged cartel concerning three road-building projects co-funded by the European Commission. Microsoft alone has been fined over $1 billion by EU’s competition Directorate-General over time.
The “common home” logic guiding the EU must extend not only to financial support instruments for member states but also to the conducting of impartial, uninhibited, anti-corruption investigations. If we draw an analogy with the monetary policy, discordant and unilateral measures of the EU with respect to Cyprus have given rise to a financial threat to all EU states. Anticorruption consideration must be given to Poland, the country, which will receive from the EU over €100 billion in 2014-2020, despite the budget cuts. When you live in a common home, you should know what is going on next door.