Romanian Ministers Must Apply Finacial Correction For EU Projects, In Case Of Faulty Actions

The prime minister also demanded that the names of EU fund management authority heads be made public.

Boc pointed out that Romania will lose European funds if these financial corrections are applied by the European Commission and not by authorities in Bucharest.

The prime minister demanded that, in the case of EU projects for which the public procurement legislation has been violated, the financial correction should range between 1% and 100% of the sum to be refunded, considering the seriousness of the case.

MEDIAFAX reported early July Romania will refund the cost of a project financed with EU funds only after an inspection of the way the contract was awarded, cutting 2%-100% of the returned amount if the investigation reveals irregularities, which means a delay of up to six months for the refund.

The authorities that manage European funds will be required to reduce the value of the refund or deny it altogether, in case they find violations of national rules on public procurement, according to an emergency ordinance approved by the Government early July and obtained by MEDIAFAX.

If the contract was awarded without observing advertising requirements, or it was expanded through additional documents by a combined value that exceeds the legal limit on public purchases, the state will refund no money.

In the case of a contract expanded through additional documents signed in violation of national and community legislation on public purchases, the state will refund no money if the combined value of those documents exceeds the legal limit, or will reduce the refunded amount by up to 25% if the combined value is below the legal limit.

The ordinance says that, if the award documents or participation announcement do not describe every qualification and selection criteria, the state will reduce the refunded amount by 5%, 10% or 25%, depending on severity. The same penalty will be applied in the case of a contract awarded using illegal criteria, or using a qualification/selection criterion to evaluate the offers.

A 25% reduction will also be applied if the contract’s objective is described insufficiently or discriminatively, as well as for companies that continued negotiations during the award procedure, unless these discussions concerned only clearer/more complete offers or the contracting authority’s obligations. In these cases, the reduction may be 10% or 5%, depending on severity.

Reducing the contract’s objectives without a corresponding reduction in its value will be penalized by the value difference plus 25% of the contract’s final value.

In case of improper application of certain auxiliary auction elements, such as contract award announcement, the refunded amount will be reduced by 2%, 5% or 10%, depending on the severity. If this flaw is only formal, with no potential financial impact, there will be no reduction.

The ordinance says these penalties also apply to the financing instruments used in the Common Agricultural Policy and the Common Fishing Policy.

According to the act, the investigations and penalties will be run and decided by the European fund management authorities, through their own control structures. The authorities must also address the government’s Antifraud Department as soon as they find indications of fraud or attempted fraud, and must ask the court to annul the illegally awarded contract.

The investigation may take up to 90 days and a further 90 days, if it needs to be more complex and entails collaboration with other structures. This means the refund procedure can be delayed by up to six months.

The result of the investigation is sent to the European Union or international public donor, who can decide to continue the procedure to apply financial corrections. In this case, Romanian and European authorities will attend a conciliation hearing. If it fails, the authorities may challenge the decision to apply financial corrections in court.