Dacian Ciolos: Romania risks losing credibility before European Commission

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If it does not improve payment procedures, Romania risks losing credibility before the European Commission rather than the earmarked money, Minister of Agriculture Dacian Ciolos told a press conference on August 21.
 
"The European Commission has asked for the improvement of particular payment procedures and of the prerogatives of the control and anti-fraud directorate of the Agency of Payments for Rural Development and Fishing (APDRP). I asked the agency’s director-general to take steps for the improvement of the control and anti-fraud directorate which – in my opinion – should have taken self action instead of waiting for the conclusions of a European Commission audit to clarify these aspects," Ciolos specified.
 
The Minister underscored that the plan of action the Commission required to be filed by August 31 – and which will allow the resumption of payments under conditions of financial security – was sent to Brussels on July 31, after a series of technical talks held within the Commission.
 
"Together with the financial Authority in the Ministry of Finance (MEF) we decided to withhold the start of payments already approved in the system until we are certain that the APDPR payment procedures were improved based on the recommendation made following the EC audit. We also asked APDRP to take prompt steps with the major aim of resuming payments from the national budget so as not to jeopardize on-going projects, and this is why a plan of action was worked out.
 
The key condition for the resumption of payments is related to the improvement of payment procedures," said the Minister of Agriculture.
 
Checks on risk-prone projects were supplemented and changes were operated with the APDRP control and anti-fraud directorate and the analysis of the Agency’s management will also continue after payments are resumed.
 
Officials from the Ministry of Agriculture and Rural Development (MADR) will meet on August 22with representatives of the Ministry of Finance to discuss specific procedure elements from the plan of action required by the European Commission, and early next week APDRP will officially refer to MEF the amended procedure to be audited.
 
"As soon as MEF confirms that the amended procedure complies with the EC observations, we will resume payments from the national budget and as soon as we solve this problem we will also analyze the improvement in the management of the Payments Agency, to avoid such situations and disruptions that could occur in the unfolding of PNDR," Ciolos also said.
 
According to MADR Secretary of State Cornelia Mihai, the plan is in an advanced stage and the EC letter dated Aug. 13 confirms that Romania sent "an improved and substantial plan" but a few additional elements should be considered related to deadlines’ correlation and the establishment of responsibilities by departments and individuals.
 
"The EC letter contained no negative element standing counter to Romania’s starting payments from the national budget, but just warned of some aspects related to securing financial management," said Cornelia Mihai.
 
In turn, APDRP director general Laszlo Klarik specified that the EC audit confirmed that Romania did not proceed to illegal or non-compliant payments, but just that the control activities were not good enough. The amount suspended by the EC under the Sapard program total 28.3 million euros and there are currently 582 applications for payment – worth a combined 62 million euros – approved in the system.
 
Following a regular monitoring audit mission in June 2008, the European Commission signaled to Romanian authorities, in keeping to standard procedures, some flaws in the management and control system of the Sapard Agency in Romania (compared to Bulgaria, where corruption deeds have been found, the situation in Romania is characterized rather by major drawbacks in the management and control system).
 
In a note sent on July 9, the European Commission asked Romanian authorities to draw up of a plan of measures to remedy the deficiencies found. The plan of measures has to be submitted no later than Aug. 31, 2008.
 
Although long enough, the list of elements to be included in the plan of measures contains the deficiencies found in the management of all the measures subject to payments under the Sapard program (and which are detailed in the July 9 note, in order to back Romanian authorities to remedy them in a short time). Among the highlighted elements are the prevention of double payment risk, the observance of the task separation principle, or the carrying out of checks.
 
Therefore, the European Commission asks Romanian authorities to exclude from the payment applications submitted to the Commission any additional use of funds under the Sapard program and will consider the resumption of payments as soon as a confirmation is received from the National Authorization Officer, who is to certify that the plan is implemented adequately, (an aspect reconfirmed by an independent auditing body).
 
The European Commission also takes note of the fact that, in the current situation, there is no guarantee of a correct processing of the reimbursement requests filed by final users, and of disbursements to these beneficiaries, and considers that payments under the Sapard program to final users can be resumed only after the implementation of the plan of action begins.
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