It caused a stir the revelation by Euro2day.gr of the Commission’s sample audit report on Greek vocational training programs.
The answers given in a relevant announcement by the competent Deputy Minister of National Economy and Finance, Nikos Papathanasis, do not address the substance of the report’s findings and confirm that Greece is entering into a protracted dispute with the Commission, from which substantial fines may result in the form of financial corrections (repayment of EU funds).
The main finding of the audit, for which the Commission proposes a “heavy” financial correction corresponding to 25% of the EU funds, is that the terms of the tenders led to the exclusion of European vocational training companies. Two major questions arise from this finding:
- Were similar terms included in the other programs of the same managing authorities, which would mean that additional funds would also be requested back?
- Are similar terms included in other Greek training programs, which fall outside the sample audit, but could be audited in the future and lead to enormous fines, given the high budgets these programs have consistently had over time? Is there a systemic problem and how extensive is it?
Also, the second important finding, which leaves Greece exposed to the imposition of financial corrections in the future, was that the program tenders were single and of high value, with the result that small and medium-sized vocational training enterprises were excluded and the programs ended up with the few, well-known, and large players in this market.
Confrontation with the Commission to the end…
The ministry avoids commenting on the substance of these findings. It states, however, that it will continue to dispute the audit findings: As emphasized in this regard, “our country will examine the possibilities provided to it by the relevant regulatory framework for the dispute of the content of the said finding”.
This leaves the field open for continuing the confrontation with the Commission services, despite the fact that the government has already put forward arguments opposing the audit findings which, as noted in the report, have been rejected by the Commission, which insists on imposing a 25% financial correction.
It is noted that the European Commission found that the tender notices required training providers to possess a national Center for Lifelong Learning (KDVM) license and physical facilities in Greece already at the time of submitting bids. This condition was deemed disproportionate, as it violates, according to the Commission, the principles of equal treatment and in practice prevents economic operators from other EU member states from participating.
Because of this discriminatory criterion that restricted competition, the Commission requested the imposition of a flat-rate financial correction of 25% on the audited contracts, even requiring the extension of the fine to all contracts of the programs of the same managing authorities, which suffer from the same systemic irregularity.
The Greek managing authorities rejected the finding, arguing that the KDVM license constituted a lawful professional capacity criterion and not an obstacle to participation. They argued that foreign companies could rely on equivalent licenses or partner with Greek entities, while also stressing that the pre-contractual audit of the Greek Court of Audit had approved the legality of the procedures.
The Commission rejected the Greek arguments and kept open the proposal to impose the 25% correction. It clarified that the imposition of national licensing conditions at the stage of submitting bids, and not at the stage of contract performance, constitutes an unjustified restriction of access to the procedure.
It also noted that the possibility of resorting to partnerships or equivalent licenses was not explicitly mentioned in the tender documents. It further underlined that the findings of the Court of Audit, which the ministry also invokes in yesterday’s announcement, are not binding on the Commission, since the Court of Audit is not part of the control system of the NSRF operational programs.
The institutional framework and financial corrections
Otherwise, the Ministry of Finance announcement, under the general title “every audit is necessary and welcome”, does not have much to offer in understanding the problem raised by the European Commission:
- It is emphasized, for example, that the tenders were conducted on the basis of the national and EU institutional framework. Here the ministry is breaking down open doors, since there was no possibility that tenders would be conducted outside the institutional framework, unless the government had decided to engage in… piracy of EU funds. The problem highlighted by the Commission does not concern compliance with the relevant institutional framework in general, but the terms of the tenders, which are being audited as irregular and abusive.
- As for the financial corrections, which at this stage concern relatively small amounts (on the order of 1.6 million euros), but could increase in the future if it is found that the same abusive terms for excluding European companies were also included in other tenders, the ministry moves with the logic of… “no harm, no foul”. As it states, “any imposition of financial corrections is covered by other EU expenditures, so that there is no loss of European resources”. This wording does not answer the reasonable concern about the financial corrections: even if the financial corrections of vocational training programs are ultimately covered by other EU expenditures, would this not mean, in the final account, that Greece will have lost EU funds?
Buying political time…
The most serious problem arising from Papathanasis’ non-answer regarding the Commission’s finding is broader: it reflects a persistence by the government to maintain tender terms that were judged abusive by the Commission and to let the problem drag on, through an attempt to dispute the audit findings, possibly in order to postpone the issue until after the national elections.
Given that enormous amounts of EU funds are directed to vocational training, one would expect the government to cooperate with the Commission so that the questioning of the tender terms ceases, terms which give even the most well-intentioned observers the impression that they were tailored to the needs of specific large vocational training centers in the country.
The foreshadowing of a long legal and political confrontation with Brussels, even with arguments that have already been rejected by the Commission, leaves the impression that the government is not seeking to solve the problem, but only to buy political time.