By hook or crook, Slovakian EU funds find their way to govt supporters

By bne IntelliNews June 18, 2009

Tom Nicholson in Bratislava -

With Slovakia eligible for more than €11bn in EU funding until 2013, there was always bound to be a little jobbery as politicians in Bratislava handed out the cash. And in this sense, the government of Prime Minister Robert Fico hasn't disappointed.

At the Agriculture Ministry, officials in charge of deciding who gets subsidies opted for a lower-the-bar approach, setting up a secret committee last year to review funding applications that had been rejected. In closed-door meetings, the committee identified a number of farms and agribusinesses that, it ruled, should have been awarded funds after all - including several with ties to the junior coalition party the Movement for a Democratic Slovakia (HZDS), which controls the ministry.

Milos Sebo's company Fructop, for example, was suddenly declared eligible for €1.3m in subsidies because its fruit crop had suffered frost damage - an "act of God" in the eyes of the committee. This exception was applied to no other applicant, however. In 2007, Sebo took a business trip to Russia with three HZDS politicians. "I know you're trying to insinuate that I have political contacts, but you're dead wrong," Sebo told bne.

The European Commission says the weather can only be taken into account if the overall funding programme is aimed at helping farms recover from a wider environmental catastrophe. "This is not the case in Slovakia," said Michael Mann, spokesman for Europe's agriculture commissioner, Mariann Fischer Boel.

The Maspoma Zvolen meat company, meanwhile, convinced the committee it should be awarded subsidies because it had made mistakes in its application. In agreeing that Maspoma should get funding, the committee again appeared to have violated EU rules, which say that all applicants get a single and equal chance to get their projects right, and if they get them wrong - bad luck. "Modifications should not be allowed after the submission of the project," said Mann.

One of the owners of Maspoma, Miroslav Abelovsky, was formerly an attorney representing HZDS leader Vladimir Meciar, and in 2002 was elected as a member of parliament for HZDS. Another owner, Jan Kolesar, ran as a candidate for the other junior coalition party the Slovak National Party (SNS) in the 2006 elections. "This is not the kind of thing I want to talk about over the phone," Kolesar said.

Chill out

The Economy Ministry, on the other hand, has elected to raise the bar for applicants. The flow of EU cash is controlled so tightly that over 80% of the more than 300 applicants to a programme to support innovations were rejected last year. Reasons cited on ministry rejection forms included: writing the date in the wrong format (mm.yyyy instead of mm/yyyy); ticking the wrong box; and writing "100%" instead of just "100".

"The original subsidy application is poorly secured, the binding is falling apart," a ministry official wrote of another project. The ministry did not allow clerical errors on applications to be corrected.

The Economy Ministry's tight-fisted approach was slammed by Dennis Abbott, spokesman for European Commissioner for Regional Policy Danuta Hubner. "The bottom line is this," he said. "The European Commission does not want to see project applications getting rejected as a result of the sort of trivial, form-filling errors that you have highlighted. Yes, rules have to be respected, not least to safeguard EU taxpayers' money, but we also expect people to exercise a bit of common sense. Trivial mistakes can easily be rectified - the sort of examples you cite should clearly not be a reason for rejecting project applications."

On the other hand, the Economy Ministry handed €4.8m to the Plastika chemicals firm, where Economy Minister Lubomir Jahnatek just happened to have been a general director until 2005. Another €3.9m went to the Hrinarske Strojarne machinery firm, where the chairman of the board, Roman Vaclavik, used to be a senior member of the ruling SMER party. And the head of the agency in charge of awarding subsidies, Martin Vavrinek, used to work for SMER party sponsor Juraj Siroky.

Officials at both ministries say they are just playing according to the existing rules, and blame any deficiencies on the absence of clear guidelines on how EU funds should be delivered. These new rules were supposed to emerge from a €120m tender last year for "technical support" for distribution of eurofunds, including rules and guidelines, logos for subsidy-issuing institutions, marketing campaigns etc., which was won by a consortium of firms with close ties to SNS leader Jan Slota. The tender notice had been posted for only five days, and on a bulletin board in a ministry hallway behind a locked door. Not surprisingly, there was only one bid. The SNS minister in charge of the contract has since been fired, the European Commission has launched an investigation, and all Slovakia has to show for it are some overpriced logos designed by the tender winner.

Konstantin Bekos, the commercial attache at the Austrian Embassy in Bratislava, described as "very strange" the country's EU fund tendering. "Each member country has some time to learn the conditions of public tendering, and Slovakia is still in the first period," he said.

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