Dáil Éireann Debate, Tuesday - 4 July 2006
287 Mr. Deenihan asked the Minister for Finance if he will confirm that if EU Regulation 2064/97 was not confirmed to the EU Commission as having been complied with, the cost to the Irish exchequer, as estimated by the Department of Finance letter of 19 July 2001, was established to be in excess of IR£300 million; and if he will make a statement on the matter. [26187/06]
View answerI can confirm that, on 19 July 2001, my Department wrote to all the Government Departments concerned in the administration of Structural Funds, drawing their attention to provisions involved in the closure process. That letter signalled that the application of EU Regulation 2064/97 would have to include further expenditure checks, in relation to a selection of pre-1998 expenditure, and, where appropriate, to ensure that these expenditure control checks were carried down to the level of final recipient. This position arose from the fact that the Regulation had been introduced during the currency of the programming period for the 1994-1999 round of Structural Funds. The letter urged all Secretaries General concerned to take the necessary action in order to minimise the risk of delays or losses in Fund payments. In this context the letter pointed out, that the outstanding balance of receipts which was estimated to be in excess of IR£300 million across all the Structural Funds could be put at risk.
Effective action was taken by the Government Departments concerned following receipt of this letter. I am happy to confirm to the House, that while some relatively minor matters remain to be closed off, there has been no loss of funds due to these particular issues.
288 Mr. Deenihan asked the Minister for Finance if he will confirm that two independent authoritative consultancy reports undertaken by a company (details supplied) in 1998 and 2000 stated explicitly and repeatedly that Irish administrative practices did not fulfil EU obligations, that is, EU Regulation 2064/97 had not been complied with; that subsequently an EU Audit in 2001 found system malpractice in respect of the requirement of EU Regulation 2064/97; that in 2002 the Department of Enterprise, Trade and Employment confirmed to the EU Commission that it had applied EU Regulation 2064/97 retrospectively; and if he will make a statement on the matter. [26188/06]
View answerThe two Arthur Andersen reports referred to were commissioned by my Department in 1997 to review the financial management and control systems within the European Regional Development Fund (ERDF) and the Cohesion Fund. Regulation 2064/97 was issued by the EU Commission during the course of the Arthur Andersen investigations. Given this time scale, it is not surprising, therefore, that the contents of this Regulation had not been implemented at the time of the 1998 ERDF report. The 2000 report referred to the Cohesion Fund, a fund which was not covered by EU Regulation 2064/97.
The EU audit in 2001 on the implementation of EU Regulation 2064/97 found that there were certain provisions which had not been implemented to their satisfaction. These provisions had not previously been clarified by the EU Commission, and, following negotiations with that body, my Department issued a letter in July 2001 to the Government Departments concerned, stressing the importance of fully meeting the EU requirements.
EU Commission Regulation 2064/97 was adopted in October, 1997. It established a new set of requirements in respect of the financial controls to be applied by member States for operations co-financed by the EU Structural Funds. I understand that the Department of Enterprise Trade and Employment did, in its Final Report on the Small Business Operational Programme submitted to the EU Commission, confirm that the requirement, established by the Regulation, to audit 5% of programme expenditure had been exceeded and that the audits conducted had included expenditure that had taken place in 1995 and 1996.
