ALL THE POSDRU PAYMENTS MAY BE SUSPENDED, DUE TO VERY SERIOUS IRREGULARITIES Ponta: We may lose 1.2 billion Euros of European funds

• Wages ranging between 3,500 and over 10,000 Euros per month

Romania might lose about 1.2 billion Euros, out of the European funds pertaining to the Human Resources Development Sectoral Operational Program (POSDRU), due to the uncovering of serious irregularities in the unfolding of this program, between 2010-2011, PM Victor Ponta said yesterday. According to him, the 100 million Euros for 2012 and the 1.1 billion Euros for next year represent all the payments afferent to the POSDRU.

The head of the Government yesterday presented data which he received "through unofficial channels" out of an audit of the POSDRU, according to which, out of the total of two billion Euros which Romania has available only 6% was settled, with 2,500 contracts being signed. Victor Ponta emphasized that there are serious problems with the evaluation of the projects and their verification and emphasized the fact that he has notified the Anti-Fraud Department (DLAF) and that the Government will try to implement a program of actions to avoid losing the European funds, the PM said. He went on to say that if the program isn't implemented by the end of the year, he will decide on a "radical" measure of total restructuring of the Authority for the management of the POSDRU, including at the risk of having to apply again for accreditation: "I have asked the DLAF, because I doubt that we can go on to without identifying the guilty, and if the ministers, - whether it was Mr. Botiş (ed. note: Ioan Botiş, former minister of Labor), Mr. Lăzăroiu (ed. note: Sebastian Lăzăroiu, former minister of Labor), Mrs. Barbu (ed. note: Sulfina Barbu, former minister of Labor)- did absolutely nothing and can clearly be accused of political negligence, when in fact there is even more than that, I think there is a need for criminal and civil liability and I think we need to send a very clear signal. (...)

I am trying not to use a very strong word, but it was a real debauchery over there".

• Cristian Pârvan: "This negative assessment is too harsh"

The statements made by Victor Ponta are exaggerated, according to Cristian Pârvan, the secretary general of the Businesspeople Association of Romania (AOAR), who said: "It is clear that POSDRU is a bit more «soft» than other programs, that it has a certain flexibility; personnel trainings are being conducted in every county, there is entrepreneurship everywhere. This negative assessment is too harsh. The businesspeople who accessed this kind of funds have adjusted to the way the program was built, and this program was fragmented across tens of priorities. There will most likely be evidence for the claims made, there is indeed a need to bring order, but not like this. For example, drastically cutting the payment of project managers is an aberration. It may have gotten to salaries of thousands of Euros, but no one is going to stay and work for four hundred Euros".

Cristian Pârvan considers that, before looking for irregularities in the unfolding of this kind of programs, we need to know how to draw up sewer projects, infrastructure, ecological garbage dumps etc.

• Mihai Ionescu: Having all of the funding of the POSDRU suspended is unfair

Some of the beneficiaries which are conducting European grants through the POSDRU will be hurt by the suspension of all the payments made through this program, considers Mihai Ionescu, the secretary general of the Romanian National Association of Importers and Exporters (ANEIR), who said: "I can not dispute the accusations made by the prime minister yesterday, but a measure like suspending the settlements will very severely affect several beneficiaries who have ongoing projects, including ourselves (ed. note: the members of the ANEIR), who were aiming at getting the Romanian exporters to the level of expertise of their EU peers and to increase the social responsibilities of the export companies. I think that the measure is unfair. Payment shouldn't be suspended on all the contracts. Legal procedures should be initiated where irregularities are found, but the projects which showed no irregularities should be allowed to continue, because the money is frozen and some of the structures which have begun this process may go bankrupt".

The fair businesspeople will be left defenseless and counterproductive, claims Mihai Ionescu, who said that "he finds generalizing "abnormal".

• Sulfina Barbu: "The Prime Minister is seriously wrong"

PDL deputy Sulfina Barbu, former minister of Labor, considers that prime minister Ponta has made unfounded statements when he referred to the major irregularities concerning the unfolding of the POSDRU which allegedly took place during the time she was minister of Labor: "The prime minister is seriously wrong, which is what we have come to expect from him, he comes out with unwarranted claims. During the time I was minister, payments of 190 million were made by the European Commission, which I think can be verified, and all of them were settled by it".

Sulfina Barbu explained that during her mandate as Minister of Labor, a list of potentially risky 348 projects was drafted: "That list was submitted by the Management Authority for all the contracts in question to be verified and the guides were not launched because we have uncovered irregularities in the projects".

Referring to who would bear the blame on the complaints about the POSDRU, Sulfina Barbu said: "Let's look at whether the guides which were launched, because during my term there weren't any, whether the projects comply with the guides and whether the procedures were complied with. But that was supposed to be checked for each individual project; this is what I decided during the time that I worked as minister".

• Orban: Most likely, the European Commission will decide to suspend the payments for the POSDRU program

The European Commission will most likely decide to suspend the payments of European funds to the POSDRU, following the audit missions, Leonard Orban, the minister of European affairs said, who did say, however, that he has not yet seen the audit report.

According to him, the suspension of the payments would be decided in a few days and would last a few months, due to the irregularities found within the POSDRU program for the 2010-2011 period.

The first thing that needs to happen during the suspension is to correct the uncovered issues.

The representative of the Ministry of European Affairs said that the blame of the irregularities which were uncovered lies with all the successive managers of the Management Authority of the POSDRU and those of the intermediate institutions of the POSDRU.

Following the uncovered irregularities, financial sanctions may be applied in order to partially or totally recoup some of the amounts which were illegally spent, Leonard Orban went on to say.

• 172 notifications to the DLAF, over the last two months

The PM said that the main irregularities were found at the Management Authority for the POSDRU, of the Ministry of Labor, as well as at the intermediate body of the Ministry of Education. The prime minister also mentioned that in the case of certain programs, a lot of people in the public and private sector earned salaries ranging from 3,500 and going above 10,000 Euros per month.

One such example of irregularity presented by the authorities was that lifeguards were not trained at the seaside.

Another example mentions the fact that the same project was presented in the same format several times to 20 intermediate bodies, of which 9 approved it, and 11 rejected it.

Also, between 2010 and 2011, serious issues were found in the system concerning the evaluation of the projects, their audit, the risk percentages and the IT system of the Ministry of Labor, to which 350 people received unauthorized access.

The DLAF received 14 notifications in 2010 and 9 in 2011. Over the last two months, after the entire top level team of the Management Authority was replaced, 172 complaints were received.

According to the 2011 activity report of the DLAF, out of the 178 probes, which were ongoing in 2011, 97 have been finalized, and hints of fraud that affect the financial and European interests were found in 53 of them.

The total value of the projects for which the probes were completed exceeds 247 million Euros, and the total value of the financial impact estimated in the case of the irregularities and possible frauds which were uncovered is about 28.88 million Euros. 52 cases were submitted to the authorities which are competent with managing the European funds, in order to recoup the amounts which were used inappropriately, according to the quoted report.

The National Anticorruption Department estimates the losses in the cases it investigated using the Audit notes of the DLAF at approximately 4.6 million Euros.

Last year, 61 court rulings were issued against 113 defendants who were indicted by the National Anticorruption Department, for committing several infractions of unlawfully obtaining and inappropriately using the funds originating from the general budget of the European Union. Out of the 61 court rulings, 31 remained final.

The total number of audits completed in 2011, which concerned suspicions of fraud shows that the biggest number of possibly criminal acts were committed in the private sector.

• In the beginning of the year, the European Commission applied preventive financial punishments against Romania

At the end of February 2012, the European Commission (EC) announced it would suspend the payments for the applications which our country has ongoing as part of the POSDRU program. According to the EC, in the annual audit report for 2011, the Romanian Audit Authority has identified some major flaws of the management and audit system of the POSDRU. At the time, the representatives of the European Commission announced that the suspension would be lifted as soon as the Romanian Audit Authority would confirm that the deficiencies have been remedied, according to the provisions of the regulations for structural funds.

The interruption of the payment deadline does not affect the implementation of the projects, as the Management Authority can continue to make payments, the authorities have announced.

After the European Commission decided to suspend the reimbursements of the expenses under the POSDRU program, it was decided that payments under this program would resume.

In the beginning of this year, the European Commission has applied preventive financial corrections amounting to 10% of the settlement value of some invoices. The corrections will remain in place as preventive measures, for the duration of the first semester, during which time the EC officials will conduct new verifications through an audit mission, the minister announced at the time.

Last year the total value of the corrections applied to the public procurement contracts using structural funds increased by more than 100%, due to the suspension of the payments on the Second Axis of the of the regional Operational Program, according to Gheorghe Oană, the vice-president of the Romanian Court of Accounts, who recently told us that in 2011, this amount reached approximately 50 million Euros.