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Reporter: How would you describe the current status of the absorption of European grants in Romania?
Leonard Orban: The absorption rate for the grants allocated to Romania by the European Union for the 2007-2013 period is approximately 25% at the present time. More precisely, about 9 billion Euros have been absorbed. For structural and cohesion funds, the absorption rate is 9.18% when it comes to the expense statements sent to the European Commission, a low rate, but an increase compared to 3.72% in September 2011, when the Ministry of European Affairs was created.
Reporter: Minister, you have set a very ambitious goal - for Romania to attract in 2012 three times the amounts of European funds it absorbed in its first five years since the accession. What are the steps you have taken to reach this goal?
Leonard Orban: It is undoubtedly an ambitious goal, which requires a concerted effort. We have identified numerous problems which can be solved in the short term and we have already taken and will continue to take measures which can produce immediate or medium term effects in order to avoid the missing out on large amounts of funding by the end of the current scheduling period. Unfortunately there are also more complex problems, some of which stem from the "architecture" of the system for the absorption of the European grants, and for which the only chance of eliminating them will come from the perspective of the future EU budget scheduling period (2014-2020).
Specifically, ever since its inception, the Ministry of European Affairs, has promoted a series of horizontal measures intended to increase the degree of absorption of the European grants such as: capping the duration of the reimbursement requests and the making of the payments at 45 days, the setting of clearer and more flexible rules when it comes to the granting and recouping of pre-financing, the withdrawing of financing and the collateral presented by beneficiaries, as well as including the non-deductible VAT afferent to the projects financed out of these funds approved after January 1st 2012.
During this time, we are focusing on fulfilling our commitments to the European Commission in December 2012 for four operational program (The Environmental Sectoral Operational Program - POS Mediu, the Transportation Sectoral Operational Program - POS T, the Sectoral Operational Program for Increasing Economic Capacity - POS CCE and the Operational Program for Developing the Administrative Capacity - PODCA). The main commitments are tied to the verification and control of public procurement.
We are also concerned with the Sectoral Operational Program for the Development of Human Resources (POSDRU). On May 23rd, the Government passed a plan of preliminary measures to fix the flaws uncovered in the unfolding of this program. Some of the measures which will be urgently taken include the verification of all the projects which are in the process of implementation through the existing personnel and through outsourcing, improving and increasing the security of the IT systems of the POSDRU and the amendment of the working procedures.
At the same time, we have completed a set of measures for simplifying the absorption process. We have also uncovered solutions for the financing of the home thermal rehabilitation process.
Reporter: What effects would reaching this objective have on the economy?
Leonard Orban: Given that this will significantly increase the rate of absorption of the European grants, this will have a beneficial effect on the economic growth of Romania in 2012.
Reporter: What were the obstacles which the Ministry of European Affairs encountered in attracting European funds?
Leonard Orban: I have already discussed some o the issues. There are certain limitations to the current institutional framework and of the administrative capacity of the management structures.
We have also seen in several cases the lack of experience and expertise of the public beneficiaries on a central level, and especially on a local level, in unfolding the projects with European funding. therefore, we have decided to grant direct support to the beneficiaries of the projects, in particular for those which have priority (being major and of strategic importance) which the Government made the commitment to implement (the list of the 150 priority projects was published on the website of the Ministry, www.maeur.ro).
The issues concerning the lack of financial resources for the co-financing of projects, in spite of measures which were taken for the financing of the access to funding (such as the Emergency Government Ordinance no. 9/2010 concerning the Support Program for the beneficiaries of the projects financed using the structural instruments, which guarantee the loans taken out by certain categories of beneficiaries in order to ensure their own contribution to the funding of certain projects).
Last but not least, I would mention the issues concerning the performance of public procurements, an area which still represents one of the major reasons for delays in the implementation of the projects.
Reporter: You said you would present to the Government proposals concerning the simplification of the bureaucratic procedures for accessing the European grants. What are the main avenues of simplification which you are considering?
Leonard Orban: The Ministry of European Affairs considers that the steps towards simplification must focus predominantly on the procedures for the verification of reimbursement requests, where there have been delays which have impacted the pace of absorption of the funds. As a result, measures will be taken to simplify and make more transparent the requests for documentation when submitting the requests for reimbursement, to eliminate the administrative verification of the cost elements of small amounts, and to simplify the procedures applicable to the acquisitions of private beneficiaries which are not contracting authorities according to the law.
Other simplification measures, which will become applicable in the medium and long term, will concern, among other things, the simplification of the contents and documentation of the audits, expanding the sampling in the audits, the elimination of parallel, redundant records, concerning the projects and the use of the Unified System for the Management of Information (SMIS) as the sole source of essential information on the projects financed using structural and cohesion funds.
Reporter: What would be your advice to those looking to access European Funds?
Leonard Orban: We would advise them to prepare thoroughly for the accessing funds: to start with elaborating a strategy for the desired evolution of the company, and then to carefully gather information on the financing opportunities which are the best fit for their own development needs, the available co-financing options, and the conditions which need to be met.
It is very important for the co-financing sources for these projects to be secured on time to avoid any implementation deadlocks. We would advise the beneficiaries to ensure the training of the personnel in areas such as project management, financial and budget management, public procurement, to ensure the effectiveness and the fairness of the implementation of the project and to minimize the risk of financial sanctions.
Reporter: How would you describe the involvement of the domestic banks in the process of attracting European funds?
Leonard Orban: We have found that overall, the involvement of the banks in attracting European grants at the present time, was limited, and varied from one bank to the next.
We have had several meetings with officials of the banking system and we have found the difficulty of harmonizing the approaches of the various banks when it comes to the lending regulations.
There are however some banks which came along with concrete solutions and proposals, based on the expertise they acquired concerning projects financed using European grants, and which will only be implemented in the coming scheduling period.
For the 2014-2020 period we are aiming at a more active involvement of the banks in the implementation process, also subject to the stipulations of the European regulations in that regard.
Reporter: How much is the absorption process affected by fraud and how much by faulty management? Do you have an estimate of the scale of the fraud involving European grants on a national level?
Leonard Orban: I do not have that kind of statistic, but like I have repeatedly said, the ineffective management is one of the reasons behind the low absorption rate of the funds, together with the low degree of admi1nistrative activity, the excessive red tape, the overly complicated regulations etc.
As for the potential frauds and their scale, the Anti-Fraud Department (DLAF), to which all the allegations are reported, has the ability to provide you with all the necessary data.
Based on the information we have from the DLAF and the National Integrity Agency (ANI), we can find that there are cases of corruption and conflicts of interest in the management and audit structures, as well as among the beneficiaries and other parties involved, such as the consulting firms.
Most of the time, however, the fraud suspicions reveal themselves to be the result of insufficient professional training, of hurry or of the inadequate interpretation of the provisions of the law.
For my part, I want to reiterate the fact that one of the priorities of my tenures as the Minister of European Affairs was to increase the fairness and transparency in the use of European grants.
For this purpose, we have also drawn up and approved a behavior code in order to avoid the situations of incompatibility and conflicts of interest in the case of the personnel involved in the management of the programs financed using European grants. And in the process of coordination of European grants we have also included the monitoring of the cases of conflicts of interest, incompatibilities and frauds in the system for the management and implementation of the operational programs. For that purpose, the Ministry of European Affairs is cooperating with the ANI and the DLAF.
We are also ensuring increased transparency of the use of the structural and cohesion funds by publishing rich and updated information concerning the level of implementation of the operational programs, of the financing contracts, of the absorption rate. All of the aforementioned data is found on the website of the ministry (www.maeur.ro) and on the special website which the ministry has dedicated to the structural instruments in Romania (www.fonduri-ue.ro).
Last but not least, I will say that, in order to ensure the best, fairest and effective information of the public, the Ministry of European Affairs has opened an information center for structural instruments.
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