EU freezes €890m of Polish road funds over graft claims

Thu, Jan 31, 2013, 00:00

The European Union has frozen some €890 million of development funds for Poland over fears of corruption in road-building projects, and told Romania to do more to fight graft and defend the rule of law.

The money earmarked for Poland was suspended amid allegations of price-fixing by firms bidding for highway construction contracts. An investigation by Polish authorities has led to charges being pressed against 10 building company employees and a director of the state roads agency.

“If these accusations are confirmed, it will mean that EU rules on public calls for tender have been broken, and it will also show weaknesses in the system of management and control,” the European Commission said in a statement.

It added, however, that the move “does not go against Poland and it is not aimed at punishing Poland. The commission has prudently interrupted payments until the situation is cleared up and the scope of the problem is established. We would like to see these payments resumed as soon as possible and are hopeful this will be the case.”

Projects cancelled

Last year Irish firm Sisk pulled out of road-building operations in Poland, complaining of delays and unexpected costs linked to difficulties with the Polish road authority. Irish construction company Siac also cancelled a major Polish project.

Major construction enterprises helped sustain the Polish economy in the lead up to the Euro 2012 football tournament, but many building firms have since gone bust as spending has dwindled.

Polish officials were indignant at Brussels’ decision.

“The Polish system of selecting projects and contractors is running efficiently,” said Elzbieta Bienkowska, the minister for regional development.

“Poland is the aggrieved party in this matter, as it was Polish law enforcement agencies that detected that perhaps there was some price-fixing between contractors,” she said, adding that Warsaw could do little more to safeguard the system short of assigning “a policeman to every contractor”.

On Romania, the commission said the government had taken some steps to strengthen respect for the constitution and constitutional court. But Brussels had nonetheless “received numerous reports of intimidation or harassment against individuals working in key judicial and anti-corruption institutions, including personal threats against judges and their families, and media campaigns amounting to harassment”.

The EU also urged Romania’s “ministers and parliamentarians to set an example in terms of respect for integrity”. Just last week, Romanian deputies voted overwhelmingly to boost their own immunity from prosecution.