EU investigates Polish agency's non-payment of foreign contractors


The European Commission is investigating why Poland’s government is refusing to pay dozens of foreign contractors for work carried out under a road-building programme worth billions of euro and backed by Europe.

Should the investigation find Poland’s state institutions have been at fault, it will deal a severe blow to the reputation of a country that is routinely held up in Brussels as a model of the successful use of European Union development cash.

EU officials are looking into how Poland’s state highways agency managed a multiyear programme, worth a predicted €5.5 billion this year alone, to modernise the creaking road system Poland was left with after decades of communist rule.

The scheme – one of the biggest publicly funded infrastructure projects in Europe – has more than doubled the size of Poland’s high-speed road network in four years. But it also has left dozens of contractors alleging that the highways agency, GDDKiA, owes them billions of euro in unpaid bills. Big multinationals – from Austria’s Strabag to Irish firms Siac, Sisk and Roadbridge – have said that delays in payments on Polish contracts have affected their financial performance.

Quality benchmark

The agency says it has complied with the law and where disputes arose it was mainly because contractors’ work was not up to the required quality.

The risk for Poland is that if the commission backs the contractors’ complaints, it could jeopardise Poland’s ability to access funds from the EU’s next round of development funds, money on which its economy depends for growth.

“This issue of management of road-construction contracts by GDDKiA has been brought to our attention at the commission. Our services – in charge of regional policy – have asked the Polish authorities to provide more information,”said Shirin Wheeler, commission spokeswoman on regional policy.

“We have also asked the Polish audit authority (within the finance ministry) to carry out an audit of the specific contracts which are affected. We expect the results in the first few months of next year.”

Poland is the biggest recipient of EU funds. It secured €68 billion in the bloc’s 2007-2013 budget, and is seeking a similar amount from the next budget.

GDDKiA’s chief executive, Lech Witecki, said he expected the European investigation would confirm his contention that it was the contractors who were primarily to blame for the problems.

“We are not afraid of its results. As a matter of fact, we are happy that it is going on, as it will show the real state of affairs and that we’ve been acting according to the law,” Mr Witecki said.

Poland launched its latest phase of road-building with an ambitious aim: to turn its patchwork of bumpy two-lane cross-country roads into a proper highway network that would tie it into Europe after years of isolation. However, the project hit trouble almost as soon as the contractors arrived at the construction sites with their machinery. Contractors and GDDKiA have contradictory accounts of what went wrong.

Contractors say the highways agency was responsible for preparing the projects, but did not do its job properly. Irish contractor SRB said it had to stop work on one section of road because a building permit was withdrawn.

Firms said when routine problems arose – for example, the discovery of archaeological sites on the route, or raw materials that were unavailable or unexpectedly costly – GDDKiA was not flexible about finding a solution. – (Reuters)