EU audit criticises Irish firms' grants

THE EU paid out several grants in excess of £1 million to Irish companies on investments which were going to produce returns for the companies of up to 70 per cent, the EU's Court of Auditors has found.

The court's annual report, due to be published next week but seen by The Irish Times, singles out for criticism five payments from regional funds to Irish businesses in the period 1989 to 1993. The largest was £3.5 million to a firm investing in solar optics. The company's rate of return on that investment, it told the Commission in its grant application, was expected to be 69 per cent.

The court recommends that such payments in future be in loans rather than grants.

The report, which largely gives Ireland a clean bill of health, will nonetheless be somewhat embarrassing to the Social Affairs Commissioner, Mr Padraig Flynn.

Although the main thrust of criticism over expenditure is directed at management weaknesses and failure to carry out evaluations in member states, the report takes the Commission to task for failing to target funding to precise objectives. The EU spent £22 billion in social funds between 1990 and 1995.

The report also backs British and German claims that the EU's limited spending on poverty projects - £55 million for the last programme - is ineffective.

Perhaps the strangest element of the report relates to the EU's attempts to promote the use of widescreen television in the hope of Europe leading the market in digital TV. The Commission will have spent some £180 million by the end of 1997 subsidising the extra costs of filming and broadcasting for the new 16:9 format screen.

The result was some 52,703 hours of subsidised broadcasts - the majority of which could not be seen by viewers - in the hope of encouraging sales of widescreen television sets.

"The question should now be asked", the report says, "whether it is worth continuing with this measure."