IP/07/1958
Brussels, 18 December 2007
Farm payments: Commission decides not to apply 'safeguard mechanism' in Romania Following rapid progress by the Romanian authorities in putting in place the necessary controls over agricultural spending, the European Commission today decided not to apply the so-called 'safeguard mechanism' in Romania. In November, the Commission asked Romania to make further improvements to the software module designed to ensure that farm payments are made correctly, in order to avoid a provisional 25 percent cut in EU payments. A new report from the independent expert (Deloitte) concludes that no major deficiencies remain to be solved for this IT module. As such, the activation of the safeguard mechanism cannot be justified. The decision not to use the safeguard does not imply that everything is perfect. As in all new systems, certain problems may only emerge when payments start. In addition, Romania still needs to increase its control rate and there are still some IT deficiencies to be solved. The Commission will continue to monitor closely the situation and carry out controls in Romania early in 2008. It has the possibility of introducing the safeguard at any time if serious shortcomings are found. In addition, Romania will as all other Member States be subject to the normal audit procedures which are carried out in all Member States and which allow misspent money to be claimed back. Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, commented: "I commend Romania for the rapid progress they have made in improving their control systems, which avoided a triggering of the safeguard. This mechanism has clearly helped in motivating Romania to improve the situation. I hope the remaining issues can be ironed out quickly, which will permit farmers to get their payments. We will remain very vigilant when we audit farm payments in both Romania and Bulgaria. Just as we do for all other Member States, we will not hesitate to claim back any misspent money."
Background
On 10 October, the Commission informed Romania that it faced a provisional 25 percent cut in EU farm payments unless it could reverse certain serious shortcomings in its administration and financial control system before payments to farmers took place (payment year begins 1 December 2007). Commission Regulation 1423/2006, building on Art. 37 of the Accession Treaty for Romania and Bulgaria, provides for the reduction of payments by 25 percent if the systems set up to ensure the correct payment of farm aid are so seriously deficient that they affect the proper functioning of the overall system. Romania was told that it could prevent this happening by delivering on two points of the utmost importance: putting in place and properly testing two software modules which are indispensable elements in the Integrated Administration and Control System (IACS); and avoiding payments to farmers before the required controls are completed. At the same time, the Commission concluded that the 'safeguard' should not be applied in Bulgaria.
Romania replied to the Commission in a letter dated 8 November, setting out the measures it had taken, and accompanying its reply with a report from independent expert Deloitte. The Commission analysed the response and came to the conclusion that further serious work had to be done on one of the software modules. The latest report of the independent expert Deloitte shows that no major deficiencies remain.
How the payments system works
From 1 December every year, Member States can pay farmers their direct aid from the national budget of their country via a Paying Agency. This money is then reimbursed to the national budget from the Community budget. In view of the shortcomings of the Integrated Administration and Control System and the Paying Agency at the time of accession and in order to avoid financial irregularities and distortions in the functioning of the internal market, the Regulation 1423/2006 allows for 25 percent of the Community aid to be withheld if serious shortcomings are found in the systems. This does not mean that farmers would lose out, but that the national budget would have to provide 25 percent of the money supposed to come from the Community until such time as the shortcomings were overcome. Romania and Bulgaria are of course also subject to the regular audit procedure which is applied in all EU Member States. This could result in Clearance of Accounts decisions to ask Member States to pay back money to the Commission.
