António Costa
Image: Paulo Cunha/ Lusa

“Serious conflicts of interest; irregular funding” identified in bids for PRR ‘bazooka’

Government says it is correcting situations

Recent audits of Portugal’s PRR (Plan for Recovery and Resilience, funded by Brussels and dubbed ‘the bazooka’ by PM António Costa) have revealed “serious situations” of irregularities and conflicts of interest which have raised concerns about the integrity of the fund distribution processes.

Following a detailed analysis of audits carried out by the General Inspectorate of Finance, the Court of Auditors and DG Ecfin of the European Commission, the Public Prosecutor’s Office identified “worrying cases of conflicts of interest and irregular funding totalling €9.6 million”, according to documents trailed by Jornal de Notícias and subsequently picked up by other media sources.

These cases were particularly notable among the PRR’s intermediate beneficiaries, entities responsible for analysing applications and distributing funds.

One glaring example occurred at IAPMEI – the State’s Agency for Competitiveness and Innovation – where a member of the application evaluation committee had links to an applicant organisation. 

According to the Public Prosecutor’s Office, the man “performed institutional functions for an organisation that was part of the consortium being assessed”.

This conflict was later mitigated by the person’s dismissal, but there are other cases that include an intermediate beneficiary who allocated funds to a venture capital company of which he was the majority shareholder, as well as the lack of declarations of no conflict of interest in another intermediate beneficiary.

In addition, the Court of Auditors discovered €9.6 million in irregular funding, with 8.2 million allocated to ineligible applications and €1.4 distributed in excess of the maximum amount defined. These funds were mainly earmarked for social responses, such as nursing homes.

Says Expresso, the report did not name names, but the various examples given “serve as justification for the Public Prosecutor’s Office that mechanisms of control in the attribution of PRR funds are very fragile and permeable to irregular situations”.

ANTI-Corruption software identifies cases

One of the tools used is the anti-corruption software Arachne, which helps detect and prevent conflicts of interest and irregularities. This software was fundamental in identifying at least one of the cases of conflict of interest at IAPMEI.

In spite of these failings, the European Commission recently approved two more payments to PRR, totalling €2.460 billion, withholding €700 million due to delays in specific targets, but unrelated to the irregularities found.

The report drawn up by prosecutor Ana Carla Almeida emphasises the need for stricter and more effective controls to ensure compliance with PRR rules – stressing the importance of close monitoring to correct and prevent similar cases from occurring.

As all media reports explain, “the government says it is correcting these situations”.

Contacted initially by Jornal de Notícias, the Ministry of the Presidency argued that the “current mechanisms effectively mitigate conflicts of interest, double funding and the prevention of fraud and corruption”.

The importance of the efficient management of Portugal’s PRR has  been stressed since the outset, with President Marcelo saying late last year that 2024 must be the year in which Portugal accelerates implementation of the plan bearing in mind only half the available money is “in the field” right now.

Back in 2021, Marcelo warned that he had set up his own team in Belém to oversee the management of PRR funding.

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