Spain diverted billions of euros – Now the EU Commission made a surprising revelation

There has been an uproar in the EU over the use of Spain’s corona recovery funds (RRF), as the country is suspected of diverting billions of euros from the support instrument to ongoing budget expenditures, such as pensions.

The suspicions are based on information from the Spanish National Audit Office and to media reportsaccording to which in 2024 around 2.4 billion euros of recovery money would have been transferred to public sector pensions and in 2025 up to 8.5 billion euros to other social expenses and to cover state losses.

At the EU level, the final use of recovery funds to cover the budget is prohibited, because the instrument’s funds are intended for investments and structural reforms that promote economic growth and employment as well as the green transition.

Temporarily possible

Vice-President responsible for Cohesion and Reform Affairs of the European Commission Raffaele Fitto emphasized that the funds of the recovery instrument may not be used permanently for current expenses of the member countries, but temporary use is allowed.

“Although the payment of pensions and other current expenses is not eligible for funding from NextGenEU or the Recovery and Recovery Support Facility (RRF), it would be possible for member states to temporarily use part of the liquidity of RRF payments to cover other budget expenses,” Fitto commented to the media.

The vice-president of the commission also stressed that such use is of a technical temporary cash management nature and does not mean the final diversion of funds to the wrong purpose.

“Such cash management operations by Member States are temporary and have no effect on the protection of EU funds.”

The Commission has also emphasized that the expenses outside the recovery plan must be returned and the funds used for the agreed investments and reforms.

Auditors’ requirements

The European Court of Auditors (ECA) linked the Spanish case to a wider criticism of the supervision of the EU’s recovery instrument. According to the court, the case confirms the previously expressed concerns about the transparency of the system.

“ECA has consistently emphasized the need for more systematic reporting of actual costs and final use of funds,” the Court of Auditors stated in its statement.

According to ECA, the current system differs significantly from previous EU funding models. The funds are paid to the member countries when they achieve the agreed reforms and goals and not based on individual expenses, as before, which makes it difficult to trace the funds.

The criticism is aimed specifically at the fact that without detailed monitoring of expenses, it is more difficult to verify where the money ends up in the end.

“Addressing grievances”

The Spanish case has also raised concerns in the European Parliament.

SDP MEP Eero Heinäluoma (S&D) emphasizes that suspicions of abuse must be taken seriously.

“My position is clear: if grievances arise, they must be addressed, and as a member of the supervisory committee, I plan to follow the progress of the matter closely.”

Heinäluoma reminds that the recovery instrument does not work like traditional EU payments, because the payment of funds is not based on individual expenses, but on the fact that the commission confirms that the member country has implemented the agreed reforms and investments. For this reason, the income and expenses of the recovery tool are not directly linked to each other.

“Spain, like other member countries, only receives funding when the Commission has determined that it has fulfilled its commitments,” says Heinäluoma.

According to Demarimep, the current discussion stems from the attention of the Spanish Court of Auditors, which concerns the need to justify certain budget changes more clearly than before.

However, according to Heinäluoma, the Court of Auditors does not claim that Spain violated its recovery and recovery plan or misused EU funds.

“The plan has not been changed, and pension expenses have not been recorded as expenses of the recovery tool,” says Heinäluoma.

Greek agricultural subsidies

According to SDP’s Euro representative, the suspicion that has now come to light is not an isolated case of possible misuse of EU funds.

“It should be noted that there are also genuinely serious suspicions of misuse of EU funds, which are currently being investigated by the European Public Prosecutor’s Office (EPPO).”

Heinäluoma refers to the suspicions of misuse of agricultural subsidies in Greece, which he says show that control should be strengthened throughout the Union.

The European Public Prosecutor’s Office is currently investigating twenty Greek prime ministers Kyriakos Mitsotakis‘s member of the center-right New Democracy Party. The suspected abuses are estimated to be almost 300 million euros. The funds are said to have passed through the state support agency over a five-year period starting in 2017.

Politicians are suspected, among other things, of trying to influence the granting of subsidies to their own supporters.

According to Heinäluoma, the parliamentary oversight committee will travel to Greece next week to assess the situation.