KOSOVO: Probes into Misuse of EU Money Stall - Part 1

• by Stefano Valentino * - IPS/Freereporter (pristina)
• Tuesday, September 06, 2011
• Inter Press Service

Audit reports, criminal findings and judicial cases were hampered and not properly followed-up, this investigation revealed. IPS also found out that the EU Rule of Law Mission in Kosovo (EULEX Kosovo), that has had judicial power in Kosovo since 2008, is not willing to push further with major cases that are archived in the local courts.

The EU injected a record amount of aid — more than two billions euro — in the post-war recovery and state-building operation led, between 1999 and 2008, by the United Nations Mission in Kosovo (UNMIK). This figure is equivalent to two-thirds of the total funding provided by the international community.

And yet, the promised results are far from being achieved. The former Serbian province still has some of the highest poverty and corruption rates in Southeast Europe. This failure is partly due to mismanagement by U.N.-contracted officials tasked to handle donor money on behalf of the provisional self-government of Kosovo, evidence shows.

Ineffective control by the EU over UNMIK’s expenditure and widespread unaccountability frustrated the work of both European auditors and investigators.

In the wake of Kosovo’s declaration of independence in 2008, UNMIK’s Department of Justice closed in a rush, and sensitive cases involving alleged abuses and misappropriations exposing possible collusion between international and local U.N. staff did not come to trial. That happened right before the EU deployed EULEX to take over UNMIK’s judicial and institutional responsibilities during the summer of 2008.

'We transferred all completed cases to local courts and all pending cases to the Kosovo special prosecution office in compliance with the UNMIK-EULEX agreement,' said Annunziata Ciaravolo, former chief prosecutor at UNMIK.

'Technically, if an investigation was not properly carried out and if the (local) prosecutor is unwilling or unable to reopen it, EULEX international prosecutors could do so, provided that a proper assessment of the available evidence is made,' explained Kai Mueller-Berner, justice specialist at the EULEX Public Information Office. Mueller-Berner confirmed that out of the dozens of cases dealt with by UNMIK prosecutors, only two are still pending.

EULEX has one year left to fulfil its mission. 'We will ask the member states to extend the EULEX mandate beyond June 2012 and approve new funding for the judges' and prosecutors' contracts,' said Bart Staes, head of the delegation of the European Parliament’s Budget Oversight Committee that visited Kosovo in June to look into the efforts made to protect EU financial interests.

'It’s crucial that extra time is allowed to settle discontinued UNMIK cases related to misuse of taxpayers’ money. The Kosovo special prosecution office directed by EULEX needs to clarify how it intends to deal with cases that were not properly tackled by UNMIK’s prosecutors, through improving its coordination with local courts.'

The European Court of Auditors sounded a warning in its early annual reports, starting from 2002, on the financial statements of the European Agency for Reconstruction. The Agency channelled all major EU disbursements until 2008, before being replaced by the European Commission Liaison Office to Kosovo, which is in charge of current support programmes.

But the warning was ignored.

The European Court of Auditors reported that 'where UNMIK is directly managing the contracts, the Agency was faced with an absence of sufficient justification for the expenditure'; that 'audits on a number of projects confirmed that funds had to be recovered'; and that often 'owing to the lack of requisite information on the final use of funds, the Court is unable to express an opinion on the regularity of the underlying payments.'

The Court is about to start an extensive review of all EU-funded activities since 2007.

EU funding was primarily committed to support public utilities. The former Serbian state companies were managed by the international staff of the Kosovo Trust Agency, created in 2002 within UNMIK’s Department for Reconstruction and Economic Development (Pillar IV). Salaries and running costs were paid directly by the European Commission, as part of the framework funding agreement with the U.N. administration.

In 2005 the consultancy firm KPMG concluded that public companies had no proper bookkeeping, thus being largely exposed to fraud. One year later, the Kosovo auditor general couldn’t find any trace of how those companies had used the subsidies regularly received from Kosovo Trust Agency.

Based on documents IPS got from the Kosovo Ministry of Finance, those subsidies included also 366,000 euros provided by the European Reconstruction Agency.

In 2008 the U.N. Office of Internal Oversight Services published an assessment report on the UNMIK mandate, criticising the Kosovo Trust Agency for neglecting the monitoring of public companies' accounts, in breach of its own regulations and auditors’ recommendations.

* This story is published under an agreement between IPS and Freereporter and it was developed with support by the European Fund for Investigative Journalism.

© Inter Press Service (2011) — All Rights ReservedOriginal source: Inter Press Service

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