TALLINN, 8 August 2005 - The State Audit Office has commenced a preliminary audit in the matter of the use of funds of an environmental project in the rural municipality of Sonda (Ida-Viru County) financed by the European Union. The European Commission submitted to the rural municipality a claim to repay the funds received during the project – approximately 8 million kroons in total – by no later than today, 9 August 2005, but the rural municipality did not repay the money and it is not able to repay it.
The rural municipality of Sonda has submitted the documents pertaining to the use of the funds of the project, which was implemented through 2002-2004, and the municipality has also addressed the police.
From the materials submitted to the State Audit Office it appears that the previous government of the rural municipality of Sonda submitted its project titled HASCO "Oil-Shale Semi-Coke Processing into Soil Improver, Soil Improver Used to Stabilise Slurry and Restore Damaged Soils for Foresting Mainly with Hybrid Aspen" to the LIFE – ENVIRONMENT competition of the European Commission in 2001. The project lasted from February 2002 to December 2004. The calculated total cost of the project was supposed to be 2,529,970 euros.
At the time of initiation of the project the European Commission made the rural municipality of Sonda an advance payment of 505,994 euros. The rural municipality of Sonda, on the basis of a decision of the Council of the rural municipality, took a short-term loan from the Environmental Investment Centre in the amount of 3,958,000 kroons.
On 9 June 2005 the European Commission presented to the rural municipality an invoice according to which the Commission reclaims the 505,994 euros paid in advance plus 463 euros of interest. The indicated reason for reclaiming the payment is that the project has not achieved its objectives. Copies of the Commission's letters to the rural municipality that are at the disposal of the State Audit Office refer to doubts about the financial correctness of the companies chosen as the partners of the project as well as to certain conflicts of interest and insufficient reporting.
The Commission demanded that the invoice be paid within two months as from the receipt of the letter. This deadline expires today, but the rural municipality of Sonda has not paid the money.
Andrea Eiche, who has been the rural municipality mayor since autumn 2004, has assured the State Audit Office that the rural municipality is unable to repay the amount. Last week the mayor addressed the police, finding that the persons involved in the project for years have caused considerable damage to the rural municipality of Sonda.
According to the rural municipality, the damage lies in the fact that the rural municipality of Sonda must pay the European Commission approximately 8 million kroons and the Environmental Investment Centre approximately 4 million kroons. These two payables alone equal the entire annual budget of the rural municipality of Sonda.
According to the State Audit Act, the State Audit Office will audit the use of the funds of the European Union allocated through the state and local authorities and the performance of the liabilities assumed before the European Union in this respect. With respect to the end users of the funds of the European Union and the persons having obligations before the European Union the State Audit Office has the right to conduct proceedings in order to identify the truthfulness of the circumstances, which were the prerequisites for receiving the funds of the European Union and the legitimacy of the use of the funds and the performance of the obligations.
The State Audit Office has commenced a preliminary audit in order to identify the main circumstances, which pertain to the use of the EU funds in the rural municipality of Sonda, to decide on further action. The rural municipality of Sonda has assured the State Audit Office of its full cooperation
Toomas Mattson
Communication Manager of National Audit Office
Telephone: 6400 777
Mob: 51 34900
E-mail: [email protected]
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Posted:
8/8/2005 12:00 AM
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Last Update:
9/22/2015 8:04 AM
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Last Review:
9/22/2015 8:04 AM