'EU may compel countries to return funds if money is misused'

MANILA, Philippines –  The new ambassador of the European Union bared yesterday that the EU could compel countries that receive European aid to return the donated funds if the money is not being spent for the intended purpose.

Ambassador Guy Ledoux said the EU, which conducts regular evaluation of projects, had in the past issued “recovery orders” on aid to the Philippines.

His statement follows recent allegations that some Philippine government agencies are involved in the diversion of funds from international organizations.

“We’ve a very strict auditing mechanism I can tell you or we account our projects regularly checked by independent auditors. And when the money is not spent as it would meant to be spent we make what we call recovery order. So that means we ask our counterpart, the beneficiary, to give us the money back,” Ledoux said in his first press conference at the Mandarin Hotel in Makati City.

He said it was not a case of misuse of funds but he did not disclose the specific project, amount of assistance granted or the year that the recovery order was issued. He also did not identify who was the President of the Philippines then.

“I don’t know exactly when but it has happened in the Philippines,” he said.

The ambassador was asked if the EU was satisfied with the quality of the management of EU aid by Filipino beneficiary.

“I indicated that we are very satisfied with the management of EU aid in the Philippines. I also confirmed that we had issued recovery orders in the Philippines,” he said in a statement issued after the press conference.

Ledoux explained that issuing a recovery order does not imply that there has been mismanagement of funds saying, “It can simply be a consequence of misinterpretation of our complex financial rules or, as in most cases, a request to return unused funds.”

“All our grants and other financial contributions are safeguarded by a set of specific rules and obligations. Being fully aware of the uniqueness and complexity of our rules and wanting to support an optimal implementation, we have started to provide financial and contractual guidance to better familiarize beneficiaries of EU funds with these rules. We are confident that this will further reduce the risk of misinterpretations and ultimately the use of recovery orders as well,” he stressed.

Ledoux said the EU would release in April the report on the overall review of its development assistance to the Philippines, including projects and activities in Mindanao.

He said the executive summary of the report struck him where it was indicated that the EU was right to concentrate its development assistance and effort in Mindanao.

The National Economic and Development Authority (NEDA) reported that the EU is the second largest donor with P11 billion (US$ 236 million) as grant in 2009.

Ledoux formally became the new EU ambassador and head of delegation to the Philippines after his presentation of credentials letter to President Aquino in Malacañang on Monday.

In this capacity, he represents the President of the European Council Herman Van Rompuy and European Commission President Jose Manuel Barroso under the authority of the High Representative for Foreign Affairs and Security Policy Catherine Ashton. – With Jess Diaz