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SGI: EU Won't Repay €26.5 milion Used to Support Social Enterprises
Thursday 26 November 2009 Zoom in | Print page
Bratislava, November 26 (TASR) - Financial support reaching €26.56 million that was provided to so-called social enterprises by the Government using EU Funds was unjustified, said board chairman of the Slovak Governance Institute (SGI) Miroslav Beblavy at a press conference on Thursday.
According to Beblavy, these non-governmental organisations were subsidised at odds with European rules on state support. "As this assistance was provided unjustifiably, Brussels will never pay the money to Slovakia. If some of them have already been subsidised, Brussels will ask for a refund," he added.
The Labour, Social Affairs and the Family Ministry has provided money from the European Social Fund (ESF) to eight pilot social enterprises.
According to Beblavy, the problem lies in the fact that seven of the eight social enterprises pursue business activities. The EU has set strict rules for subsidised businesses that aren't being met at the moment. If the enterprises hadn't been carrying out business activities the requirements for subsidies would have been met.
"The problem is at two levels. First, overall generosity. No European legislation enables you to provide 95-percent financial backing like these chosen pilot social enterprises are getting. The second (problem) is in the structure of the subsidy," said Beblavy, adding that EU law only allows businesses to be subsidised to a restricted level and according to an exact structure. For example, a subsidy reaching only 50-percent of labour costs to boost employment can be provided. Limits of 15-20 percent are set when buying technical equipment.
According to SGI, the only way to by-pass these rules is to ask for an exemption, which didn't happen in this case.
Beblavy called the practices fraudulent, as the reports provided by the social enterprises to the ministry don't include information on doing business.
SGI has already sent its findings to the Finance Ministry, the Labour Ministry and the European Commission (EC). "Two bodies can stop providing the money and they are the Finance Ministry, which represents the first instance, and the EC, which represents the second," added Beblavy.
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