BusinessCompany NewsEU to avoid costly debt write-offs

EU to avoid costly debt write-offs

A set of comprehensive guidelines on the recovery of debts owed to EuropeanUnion institutions has been adopted by the European Commission.

The EU wants to avoid the unnecessary and expensive writing off of money owed. Debts owing to Brussels can run into the millions of euros.

Under the new harmonised rules, decisions to waive the recovery of debts for Euro 1m (Pounds 620,000) or more and for Euro 100,000 (Pounds 62,000) or more where the waiver is 25% plus, will be left to the College of European Commissioners itself.

For all other cases, officials will be required to follow principles of proportionality, taking into account:

The facts, such as the seriousness of an irregularity, repeated offencesand intent;
The consequences of waiving the debt, including the amount involved, therisk of setting a precedent, the undermining of EU law;
The economic impact of the full recovery on the debtor, any distortion of competition that could result from writing off debt and the wider economic and social consequences of insisting on repayment.

In-house rules have especially been designed to prevent the recurrence of a case such as the Flechard Russian butter aid scandal, where a tender security of euro 17.6m (Pounds 11m) was claimed, but only euro 3m (Pounds 1.87m) was actually paid.

Meanwhile, any decision on writing off a debt must include a note on the underlying legal and factual justification and the grounds.

Budget commissioner Michaele Schreyer said: ‘Transparency and equity are thekey principles for dealing with debt recovery. The set of criteria that weadopted today are clearly based on these principles.’

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