Because the EU Commission is not obligated to collect the data, even in cases where member states have that information, it is hard to tell who benefited and by what amount

The EU’s €577bn pandemic recovery fund is riddled with transparency gaps that make it hard to tell where the money actually ends up, the European Court of Auditors warned.

There is a “huge lack of transparency,” said Ivana Maletić, lead author of a new report, in a press briefing on Wednesday (6 May).

Set up in 2021, the so-called Recovery and Resilience Facility (RRF) was meant to help member states rebuild after Covid — with a focus on green and digital investment.

By January 2026, €577bn of the €723.8bn pot had been committed.

But because transparency rules are weak, it remains largely unclear what the money has achieved and who ultimately received it.

Only the 100 largest

Most payments can be traced to the final user, but member states are not required to share actual amounts spent on individual measures.

Some countries, including Austria, Estonia, France and Spain, have created online dashboards or maps showing funded projects.

But even there, information on final beneficiaries or investment results is lacking, according to the auditors.

Another problem identified by the auditors is the fact that member states are only required to publish the 100 largest recipients of pandemic-era funding.

In practice, these are usually public bodies such as ministries, municipalities, or state-owned companies such as railways, which account for more than half of the listed recipients and around 80 percent of reported amounts.

Those public bodies then pass funds on to thousands of private companies, NGOs, banks, and investment funds.

But these fall outside of the list. And because the EU Commission is not obligated to collect this data itself, even in cases where member states have it, the information is hard to access.

“We need information on all the recipients. Not only we, but citizens, journalists, everybody who would like to see how money is spent,” said Maletić.

The commission however, in a written response shared with EUobserver, said it “could not endorse” the ECA’s recommendations.

When asked whether it would push member states to provide more information on recipients beyond the top 100, commission spokesperson Maciej Berestecki said it had “issued guidance” to help member states collect the data and held “dedicated meetings” on the issue.

“In relation to data on actual costs, there is no legal basis for the Commission to request or analyse such national data,” he added.

Hard-baked

Some of the transparency problems identified by the auditors are hard-baked into the fund’s design.

Covid-era financing was put together in haste to help governments kickstart the economy, which had largely come to a halt.

Unlike traditional EU funding mechanisms, which typically reimburse incurred costs, the RRF disbursed money based on performance.

National authorities report on milestones and targets to unlock payments from Brussels, but not on the full chain of spending and financial flows.

The commission now wants to use the model as a template for the next seven-year EU budget.

“The approach has proven effective,” the commission told EUobserver in a response. “It ensures EU funding is directed toward tangible outcome.”

“We did not want to overly criticise RRF,” said Maletić, because it was a one-time emergency fund.

But, she added, “we cannot use this model for traditional policies such as cohesion or agriculture. We really have to be very cautious. Money cannot be misused.”

“Citizens have less trust in public finances if money is not spent with full transparency,” she also said.

The problem with the RRF

“Transparency is high for progress and milestones but low for money and who receives it,” Maletić said, summing up the core design issue of the Covid-era fund.

Under current rules, the commission is not obliged to collect data on individual payments or final beneficiaries, “which means it doesn’t happen,” she said.

For anyone trying to follow the money, detailed information is often only available on request from member states.

This can lead to month-long delays or, in some cases, complete failure to produce basic data, the auditors say.

French authorities, for example, were unable to provide the names of final recipients for three out of a sample of five measures examined by auditors.

EU treaties state that institutions should work “as openly as possible”.

The bloc’s 2018 financial regulation also says citizens should be able to see where EU money goes and for what purpose, through publication of “relevant information concerning all recipients of funds”.

But the court notes that the legal framework “does not provide for full disclosure on the flow of funds”.

“To this day, we still don’t know where the €577bn in Covid aid ended up. This is a scandal. After all, this is taxpayers’ money from across Europe,” Green MEP Daniel Freund told EUobserver.

“We are calling on the commission to ensure that all member states publish the final recipients by the end of the year. If this does not happen, we reserve the right to take legal action,” he added.

Private funds left out

One area the auditors mention, but explicitly did not cover, is the use of financial instruments, such as investment funds, to distribute pandemic financing.

Member states channel RRF money to national promotional banks such as Germany’s KfW or France’s Bpifrance, or into investment vehicles that co-finance privately capitalised investment funds, especially those targeting green tech or digitalisation.

These instruments then provide loans, guarantees or equity to companies.

The auditors did not track “repayable support” such as loans because they are “less risky” to public coffers, explained Maletić.

Even so, tracking individual beneficiaries can be difficult when funds are pooled and invested via intermediaries, even for member states themselves.

Some member states, including Estonia, Romania and Bulgaria, lost sight of where the money ended up once it was routed through financial vehicles, and where unable to retreive it when asked,

Part of the reason for this lack of transparency is practical and related to corporate confidentiality terms under which such funds operate.

But auditors acknowledged there is a risk of channeling public money through private equity funds.

“Commission and member states have to be careful not to enter into structures that use, for example, advanced tax agreements that can be seen as tax avoidance,” senior auditor Viorel Cirje told EUobserver, adding that transfers to financial intermediaries “should have actually been shown” in the report.

“There is great complexity there,” he also said.

EIB funding spyware

The risk isn’t far-fetched.

The European Investment Bank (EIB), which, according to its own website, implements some of these RRF-related financial instruments, has been criticised in the past for investing hundreds of millions in private equity funds located in tax havens.

Last year, the bank’s investment arm was found to have channelled funding to the Israeli spyware company Paragon Solutions via an Israeli venture capital fund, in what is known as the Paragon scandal.

A spokesperson for the bank’s investment arm told Belgian news outlet Apache, who broke the news, that it had “necessary safeguards to ensure EU funds do not support companies or projects that violate EU standards.”

“Whatever the explanation, the outcome is clear: EU taxpayers’ money has ended up in the hands of spyware companies whose products have been used to harm Europeans,” Frank Vanaerschot, director of Counter Balance, a dedicated EIB watchdog, wrote in an opinion piece for EUobserver.