BRUSSELS – In a newly released audit report published Wednesday, the European Court of Auditors has raised critical transparency concerns around the EU’s landmark €577 billion ($679 billion) post-COVID-19 economic recovery fund, stating that auditors cannot fully trace how billions in public funding are allocated across the bloc’s 27 member states.
The Recovery and Resilience Facility (RRF), the largest component of the EU’s collective pandemic response, was established in 2020 at the height of the global health crisis. When national governments imposed border closures, strict lockdowns, and raced to secure vaccine supplies to curb the spread of the deadly coronavirus, the EU fell into its deepest post-WWII recession. Designed to deliver targeted grants and loans to member states for projects focused on sustainable growth, digital transition, and green transformation, the fund departed from traditional EU budget processes: instead of disbursing funds based on projected project costs, payments are released only after pre-agreed policy and reform milestones are met. To ensure public accountability, RRF rules require national governments to publish the identities of their top 100 funding beneficiaries.
Despite these safeguards, the audit found major gaps in public disclosure. Examining reporting from 10 selected member states, auditors found that the published top 100 beneficiaries are almost entirely public entities – national ministries, government agencies, and subnational governments – with almost no transparency around private sector recipients, including businesses and large industry consortiums that receive billions in funding. Thousands of final recipients remain unlisted in public records.
“Without clear, complete information on where the money goes, we cannot verify if funds are distributed fairly, if dangerous concentration of funding exists, or if EU taxpayer money delivers tangible value for ordinary citizens,” explained Ivana Maletić, the European Court of Auditors member who led the audit. Maletić emphasized that transparency is not a trivial administrative detail, but a foundational requirement for public trust and democratic accountability. She added that EU legislators investigating potential misuse of public funds have repeatedly requested details on transfers to private companies and consortiums, information that auditors were unable to obtain. The audit specifically noted that French authorities cited excessive administrative burden as a reason for failing to share details on final private recipients, even upon formal request.
Cases of fraudulent diversion of RRF funding have already been documented: two years ago, law enforcement agencies in Italy, Austria, Romania and Slovakia arrested 22 people as part of a crackdown on a criminal ring accused of siphoning more than €600 million ($700 million) in pandemic relief funds.
The European Commission, the EU’s executive branch which manages the RRF, has pushed back against the auditors’ criticism. Commission officials noted that the framework for the fund was negotiated and approved by all 27 member states, limiting the executive’s ability to impose stricter transparency rules unilaterally. It defended the milestone-based payment model, arguing that its existing system of payment review, progress reporting, and ongoing engagement with member states to resolve reporting inconsistencies is functioning as designed.
The auditors’ broader concern extends beyond the current RRF: they warn that the flexible, conditions-based model used for the recovery fund is gaining support among policymakers, and could be expanded to major spending areas in the EU’s next seven-year long-term budget (2028-2034), which is expected to total roughly €2 trillion ($2.4 trillion). If adopted for traditional spending lines such as agricultural subsidies and infrastructure grants, the same lack of transparency could become systemic, Maletić argued. The milestone model, she said, is unacceptably opaque and boils down to arbitrary allocation of funds to recipients, making it unsuitable for longstanding EU budget policies. The commission dismissed this concern, noting that any future changes to EU budget architecture will be decided jointly by member states and the directly elected European Parliament.