March 4, 2013

Spain was demanded by the European Commission to repay €40.6 million (US$52.85 million) in Common Agricultural Policy (CAP) funding, in large part because of discrepancies over the payment of beef export refunds.

In a statement, the Commission accused Madrid of conducting "deficient ex-ante checks on beef" export refunds and alleged "advance notice of physical checks given to the exporters", allowing dishonest exporters to hide financial irregularities from inspectors.

Brussels has the authority to demand the repayment of money it sends to member states for agricultural subsidies if they are defrayed illicitly or in a way that breaks EU spending rules. And while the Commission cannot demand the money back directly from meat and livestock companies, which were wrongly compensated, national governments can ask them to repay subsidies - especially if there have been irregularities.

In this instance, the Commission alleged Spain had misused subsidies for both beef and sugar, following an audit of its accounts. "The Commission is required to ensure that member states have made correct use of the funds," it said in a communiqué. It also demanded Spain repaid €16 million (US$21 million) in 'area aid' paid to livestock and other food producers based on the size of their landholdings – again there were problems: "deficiencies in the allocation of the entitlements", said the Commission.