BRUSSELS (Reuters) - The European Commission and EU governments are not doing enough to prevent the misuse of the bloc's money, auditors said on Monday, warning that fraudulent or corrupt businesspeople may receive funds because too few of them are blacklisted.
The EU's current blacklisting systems - set up in 2016 to stop potentially risky people and bodies from getting EU cash - were much less rigorous than those used by the United States and the World Bank, the report said.
Nearly all 448 entities barred by the EU in 2020 were excluded because of bankruptcy, which would have prevented them from getting EU money anyway, auditors said. Only two were blacklisted for corruption or fraud.
EU member states, who in practice hand out most of the bloc's funding, are currently not obliged to set up blacklisting systems at all, the EU auditors added in their report.
"Blacklisting is not used effectively to prevent EU funds from being paid out to individuals, businesses or public organisations involved in illegal acts such as fraud and corruption," they said.
The report focuses on funds disbursed in 2020, when the EU paid out around 150 billion euros ($160 billion) of its budget to farmers, researchers, companies and other beneficiaries, in line with previous years.
None of the four countries assessed for the report - Estonia, Italy, Poland, Portugal - had a blacklisting system in place, the report said.
The Commission usually cannot access national data on fraudsters easily, and often relies on the word of applicants to offer grants, the report added.
In 2020, the EU anti-fraud office OLAF recommended the recovery of about 300 million euros of EU funds that were misspent.
($1 = 0.9371 euros)
(Reporting by Francesco Guarascio; Editing by Andrew Heavens)