The government received about €55 million in European Regional Development Funds between 2007 and 2013. Photo: Reuters

The distribution of EU funds could be handled by a centralised unit after about €23 million risked being misallocated, Times of Malta has learnt.

European Affairs Ministry sources said plans to have the distribution of such funds handled by the ministry’s managing authority, rather than by a number of different entities, were being actively studied. This followed an audit which revealed that millions of euros, targeted for EU-financed projects, were on the verge of being lost because of “poor administration” by State entities.

The government received about €55 million in European Regional Development Funds between 2007 and 2013.

An internal audit of the distribution of the funds, however, found that government bodies such as Malta Enterprise, the Malta Tourism Authority and the Employment and Training Corporation had only managed to utilise about €32 million, €23 million short of the amount allocated.

We just cannot afford to repeat the poor administrative practices we saw in the past

The review, commissioned by the ministry, highlighted several instances where funds had been distributed incorrectly and, in certain cases, even uncovered possible cases of fraud, the sources said. It also revealed that different entities were giving their own interpretation of regulations, which had led to money being given out when it should not have been or in some cases, money being tangled up in “unnecessary bureaucracy”.

Parliamentary Secretary Ian Borg pointed out when contacted that no funds had been lost as they were diverted onto other projects before the funding period officially closed. However, the system in place which allows State entities free reign over the distribution of funds would have to be reviewed, he added.

“We just cannot afford to repeat the poor administrative practices we saw in the past. We have to make sure that we approach the next funding period with a suitable structure that remains accountable from start to finish,” Dr Borg said, adding that, when he took office, only 30 per cent of EU funds had been absorbed. The rate of absorption has since risen to 78 per cent.

Too get a better picture of the problems facing applicants, Dr Borg said he had commissioned a survey among those who had benefited from EU funds over the last funding period. This, he said, revealed that one third found the process “very bureaucratic”, claiming too much paper work and information was required.

Three of every four respondents gave negative feedback when asked about the application process, he added.

“We want our focus to be on the implementation of projects. That is why we are proposing a revamp in the way these bodies operate and the way funds are managed,” Dr Borg said.