Brussels: European auditors on Wednesday raised concerns over the lack of transparency in the use of billions of euros disbursed under the bloc’s post-pandemic recovery programme, saying they are unable to clearly trace how a significant portion of the funds has been spent.

The Recovery and Resilience Facility (RRF), launched in 2020 by the European Union, was designed to help member states rebuild their economies after the Covid-19 crisis. By January this year, the fund had reached an estimated 577 billion euros (USD 679 billion).

However, in a new report, the European Court of Auditors said tracking the allocation of funds remains difficult, with thousands of recipients, including businesses and large consortiums, not clearly identified.

"Without this information, we cannot assess whether funds are fairly distributed, whether risks of concentration exist, whether EU money delivers value for citizens," said Ivana Maletic, who led the audit.

"Transparency is not a technical issue. It is a core condition for trust and accountability," she told reporters.

The European Commission had raised the funds by issuing bonds on capital markets and channelled them into projects aimed at making economies more sustainable, digital and resilient. Unlike earlier funding mechanisms, payments under the RRF are tied to the fulfilment of specific milestones rather than project costs.

Under the rules, member states are required to disclose their top 100 beneficiaries. But auditors found that in 10 countries reviewed, these were largely government bodies, with little publicly available information on private sector recipients.

Maletic noted that lawmakers frequently seek clarity on how funds are transferred to companies and consortia, but such details are often unavailable. "about transfers and money going to different companies, big companies, consortia and so on. This is something that we don't see."

The auditors also faced difficulties obtaining detailed data from France, where authorities cited administrative challenges. The report said it was "too administratively burdensome to obtain information on final recipients and amounts paid, even upon request."

"You can imagine in France we have thousands and thousands of recipients," Maletic said.

Concerns over misuse have already surfaced. In 2024, police in Italy, Austria, Romania and Slovakia arrested 22 individuals in connection with a suspected scheme involving the siphoning of around 600 million euros in recovery funds.

Responding to the findings, the European Commission defended the system, saying its framework of payment requests, progress reports and continuous engagement with member states is functioning as intended.

It added that the design of the fund, including its condition-based approach, had been agreed upon by all 27 member countries.

However, auditors warned that the model could be extended to future EU budgets, including major spending areas such as agriculture and infrastructure under the bloc’s next long-term financial framework.

Maletic questioned the clarity of the system, saying it is "not clear" and essentially boils down to "just a number of people getting different amounts. It's really a model which cannot be applied to traditional policies."

The European Commission, however, dismissed the concerns, stating that "the design of future legislative proposals" ultimately rests with member states and the European Parliament.