Officials warn Romania may need to repay a fifth of EU aid this year

(BUCHAREST) - Romania may need to repay up to 400 million euros ($520 million) in EU development aid this year, over a fifth of what it has received to date, officials said on Monday after the bloc halted payments due to irregularities.

European Affairs Minister Leonard Orban said up to 800 million euros in EU development aid, both what has been received and what is due to be disbursed, might eventually be clawed back by Brussels.

Officials later said that up to 400 million euros might have to be paid back this year, or 22 percent of the 1.8 billion euros in EU development aid that Romania has received so far.

The European Commission last interrupted payments for four programmes in the transport, competitiveness, human resources and regional policy areas because of irregularities.

The interruption is temporary, but Romania, the second poorest EU member, must correct the shortcomings identified by Commission within two months or face a total suspension in payments.

The Commission also said it would recover funds or reduce planned disbursements due to the irregularities.

Most of these so-called corrections are in the transport sector, said Orban.

The primary beneficiaries of the aid, and which will be required to repay the funds, are the state-owned railway and highway company CNADR.

Nevertheless, the state budget would likely be affected, Orban conceded.

Private companies which received aid may also sue the state for losses due to its failure to properly carry out EU procedures.

Orban blamed the situation mostly on "incompetence" in the Romanian administration, although he acknowledged there were cases of fraud and conflict of interest in awarding EU funds.

The Romanian media has exposed numerous cases of EU funds being awarded to companies owned by relatives of politicians or senior officials.

Romania has only made use of 9.7 percent of the 20 billion euros in EU funds available to it from 2007, when it joined the bloc, to 2013, according to the latest data.