Furore in Poland over EU freeze on road funds

(WARSAW) - The European Union has frozen nearly one billion euros in funding for Polish roads, as prosecutors here pressed charges against 11 people suspected of price fixing tenders in road works co-funded by the EU.

"The (European) Commission has, as a precaution, interrupted payments until the situation is clarified, the necessary control measures are taken and the extent of the problem is established," it said in a statement Thursday, adding that the "Commission has ZERO TOLERANCE when it comes to to fraud".

The EU is demanding the Poles investigate and act "to protect themselves and to remedy any damage", including "recovering any public funds".

"We would like to see these payments resumed as soon as possible and are hopeful this will be the case as the Polish authorities have an excellent record in managing funds well and efficiently," the Commission statement said.

Polish prosecutors charged 10 senior managers from top construction firms -- including Austria's Strabag and France's Eurovia -- and a director of the country's GDDKiA road agency on suspicion of being involved in a price cartel.

The total 957 million euros ($1.3 billion) frozen by the Commission are part of a larger four billion euro package destined to upgrade the country's communist-era road infrastructure.

The Commission's move, coming just days ahead of an EU summit next week aimed at thrashing out the bloc's seven-year budget, sparked furore in Warsaw.

Elzbieta Bienkowska, minister for regional development, termed the funding freeze "very strange".

"Poland is the victim in this case, because it's the Polish justice administration that discovered the alleged illegal price cartel among road works companies," she told reporters.

Deputy transport minister Patrycja Wolinska-Bartkiewicz slammed the freeze as "unjustified" insisting that "the Polish system managing and auditing European funds works correctly".

Warsaw hopes to resolve the issue before the end of March in order to be able to keep planned road works on schedule, Bienkowska said.