LONDON (AFP) – Billions of euros earmarked by the European Union for developing rundown areas are lying idle because member countries cannot find the required matching funds, the Financial Times reported Tuesday.
More than half-way into its spending cycle, the EU has spent only 10 percent of the 347 billion euros (456 billion dollars) allocated until 2013 for promoting growth in poor regions, according to EU documents seen by the paper.
Guidelines for the fund's allocation were agreed in 2006, before national governments were forced by the financial crisis to make severe public spending cuts.
Under the agreement, the EU would only provide money if local bodies, usually local or national governments, contributed up to half of the project's cost.
An internal European Commission report drafted last month and seen by the FT highlighted the problem.
"As public finances came under increasing strain, many cohesion projects had to be cancelled before the contracting phase got under way or during implementation as beneficiaries found it impossible to secure their own contributions," the report said.
EU social affairs commissioner Laszlo Andor warned against overplaying the significance of the statistics.
"This is not a bank that needs to produce a balance at any given moment," he told the newspaper.
The Structural Funds and the Cohesion Fund are the financial instruments the EU uses to even out regional disparities in wealth and consist of the European Regional Development Fund and the European Social Fund.
The cohesion fund is intended to assist small and medium-sized enterprises, but has also been tapped into by multinational giants including Coca-Cola, IBM, and Nokia Siemens -- although this was not illegal, the paper said.
The pool of money is used to fund projects ranging from the building of bridges to the training of staff in fast-food restaurants.
However, those responsible for implementing the funds within the nation states criticised the system's red tape.
"They are not really interested in whether the bridge is built," Marek Kalupa, whose office allocates structural funds in Poland, told the paper.
"All they're interested in are the dates and times."
The investigation, carried out with the Bureau of Investigative Journalism, also criticises the fund for its bureaucracy and a weak oversight system, which it said rarely punished fraud.
The European Commission -- the Union's executive arm -- blamed the slow uptake of funds on the time taken to select suitable projects; for the money eventually allocated to be spent; and for it to be reimbursed by Brussels.
The newspaper's investigation also found that 8.4 billion euros was paid out of the fund in error, 25 percent of which was still to be recovered.
TOKYO (Reuters) – Japanese prosecutors will open an investigation into possible insider trading involving shares of Wal-Mart's (WMT.N) Japanese subsidiary Seiyu, the Nikkei business daily said on its website on Tuesday.
The trading is suspected to have occurred when Wal-Mart turned Seiyu into a fully owned unit in 2007, the Nikkei said on its website, citing unidentified sources.
Wal-Mart officials declined to comment on the report, repeating a statement made on November 5 when Japan's Securities and Exchange Surveillance Commission began an investigation into possible insider trading, that it would cooperate with authorities.
(Reporting by Tim Kelly; Editing by Michael Watson)
TOKYO/SEOUL (Reuters) – Factories in Japan and South Korea cut output in October, adding to evidence of an Asia-wide slowdown and boding ill for the rest of the world that has relied on the region to keep the global economy humming.
Japanese companies cut production for the fifth month, which fell by a biggest margin since February 2009, while South Korean industrial output fell for the third month in a row, disappointing economists who had expected a rebound.
The fall in Japan was expected -- in fact a drop of 1.8 percent was smaller than forecast 3.3 percent -- after a key stimulus measure, incentives for buyers of fuel-efficient cars, expired in September, and exports continued to cool.
The drop, however, confirmed expectations that the world's third-largest economy would contract in the final quarter of the year after a stimulus-driven spurt in the third quarter.
South Korea, among the first economies to regain cruising speed after the global recession, is also losing steam, though Seoul still bets on solid export growth next year.
"The inventory rebuilding cycle after the recession has come to an end, and what we're left with is final domestic demand, which isn't doing that well across the globe," said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.
"We will see some slowdown in G3 economies and Asia next year. With the European situation unraveling, the risks are more conspicuous."
ASIAN ECONOMIES COOLING MORE THAN EXPECTED?
The numbers follow third-quarter reports from across Asia that showed most economies in the region were losing traction faster than thought as the initial spurt of foreign demand late last year and early in 2010 waned.
Economists had long expected Asia and the world economy to slow in the second half of this year and early in 2011 as the rebuilding of inventories depleted during the recession was drawing to an end and the effects of stimulus packages were wearing off.
But the cool-down came sooner and turned out to be more pronounced than many economists had anticipated. The economies of the Philippines, Thailand and Singapore all contracted in the past quarter, while South Korea, Taiwan and Indonesia slowed markedly.
That leaves China, which slowed only marginally to a 9.6 percent annual clip in the third quarter, and India, which is expected to report impressive 8.3 percent growth in the same quarter later on Tuesday.
However, Beijing's fears that inflation may get out of hand mean the authorities will try to cool the economy further.
India's domestic-driven economy, on the other hand, has a long way to go to become a global source of demand that could fill the void left by Europe, dogged by its debt crisis, and the United States, which is struggling to take off.
Japan's production data coincided with a purchasing managers' survey for November that showed a third consecutive decline in manufacturing activity and a sharp drop in export orders. Official data also showed household spending fell last month, boding ill for the final months of the year.
Manufacturers' forecasts that they would crank up production in November and December offered some hope, but did little to change expectations that the Bank of Japan will keep its ultra-loose monetary policy and stand ready to ease it further.
The central bank would probably do it by topping up its 5 trillion yen asset buying scheme after it has already effectively pushed interest rates down to zero.
In South Korea, a surprising 4.2 percent drop in output in October from September convinced analysts that the central bank there will keep rates on hold in December after a rise this month, but economists and businesses were more upbeat about outlook than their Japanese peers.
"Since the policy effects such as advanced budget spending in the first half of this year fizzled, the decline was inevitable but is merely technical," said So Jae-yong at Hana Daetoo Securities.
"Because facility investment and exports are maintaining strong momentum, the economy will remain fundamentally at a solid pace."
(Additional reporting by Rie Ishiguro and Yoo Choonsik; Writing by Tomasz Janowski; Editing by Kim Coghill)