Jimmy Deenihan (Kerry North, Fine Gael)
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Question 222: To ask the Minister for Enterprise, Trade and Employment if he will confirm that his Department was informed, in a variety of independent consultancy reports, but particularly in the two Arthur Anderson reports of 1998 and 2000, that the authorities here had not fulfilled their EU obligations with audit procedures specified by the Commission and that the audit procedures applied by the authorities here were described by Arthur Anderson as ineffective and haphazard; and if he will make a statement on the matter. [39742/06]

Micheál Martin (Cork South Central, Fianna Fail)
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The two Arthur Andersen reports referred to were commissioned by the Department of Finance in 1997 to review the financial management and control systems within the European Regional Development Fund (ERDF) and the Cohesion Fund. As the 2000 Report dealt with the Cohesion Fund, it had no relevance to programmes being managed by my Department.

The 1998 Report, which covered all Departments and bodies involved in the administration of ERDF co-funded measures, concluded that, in overall terms, "it is fair to say that the system of financial management and control currently in place appears to be working reasonably effectively". While the Report did highlight some weaknesses in the systems and made some recommendations for improvements in the management and control systems, these were, where relevant, taken into account in the subsequent management of the programmes run by my Department.

Jimmy Deenihan (Kerry North, Fine Gael)
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Question 223: To ask the Minister for Enterprise, Trade and Employment if he will confirm that his Department incurred penalties of €15 million in respect of just one sub-programme which had not met the exacting audit requirements as laid down retrospectively by EU Regulations 2064/97 and that in respect of other approved projects his Department was, in 2003 and 2004, retrospectively creating and confirming the specific audit trail as required by EU Regulation 2064/97; and if he will make a statement on the matter. [39743/06]

Micheál Martin (Cork South Central, Fianna Fail)
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As a consequence of an EU Commission Decision in the year 2000, which was subsequently confirmed by a Judgement of the European Court of Justice in 2005, €15.6 million of European Social Fund monies have been withheld from Ireland. This reduction applied to the Human Resources, Tourism and Industry Operational Programmes for the programming period 1994-1999. The amount withheld represents less than 1% of the €1,897 million in ESF allocated to these Operational Programmes in total. As part of the closure process of the three Operation Programmes, the audit trail was reconstructed and confirmed by my Department. With regard to the compliance by my Department with EU Regulation 2064/97, I would refer to the decision of the European Court of Justice in this matter (see paragraph 36-53, in particular) where it is clearly stated that the Commission Decision was not based on any provision of EU Regulation 2064/97, but was based on other provisions in force at that time.