THE European Union's biggest funding scandal has been uncovered after Polish road-building projects worth more than £770m (€897m) were revealed to be caught up in a price-fixing racket.
"The commission has interrupted payments until the situation is clarified, the necessary control measures are taken, and the extent of the problem is established," said a commission spokesman.
The scandal is a disaster for Poland, which has received more than £50bn (€58.2bn) in EU regional funds during the past seven years while, until now, avoiding the whiff of corruption that has often surrounded the spending of money from Brussels in southern Europe.
Huge potential losses for Irish and other taxpayers will raise questions over the future of EU regional funding at a summit of European leaders next week that will set the size of future Brussels budgets between 2014 and 2020.
Prosecutors have charged 11 people after the discovery of price-fixing between contractors and Polish officials who were responsible for administering the EU funding, including the former head of office in Warsaw.
Some of those charged include employees of some of Poland's largest construction companies. Polish prosecutors said the cartel managed to win at least one project partly funded by the EU.
The investigation is now focused on three road and highway construction projects worth €900m, a record for EU funding scandals.
EU officials have been concerned about the slow pace of the Polish investigation, which began in 2010 and raises questions over all of Poland's EU-funded road projects, totalling £8.6bn (€10bn) since 2007.
Elzbieta Bienkowska, Poland's minister for regional development, attacked the decision to suspend payments as "incomprehensible".
"Poland is the injured party in this case, because it is Polish investigators who discovered that there may have been – in two or three cases – a price-fixing deal by contractors," she said.
The scandal could tilt the balance against Poland and other countries pushing for increases in EU spending at a summit next Thursday against demands for Brussels budget cuts from David Cameron and Angela Merkel.
Mario Monti, the Italian prime minister, has threatened to veto a deal at the summit next week if Mr Cameron succeeds in winning cuts to EU regional and other budgets that benefit countries such Italy and Poland. "The orgy of cuts that certain countries want to apply is inconsistent," he said. (© Daily Telegraph, London)