Marta Grodzki | In Principle

For many businesses, completion of a project and payout of the funding mark the symbolic end of the cofinancing process. But in practice completion of the project does not mean an end to the relationship with the financing institution. Some obligations continue after completion of the project, over the entire durability period and also after the end of the durability period. The significance of these obligations is most often revealed during an inspection or audit, a reorganisation of the enterprise, or an M&A transaction, when it turns out the project, although formally completed, must still comply with the contract.

Can you lose a tender for hundreds of millions of euros because of a single subcontractor? Or more precisely, due to a subcontractor’s structure and sources of financing? This is an entirely realistic scenario under the Foreign Subsidies Regulation. The case of the Lisbon Metro’s Violet Line shows that even if a distortion of competition is found, the bid does not automatically have to be discarded. But it may require a major change in the entities involved in the bid. 

Until recently, the FSR was regarded by many businesses as a “niche” regulation, mainly relevant only in the largest concentrations and high-value public procurements. But the ex officio investigation launched against Nuctech shows that this perception was erroneous.

Contrary to popular belief, funding institutions’ claims for reimbursement of EU financing are not eternal. The national and EU regulations provide certain timeframes beyond which the institution loses the right to demand return of the funds. More and more frequently businesses which carried out and accounted for projects years before, financed from EU funds, are now receiving demands to repay the funds, often in connection with irregularities uncovered in subsequent audits. Does the institution still have the right to demand repayment five, eight, or even ten years after the project is completed?