title: Special Report No 7/2000 concerning the International Fund for Ireland and the Special Support Programme for Peace and Reconciliation in Northern Ireland and the border counties of Ireland (1995 to 1999), together with the Commission's replies

eurovoc_concepts:
EU aid
EU programme
Northern Ireland
economic development
financial aid
peaceful co-existence

text: 25. 5. 2000 EN Official Journal of the European Communities C 146/1 I (Information) COURT OF AUDITORS SPECIAL REPORT No 7/2000 concerning the International Fund for Ireland and the Special Support Programme for Peace and Reconciliation in Northern Ireland and the border counties of Ireland (1995 to 1999), together with the Commission(cid:146)s replies (pursuant to Article 248(4), second subparagraph, EC) (2000/C 146/01) CONTENTS Paragraph Page SUMMARY. INTRODUCTION. THE COURT(cid:146)S AUDIT. 1 to 2 3 to 5 THE INTERNATIONAL FUND FOR IRELAND. 6 to 28 Summary of the main findings in respect of the IFI. 6 Funding arrangements and regulatory framework. 7 to 12 Administrative procedures. IFI(cid:146)s programmes. 13 to 14 15 to 16 Project appraisal procedures. 17 to 20 Monitoring and evaluation of projects. 21 Impact of the IFI. 22 to 27 Monitoring by the Commission. 28 THE SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION. 29 to 55 Summary of the main findings in respect of the P & R. 29 Regulatory framework and funding arrangements. 30 to 33 Financial and budgetary execution. 34 to 38 The programme(cid:146)s administrative structure. 39 to 44 Project appraisal procedures. 45 to 48 Subsequent monitoring of grant-aided projects. 49 to 50 Impact of the programme. 51 to 54 Publicity and information. 55 MULTIFUNDED ACTIONS. 56 to 58 ADDITIONALITY OF FUNDING. 59 to 65 CONCLUSION AND RECOMMENDATIONS. 66 to 71 ANNEXES 1 TO 5. The Commission(cid:146)s replies. 2 3 3 3 3 3 5 5 6 6 7 7 7 7 8 8 10 11 11 12 12 12 12 13 16 21 C 146/2 EN Official Journal of the European Communities 25. 5. 2000 SUMMARY In 1986 the International Fund for Ireland (IFI) was created under the Anglo-Irish Agreement with the primary objective of promoting reconciliation between the divided communities in Northern Ireland. In 1995 the Euro- pean Commission created a Community initiative conceived as a special support programme for Northern Ireland and the border counties of Ireland with the joint aim of reinforcing progress towards a stable society and promoting reconciliation through economic development and employment. This report examines the European Union(cid:146)s support of the activities of the IFI up to December 1997 and the implementation of the Special Peace and Reconciliation Programme (P & R) in the period 1995 to 1997. The audit focused on the legality and regularity of the Community funding and, by means of a broad sample of measures and projects, examined the efficiency and effectiveness of procedures employed under both actions for the disbursement of funds. The circumstances in which both the IFI and P & R Community aid packages, designed to boost the peace process in Northern Ireland and the border counties of Ireland, were developed and implemented were par- ticularly difficult, given the distrust between the different communities. In respect of the IFI, the Court underlines that the Commission(cid:146)s payment of grant aid in advance of need did not ensure the most efficient use of EU funding (paragraph 12). The IFI(cid:146)s staffing arrangements and delega- tions of power were not formally established in writing (paragraph 14). The evaluation of project applications and the post-grant monitoring of projects did not ensure sound financial management in all cases (para- graphs 17 to 21). The Commission failed to carry out verification and spot checks as required under Article 3 of the funding agreement with the IFI (paragraph 28). In respect of the P & R, in a region where little opportunity for cross-community cooperation existed, it set up important structures and incentives which encouraged cooperation. It provided opportunities for partnership and dialogue and brought decision-making and responsibility for community development closer to the people, thus contributing to the overall objective of improving social and economic conditions through the direct involvement of local communities (paragraphs 39 to 40). However, the Court underlines that the programme structure was complicated by the wide diversity of the implementing bodies and by the differing needs of the two regions (paragraph 41). In particular, the decision to place much of the management and decision-making functions in the hands of non-governmental bodies led to difficulties in the selection of the implementing bodies (paragraphs 42 to 43). In some cases, inadequate consideration was given by the implementing bodies to developing an effective methodology for targeting community projects and social groups (paragraphs 52 and 53). The selection and appraisal procedures lacked common criteria and, as a result, some appraisals were not adequately documented or contained inconsisten- cies of treatment between projects (paragraphs 45 to 48). The initial allocation of three years(cid:146) funding to a five-year programme caused difficulty in the planning and management of the measures (paragraph 34) and delays in the programme(cid:146)s execution were noted (para- graphs 35 to 37). Up to December 1997, inadequacies in financial and management reporting systems (para- graph 49) and the lack of quantified targets in the programme document (paragraph 50) have affected the effectiveness of the programme(cid:146)s control mechanisms and the measurement of the impact. Finally, although the P & R programme(cid:146)s objectives and delivery mechanisms were substantially different, there was significant overlap between the P & R, the activities of the IFI and Structural Funds support measures, resulting in inefficiencies and delays in the execution of other programmes (paragraphs 56 to 58). 25. 5. 2000 EN Official Journal of the European Communities C 146/3 INTRODUCTION selection of the activities through which the IFI seeks to achieve its objectives for the promotion of dialogue and reconciliation and for economic and social advancement. 1. The International Fund for Ireland (IFI) is an international organisation which was created under an agreement of 18 Sep- tember 1986 (hereafter called (cid:145)the Agreement(cid:146)) to contribute to the work envisaged in Article 10(a) of the Anglo-Irish Agreement of 15 November 1985 (1), signed between the United Kingdom and Ireland. The objectives of the IFI were to (cid:145)provide financial support for measures designed to promote reconciliation between the divided communities in Northern Ireland, cross-border coop- eration and promote economic and social advance(cid:146). The IFI is cur- rently supported by contributions from the European Union (50 %, under Article B2-6 0 4 of the EU(cid:146)s general budget), the United States of America (47 %) and Australia (3 %). The IFI pur- sues its objectives through a set of programmes with annual bud- gets which apportion 75 % of aid to Northern Ireland and 25 % to Ireland. 2. In September 1994, following the declaration of cessation of violence in Northern Ireland, a Community initiative entitled (cid:145)The Special Support Programme for Peace and Reconciliation in North- ern Ireland and the border counties of Ireland(cid:146) (P & R) was agreed between the Commission and the Member States. Its aim was to (cid:145)reinforce progress towards a peaceful and stable society and to promote reconciliation by increasing economic development and employment, promoting urban and rural regeneration, develop- ing cross-border cooperation and extending social inclusion(cid:146) (2). THE COURT(cid:146)S AUDIT 3. The Court(cid:146)s audit covered an examination of the legality and regularity of both of the abovementioned measures and involved an examination of the IFI(cid:146)s activities up to December 1997, and those of the P & R from July 1995 to December 1997. The effi- ciency and effectiveness of both measures were also examined and, in particular, under the P & R, the measures financed from the European Regional Development Fund (ERDF). The review period for the IFI covers a substantial period from 1989 when political violence was at its height, well before the ceasefires and peace initiatives in 1994. In respect of the P & R programme, the audit period (July 1995 to December 1997) corresponds mainly to its initial phase, during which time new implementing arrange- ments were being established. The Court acknowledges the highly specific circumstances in which the IFI and the P & R programme have had to operate as well as the risks attaching to the execution of development actions in a politically volatile environment. The audit findings should be considered against this background. 5. With regard to the P & R, a broad cross-section of the meas- ures financed under the P & R programme, representing eight of the 70 implementing bodies, was selected for audit. From this, a sample of 58 projects was examined in detail, of which seven were visited on-the-spot. THE INTERNATIONAL FUND FOR IRELAND Summary of the main findings in respect of the IFI 6. The Court(cid:146)s audit findings, which are detailed below can be summarised as follows: (a) The IFI pioneered the joint management and delivery of pro- grammes between Ireland and Northern Ireland and was innovative in giving priority to disadvantaged areas for fund- ing (paragraph 22); (b) The IFI(cid:146)s role as the first funder of projects enabled grant recipients to gain access to other funding (paragraph 23); (c) The Commission(cid:146)s payment of grant aid to the IFI in advance of need did not ensure the most efficient use of EU funding (paragraph 12); (d) The IFI should consider setting out staffing arrangements and delegations of power in writing (paragraph 14); (e) The evaluation of project applications and the post-grant monitoring of projects should be improved to ensure sound financial management in all cases (paragraphs 19 to 21 and 27); (f) The Commission(cid:146)s failure to carry out verification and spot checks as required under Article 3 of the funding agreement with the IFI must be urgently addressed (paragraph 28). Funding arrangements and regulatory framework 4. In respect of the IFI, the Court(cid:146)s audit involved a detailed examination of a sample of 34 projects, of which 10 were visited on-the-spot. The sample was chosen to give a broad cross- 7. The European Community funding of the IFI was first approved in 1989 (3), at which time the IFI had already been in existence and operating for three years. However, the necessary legal frame- work for Community funding was only established by Council Regulation (EC) No 2687/94 of 31 October 1994 (4). C 146/4 EN Official Journal of the European Communities 25. 5. 2000 8. During the period 1989 to 1994, the Commission made an annual contribution of ECU 15 million to the IFI. In October 1994, the Council set Community financial contributions to the IFI at ECU 20 million per annum for the years 1995, 1996 and 1997. Further annual contributions of ECU 17 million were pro- vided for the years 1998 and 1999 (5), with the requirement that a review of the performance of the IFI and its need for further support should be made before April 1999. That review has since taken place and, at the Berlin Summit of Heads of State or Gov- ernment in March 1999, further annual contributions of ECU 15 million were approved for the years 2000 to 2002. 9. The 1994 funding regulation provided that the Commission administer the contribution and that it submit an annual report to the budgetary authority, including a detailed survey of the IFI(cid:146)s activities, an assessment of the nature and impact of its interven- tions and the results of on-the-spot verifications carried out by the Commission. 10. Table 1 shows the budgetary execution in commitments and payments of the Community contribution to the IFI. In the period 1989 to 1997, a total of ECU 150 million of Community funding was committed to the IFI, of which ECU 146 million (97 %) was paid. The Community(cid:146)s annual contribution is paid in two instal- ments: a first advance of 80 % is made on the basis of a single claim from the IFI and the 20 % balance is paid following receipt of the annual accounts of the IFI by the Commission. These pay- ment arrangements are in contrast to those applicable to the P & R, in that payments to the IFI are on the basis of a fixed annual contribution, unrelated to actual expenditure levels (see Table 2). Budgetary execution of Community contribution to the International Fund for Ireland Table 1 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total (million ECU) Budget line Type of appropriation B-5 4 7 NDA B-5 4 7 NDA B2-6 0 4 NDA B2-6 0 4 NDA B2-6 0 4 DA B2-6 0 4 DA B2-6 0 4 DA B2-6 0 4 DA B2-6 0 4 DA COMMITMENTS Initial appropriations Carried over from previous exer- cises Available appropriations Commitments made during the exercise PAYMENTS Initial appropriations Carried over from previous exer- cises 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 150,000 0,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 150,000 15,000 15,000 15,000 15,000 14,501 15,000 20,000 20,000 20,000 3,000 3,240 3,000 3,000 2,501 Available appropriations 15,000 18,000 18,240 18,000 17,501 17,501 20,000 20,000 20,000 Payments on commitments of cur- rent exercises Payments on commitments of pre- vious exercises Payments made during the exer- cise DA = Differentiated appropriations. NDA = Non-differentiated appropriations. 12,000 11,760 12,000 12,000 12,000 12,000 16,000 16,000 16,000 119,760 n/a 3,000 3,240 3,000 3,000 NDA 3,000 3,000 4,000 4,000 26,240 12,000 14,760 15,240 15,000 15,000 15,000 19,000 20,000 20,000 146,000 Source: Revenue and expenditure account and balance sheet. 25. 5. 2000 EN Official Journal of the European Communities C 146/5 Table 2 Commitments and payments of the EU to the International Fund for Ireland and to the Special Support Programme for Peace and Reconciliation in Northern Ireland and the border counties of Ireland IFI P & R (1) (million ECU) Commitments made during the financial year Payments made during the financial year Commitments made during the financial year Payments made during the financial year 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 12,000 14,760 15,240 15,000 15,000 15,000 19,000 20,000 20,000 150,000 146,000 (1) The Special Support Programme commenced in 1995. 27,385 95,561 53,311 176,257 10,609 61,800 72,409 11. The budgetary and accounting rules adopted by the IFI allow for the carry-over from year to year, of funds committed to spe- cific projects for which contractual letters of offer have been issued and of non project-specific funds committed to programmes. This practice of making commitments to be met from future donor contributions, resulted in the Fund balance sheet at September 1997 recording a deficit of ECU 16,46 million. The IFI informed the Court that the presentation adopted for the Fund(cid:146)s accounts reflects the Fund(cid:146)s unique status. 12. Notwithstanding this, in 1995, 1996 and 1997, an average of only 37 % of the total committed expenditure was spent, result- ing in significant bank balances of ECU 64,85 million, ECU 88,91 million and ECU 78,75 million being held by the IFI. Although Article 6 of the annual declaration made by the IFI to the Com- mission provides for the reimbursement of unused funding, the Commission(cid:146)s payment procedures which grant automatic pay- ments of advances to the IFI, while accelerating the use of Com- munity budget appropriations, do not include an assessment by the Commission of the immediate financial needs of the IFI. administrative structure, the IFI, which has a separate legal status, is independent and is prohibited from taking any instruction from either Government (see Annex 1). 14. Under Article 10 of the Anglo-Irish Agreement, the secret- ariat of the IFI, which consists of two joint directors-general and other officials from both Government administrations on second- ment, is provided at no cost by both Governments. However, such secondment is not covered by separate employment con- tracts. While the Fund(cid:146)s Rules of Procedure refer to specific duties and responsibilities of the joint directors-general, the responsibili- ties and functions of other officials are not formalised in writing. Moreover, the delegation of contractual powers by the board in the signing of letters of offer and management contracts are not specifically covered by the Fund(cid:146)s Rules of Procedure, but are established through custom and practice. IFI(cid:146)s programmes Administrative procedures 13. The board of the IFI is appointed jointly by the British and Irish Governments, with an observer at board meetings nomi- nated by each of the donor countries and the EU. In terms of its 15. The IFI pursues its objectives through a set of programmes, consisting of projects which are primarily sourced through open advertisement. Up to the end of 1997 the IFI had provided part- financing in respect of some 3 600 projects concerning (cid:145)Disad- vantaged areas(cid:146), (cid:145)Communities initiatives(cid:146), (cid:145)Wider horizons(cid:146), (cid:145)Busi- ness enterprise and technology(cid:146), (cid:145)Tourism(cid:146), (cid:145)Urban development(cid:146) and (cid:145)Flagship projects(cid:146) (see Table 3). C 146/6 EN Official Journal of the European Communities 25. 5. 2000 International Fund for Ireland 1997 (cid:151) Programmes and payments Table 3 Disadvantaged areas initiative 16 642 11 137 Thousand ECU Thousand GBP Communities initiatives Wider Horizons Business enterprise and technology Tourism Urban development Flagship projects Source: Annual report of IFI, 1997. 7 279 9 264 1 315 7 174 6 800 4 006 4 871 6 200 880 4 801 4 551 2 681 52 480 35 121 16. A preliminary assessment of each project is performed by the IFI secretariat and/or programme teams followed by a formal assessment by the managing government department or agency. The projects are then considered by the designated board mem- bers for submission to the full board of the Fund, which decides on the projects following receipt of advice from the advisory committee. Project appraisal procedures 17. Under the terms and conditions of appointment of board members and the Rules of Procedure and operating rules of the board, the board may employ advisors and consultants to assist in the evaluation of proposals submitted to it and generally in the discharge of its functions. The Fund uses this facility and the man- agement of projects is in general carried out by government ser- vices or public sector agencies. In contrast to the free provision of secretariat services by both Governments as provided for in the Agreement, the IFI paid these organisations amounts of ECU 3,14 million, ECU 3,59 million and ECU 2,89 million in 1996, 1997 and 1998 respectively for this service. This represented an aver- age of 5 % of programme expenditure. (a) the decision to grant aid to a project without carrying out a formal business appraisal, (e. g. an equestrian centre project (7); while the IFI has informed the Court that it carried out an internal assessment, a separate commercial business appraisal was deemed unnecessary); (b) a (cid:145)Disadvantaged areas initiative(cid:146) project; while business plans were produced by the project in support of an application for funding, the first formal project appraisal was only carried out after the initial assistance of ECU 915,985 was approved by the IFI (8); (c) a project where the absence of a full commercial appraisal led to the replacement of the proposed project by another (e. g. a cultural and language centre project (9) was replaced by a cin- ema and office building, used as rented accommodation for the local council) and, (d) a project (10) where the grant letter of offer, which was not taken up by the applicant, was subsequently reissued, in advance of a second economic appraisal and despite the res- ervations of the co-funders as to the value-for-money of the scaled down project. 20. In three of the 34 project cases examined (11), multiple fund- ing of projects was provided to meet cost overruns and repay loans. For example, in the case of a multimedia exhibition centre project (12), the IFI contributed an initial ECU 1 494 268, with further grants of ECU 373 566 and ECU 522 993 in subsequent years. Despite this however, the project, which was not self- sustaining, was at 31 December 1997 in search of an on-going subsidy to enable it to continue. Without calling into question the overall merit of these projects, all three projects had not achieved economic viability at 31 December 1997, which was the basis on which the IFI funding decision was taken. Monitoring and evaluation of projects 18. Under the Rules of Procedure and operating rules of the Board, specific project assessment criteria are laid down for the IFI which include the requirements that value for money be obtained and that projects be subject to ex ante evaluations, including risk assessments. 19. Although the majority of projects examined met the objec- tives of the IFI, the rigour of the risk assessment and appraisals carried out were found to be inadequate in eight out of 34 projects examined by the Court (6). Examples of weak procedures were: 21. Weaknesses were observed in six of the 34 cases exam- ined (13). These weaknesses in monitoring and evaluation were compounded by inadequate management on the part of the project owners. Examples of these were: (a) the non-compliance with grant conditions (e. g. in the case of a rural development project (14), which was awarded assis- tance totalling ECU 1 084 834. While the IFI commissioned three consultancy reports for 1995, 1996 and 1997 high- lighting serious management problems with the project, the original grant was released without the required community contribution being in place and further grants were released without significant improvement in control systems); 25. 5. 2000 EN Official Journal of the European Communities C 146/7 (b) delays in taking direct action to safeguard the IFI(cid:146)s investment (e. g. the investment in an accommodation/activity centre project (15) which was awarded ECU 793 200, was unsuccess- ful due to on-going financial difficulties. An internal note on the project by the IFI stated that (cid:145)total expenditure on the property is ECU 1 541 175, which to anyone who has seen the property in either incomplete or complete condition, (is) almost impossible(cid:146). While the IFI informed the Court that a part of the project has now been sold and is operating, it remains that this community project failed due to poor project management and cost controls). Impact of the IFI 22. The IFI(cid:146)s establishment in 1987 pre-dated the reform of the Structural Funds and initiated certain principles which would later become the main elements of the reform, such as the programmed approach to economic development and the importance of cross- community partnership. Similarly, it pioneered the joint manage- ment and delivery of programmes between Ireland and Northern Ireland and was innovative in giving priority to disadvantaged areas for funding. 25. The Fund(cid:146)s project database records estimates of the ultimate employment in assisted projects at the time of the projects(cid:146) approval. However, the commissioned impact study assessed the actual number of jobs on the ground to be 85 % of the jobs potential claimed by the IFI, which it stated compared favourably with that achieved by other agencies. In the case of two projects examined on audit, the estimated jobs far exceeded the actual employment on the ground (e. g. an aquaculture research cen- tre (18) where an estimated increase of 2 000 jobs was recorded as jobs attributable to the project, where in fact the actual figure was four. Similarly under a (cid:145)Fishing villages initiative(cid:146) project (19) only 10 jobs were actually created compared with an estimated 41 full- time jobs) 26. The impact study indicated the positive effect of the IFI (20) and in particular its (cid:145)Wider horizons(cid:146) programme, which has a cross-border/cross-community dimension. However, the study also identified the difficulty in finding a satisfactory modus oper- andi for cross-border projects, resulting in the predominance of government organisations and professional bodies as beneficiar- ies of cross-border projects. 27. Evaluation studies provide useful information regarding the impact of activities at a strategic planning level, i. e. the setting of objectives and the allocation of resources. However, the lack of up-to-date operational information or information on the achieve- ment of indicators on the projects being funded by the IFI (as in the case of jobs created), constitutes a weakness in management control and presents the risk that the organisation may not be accomplishing its objectives efficiently and effectively. 23. The Commission(cid:146)s evaluation report on the IFI of March 1997 (16) assesses the IFI(cid:146)s role as the first funder of projects, enabling grant recipients to gain access to other funding. While this leverage ratio is quoted as 1,8: 1 for the period 1994 to 1996, no analysis is given as to what percentage of this figure relates to EU part-financing and what percentage is private investment. Fur- thermore, by solely attributing this leverage effect to the IFI(cid:146)s assistance, it ignores the volume of public (including EU) funding which would be available anyway, particularly within an Objec- tive 1 area. Moreover, the lack of real analysis as to the attribut- able impact and synergy between the funders, often obscures the substantial role and impact of other project co-funders, both national and EU. Monitoring by the Commission 28. Although Article 3 of the governing regulation assigns to the Commission the role of monitoring the activities of the IFI, the Commission has not fulfilled its role in all respects. Notwith- standing the requirement from 1995 onwards, to prepare an annual report on the activities of the IFI, the first such report was only presented in 1997. Furthermore, no on-the-spot checks or verifications were carried out by the Commission during this period. 24. In a study commissioned by the IFI in 1994 on the impacts of its programmes, it was estimated that the employment created in IFI-assisted projects was 23 787 jobs as at 30 September 1994. This figure was reduced to 11 186 when displacement and dead- weight effects (i. e. an estimate of the likelihood of projects obtain- ing alternative funding or proceeding without assistance), were taken into account. This estimate was further reduced to 7 000 jobs in a subsequent study in 1996 covering the same period (car- ried out by consultants (17) who collaborated on the first study). THE SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION Summary of the main findings in respect of the P & R 29. The results of the Court(cid:146)s audit findings can be summarised as follows: C 146/8 EN Official Journal of the European Communities 25. 5. 2000 (a) The P & R was effective in providing opportunities for part- nership and dialogue and gained acceptance by both commu- nities by bringing decision-making and responsibility for com- munity development closer to the people (paragraphs 39 and 40); (b) Programme implementation was complicated by the wide diversity of the implementing bodies and by the differing needs of the two regions (paragraph 41); (c) In some cases inadequate consideration was given by the implementing bodies to developing an effective methodology for targeting community projects and social groups (para- graphs 52 and 53); (d) The allocation of three years(cid:146) funding to a five-year pro- gramme caused difficulty in the planning and management of the measures, resulting in delays in the programme(cid:146)s execu- tion (paragraphs 34 and 35); (e) The decision to place much of the management and decision- making functions in the hands of non-governmental bodies led to difficulties in the selection of the implementing bodies (paragraphs 42 and 43); (f) The selection and appraisal procedures lacked common cri- teria and, as a result, appraisals were often limited in scope, not adequately documented or contained inconsistencies of treatment between projects (paragraphs 45 to 48); (g) Up to December 1997 the lack of appropriate control mechan- isms, weaknesses in computerised databases and inadequacies in financial and management reporting systems led to inac- curate reporting of financial and management information (paragraph 49); (h) Measurement of the impact of the programme was adversely affected by the lack of quantified targets (paragraph 50); (i) Although the P & R programme(cid:146)s objectives and delivery mechanisms were substantially different, there was significant overlap between the P & R, the activities of the IFI and Struc- tural Funds support measures, resulting in inefficiencies and delays in the execution of other programmes (paragraphs 56 to 58). 28 July 1995, the Special Support Programme for Peace and Rec- onciliation. The creation of the P & R, which is a multi-funded Community initiative (CI) under the governing regulations of the various Structural Funds and the EIB, was achieved after extensive consultation with all interested parties both in Ireland and North- ern Ireland. The P & R(cid:146)s strategic objectives are (cid:145)to reinforce progress towards a peaceful and stable society and to promote reconciliation by increasing economic development and employ- ment, promoting urban and rural regeneration, developing cross- border cooperation and extending social inclusion(cid:146). Unlike other Structural Fund programmes, the P & R programme was designed not just to bridge the gap of an economically lagging-behind region, but was intended to focus on those areas and sections of the population most adversely affected by the violence and con- sequently suffering most acute deprivation. 31. The P & R consists of seven subprogrammes, divided into 30 measures, of which 20 apply jointly to both Northern Ireland and the border counties of Ireland (see Annex 2a and Annex 2b). The structure of the programme is outlined in Annex 3. A sum of ECU 300 million was set aside for an initial period from 1995 to 1997 and a further ECU 100 million was subsequently approved by the Commission for each of the years 1998 and 1999. 32. The opportunities arising from the cessation of violence were described in broad terms in the programme document, as in the example of the opportunity to bring about economic adjust- ments in the balance between public and private sectors, while mitigating against the adverse employment effects of a reduction in the security sector. However, the nature and specificity of such opportunities were not fully identified or defined, so as to be effectively addressed by the programme. Furthermore, although the P & R aimed to prioritise cross-community projects and to target marginalised social groups, it did not elaborate on the method of identifying such groups or of establishing priorities. 33. These characteristics together with the requirement for an immediate and visible impact on the ground, the short time-frame for the execution of the first phase and the desirability of includ- ing as many local community interests as possible in the decision- making and implementation procedures, required a considerable administrative effort on all involved in the P & R(cid:146)s implementa- tion. Regulatory framework and funding arrangements Financial and budgetary execution 30. In a further response to the developments in the peace pro- cess in Northern Ireland during 1994, the Commission, in wish- ing to identify ways to assist the peace process, approved on 34. The Commission(cid:146)s initial funding decision, which allocated only three years(cid:146) funding to a five-year programme was badly devised, in that the uncertainty over future funding caused dif- ficulty in the planning and management of the subprogrammes and measures. This uncertainty contributed to the delays experi- enced in the selection of actions for funding. 25. 5. 2000 EN Official Journal of the European Communities C 146/9 35. Delays in the programme(cid:146)s execution, reflected in Table 4, resulted in a lack of use of appropriations by the P & R. Signifi- cant amounts of commitment appropriations were cancelled at the end of 1996 and 1997, respectively ECU 14,9 million (13,5 % of appropriations) and ECU 106,6 million (66,7 % of appropria- tions). These cancellations represented more than 40 % of appro- priations for the period 1995 to 1997. Similarly, at the level of payments, ECU 34,9 million, representing more than 20 % of appropriations, was cancelled during the same period. Notwith- standing the low absorption rate of the programme, further financing of ECU 100 million was made available for each of the years 1998 and 1999. Budgetary line B2-1 4 1 2 (cid:145)Special programme for regions in both parts of Ireland(cid:146) (cid:151) Special Support Programme for Peace and Reconciliation Table 4 1995 1996 1997 Total (million ECU) COMMITMENTS Initial appropriations Transfer of appropriations in % of initial appropriations Available appropriations Commitments made during the financial year in % of available appropriations in % of initial appropriations Cancellations of appropriations in % of available appropriations PAYMENTS Initial appropriations 66,000 117,900 159,900 343,800 (cid:150) 38,615 58,5 27,385 27,385 100,0 41,5 0,000 0,0 (cid:150) 7,390 6,3 0,000 0,0 110,510 159,900 95,561 86,5 81,1 14,950 13,5 53,311 33,3 33,3 106,589 66,7 (cid:150) 46,005 13,4 297,795 176,257 59,2 51,3 121,538 40,8 40,000 69,100 93,900 203,000 Transfer of appropriations (cid:150) 10,425 (cid:150) 14,918 Available appropriations 29,576 54,182 (cid:150) 6,133 87,767 (cid:150) 31,475 171,525 Payments on commitments of current financial year Payments on commitments of previous financial years Payments made during the financial year in % of available appropriations in % of initial appropriations Cancellations of appropriations in % of available appropriations Source: Revenue and expenditure account and balance sheet. 13,693 31,071 19,357 64,120 n/a 13,693 46,3 34,2 15,883 53,7 10,609 41,680 76,9 60,3 12,502 23,1 61,800 81,157 92,5 86,4 6,610 7,5 72,409 136,530 79,6 67,3 34,995 20,4 36. Although the Commission(cid:146)s accounts show a 100 % utilisa- tion of the available budgetary credits for 1995, this was achieved through the transfer of ECU 38,6 million (58,5 % of the initial appropriations for this year) to other CIs. In fact, over the period 1995 to 1997, more than ECU 46 million, representing some 13 % of initial appropriations, was transferred to other CIs. 37. As at 31 December 1997, the Commission had advanced ECU 61,4 million of the ECU 148,3 million sourced from the European Regional Development Fund for the years 1995 to 1997 period, 41,4 % of the allocated amount. At the same date, the expenditure declared on projects amounted to only 20 % of the amount budgeted in the financial plan for 1995 to 1997 (see Table 5). C 146/10 EN Official Journal of the European Communities 25. 5. 2000 Financial situation as per 31. 12. 1997 concerning ERDF for the Special Support Programme for Peace and Reconciliation Table 5 Commission decisions 1. Envisaged intially (1) 1. 1. Public expenditure 1. 2. ERDF 2. Modification (2) 2. 1. Public expenditure 2. 2. ERDF Realised transactions Commitments 1995 1996 1997 1998 1999 Total (million ECU) 20,02 15,01 79,85 59,51 99,16 73,77 199,02 148,29 0,40 0,28 11,91 8,98 86,90 65,15 73,92 54,58 26,21 19,54 199,35 148,53 3. Commitments, ERDF (ECU) 3. 1. Commitments, ERDF (in % of point 1. 2) 15,01 100,00 52,11 87,57 7,29 9,88 Payments 4. Payments, ERDF (ECU) 4. 1. Payments, ERDF (in % of point 1. 2) 4. 2. Payments, ERDF (in % of point 3. 1) Certified expenditure (3) 5. Certified expenditure (ECU) 5. 1. Certified expenditure (in % of point 1. 1) 5. 2. Certified expenditure (in % of point 2. 1) (1) Decision C(95) 1789 of 28. 7. 1995; 1995 prices. (2) Decision C(97) 3224 of 5. 12. 1997; 1996 prices. (3) Certification of expenditure received by the Commission 12. 12. 1997. 7,51 50,00 50,00 19,96 33,54 38,29 33,92 45,98 465,45 0,35 1,7 12,98 16,3 26,64 26,9 74,42 50,18 61,39 41,39 82,49 39,96 20,1 20,0 38. The additional allocation of ECU 100 million for each of the years 1998 and 1999 was conditional on the presentation of a progress report by the Commission. This report was presented in November 1997 as a communication to the Council, the Euro- pean Parliament, the Economic and Social Committee and the Committee of the Regions (21). The report shows that at the end of 1997, ERDF commitments were expected to reach ECU 74,4 million with payments estimated to amount to ECU 61,4 million. As a result of this slow uptake of funds, a new Commission de- cision on 5 December 1997, spread expenditure over five years with a significant reduction for the period 1995 to 1997. At the Berlin Summit in March 1999 it was decided that the P & R pro- gramme would be renewed for a further five years with an alloca- tion of ECU 500 million for the period. The programme(cid:146)s administrative structure departments and agencies) had a key role in the implementation of the programme. This innovative (cid:145)bottom-up(cid:146) approach was deemed politically necessary for the overall success of the pro- gramme despite the risk of management difficulties and delays in implementation. Thus, in contrast to the IFI(cid:146)s operating proced- ures, the P & R placed much of the management and decision- making functions outside of central government departments and agencies. 40. The success of this approach was most notably demonstrated in the case of the District Partnerships in Northern Ireland, which consist of cross-community representatives. Similarly, the setting up of a (cid:145)consultative forum(cid:146) overseeing the implementation of the entire programme, ensured representation from a wide range of partners. 39. The CI contained some novel features, in that, it applied to both Northern Ireland and the designated border counties of Ire- land and provided a model for the widening of local participa- tion through the promotion of cross-community and cross- border cooperation. Consequently, decentralised implementing bodies, such as non-governmental organisations and District Part- nerships (in addition to the traditional channels of government 41. The implementation of the programme(cid:146)s strategy was, how- ever, complicated by a number of factors. Firstly, compared with other EU programmes, the scope of the P & R programme was very wide and the number of implementing bodies very large. Furthermore, the implementation was affected by the attempt to address within one structure, the distinctive needs of the two regions, whose divergence was most pronounced in the area of cross-community reconciliation and social reconstruction. 25. 5. 2000 EN Official Journal of the European Communities C 146/11 42. With some 70 bodies with widely differing administrative practices involved in implementing the programme, difficulties arose in the selection of implementing bodies. For example, it was observed that no competitive selection procedure took place for the selection of IFBs for the management of the global grant ele- ment of the programme, which due to the urgency of its launch, commenced without the corresponding contracts being in place. Furthermore, one case was noted where the actual delivery mecha- nism was different to that foreseen in the programme docu- ment (22). cies in Northern Ireland generally used a deprivation index (27) for the allocation of funding, in the absence of any formal govern- ment or Commission guidance. The border counties of Ireland did not systematically apply a deprivation index for the allocation of funds. This lack of a common definition did not give adequate assurance that investments were being made in the areas of most need. It was also noted in the case of one measure examined (23), 43. that a public company appointed under the programme delegated its full powers to independent companies (second tier bodies), without the approval of the Monitoring Committee or the Com- mission. The responsibilities of these agents were defined in a let- ter of offer and an operating manual was provided by the delegat- ing body. However, while a tendering procedure was carried out for the selection, two of the seven managing bodies (24) were appointed outside of this procedure and in contravention of Council Directive 92/50/EEC relating to the award of public ser- vice contracts. Furthermore, the selection of one of these bodies led to an incompatibility of function, in that the public com- pany (25) was already a subscriber of that body. 44. In the period up to 31 December 1997 an inconsistency of treatment leading to inaccurate financial reporting took place in respect of the definition of final beneficiary of grant aid. In July 1997 the Monitoring Committee of the P & R proposed to the Commission that the situation be formalised with the recognition of implementing bodies as final beneficiaries of grant assistance solely for the purpose of speeding up drawdowns from the Com- mission. This treatment was not however universally adopted by all implementing bodies. Moreover, as the ERDF regulations require the reporting of actual expenditure incurred by final bene- ficiaries for final claim purposes, considerable work will be required in terms of detailed reconciliations at the time of the P & R(cid:146)s closure. Project appraisal procedures 45. The selection and appraisal procedures applied by eight (26) of the implementing bodies examined varied considerably, as demonstrated by the deficiencies uncovered, as detailed in the fol- lowing paragraphs. Thus, despite the stated wishes of the delivery agencies, a common approach to assessing projects and issuing letters of approval was not achieved between Northern Ireland and the border counties of Ireland. 46. With the aim of the P & R to ensure that its funding targeted the areas most affected by the conflict, the implementing agen- 47. Project selection and appraisal procedures were deficient in nine of the 58 projects examined. For one measure, no procedure existed to assess the comparative merits of the applications (28), while for the majority of projects examined, there was no rank- ing of projects by scoring or weighting their merits (29). 48. In the case of one implementing body (30) which managed five of the selected projects (31), no project appraisal documenta- tion was made available, while in one such case (32), there was no division of costs in respect of the different phases of the project. Furthermore, the implementing body was not in possession of a formal project application at the date of the project(cid:146)s approval. Moreover, project applications received prior to the body(cid:146)s formal establishment in July 1996 were not formally appraised. As a result the transparency of the procedures was inadequate. Subsequent monitoring of grant-aided projects 49. In the context of the decentralised nature of the P & R and the importance of key financial management and monitoring sys- tems, suitable control mechanisms were not established at all lev- els in the initial period. For instance, it was a requirement of the P & R that a centralised database of approved projects be made available as essential information to the general public and as an anti-fraud system. However, as at 31 December 1997, due to the complexity of the implementation structure and the absence of a proper project design and development plan, the required data- base had not been established. Moreover, while it was the inten- tion of the programme(cid:146)s Monitoring Committee that expenditure claims be subject to separate audit, no such control was in evi- dence up to 31 December 1997. Nevertheless, in the period since the end of 1997, the required central database has been created. 50. Notwithstanding the provisions of the regulations that quan- tified objectives must be identified, the P & R programme estab- lished no quantified physical and impact targets or target popula- tions for its measures. Neither was the requirement for all implementing bodies to gather performance indicator data for their projects uniformly carried out, with only four of the eight implementing authorities audited having monitoring procedures in place. C 146/12 EN Official Journal of the European Communities 25. 5. 2000 Impact of the programme for the programme in the promotion of its peace and reconcilia- tion objective. 51. The impact of the programme(cid:146)s global grant approach was curtailed by the way in which funding was allocated. For example, the attempt to channel funding through community-based non- governmental bodies in Northern Ireland was sometimes compli- cated by the fact that, while European Social Fund grants were primarily disbursed by community-based intermediaries, ERDF grants were predominantly managed by government depart- ments, thus obliging a single beneficiary to apply to both, for access to such grants. 52. Deficiencies were noted in the procedures for targeting poten- tial beneficiaries. For example, while the P & R had, as one of its objectives, the distribution of grants to first-time beneficiaries, this objective was not always achieved, as illustrated in one mea- sure (33), where 92 % of the beneficiaries were estimated to be already in receipt of EU co-financed assistance from the relevant State agency. While this action aimed to provide seed capital to SMEs for new businesses, the deficiencies in definition and target- ing resulted in short-term loans being provided to existing busi- nesses. 53. Similar weaknesses in targeting were found in the Interest Relief Scheme (IRS), which was the largest single action funded under the P & R, modelled on the European Investment Bank(cid:146)s Global Grant Scheme. The broad eligibility criteria allowed large corporations to benefit from the subsidy. Furthermore, some investments receiving the subsidy (34) for the building of indus- trial units were wrongly regarded as productive investments under the eligibility criteria. 54. Due to the slow progress in implementing the programme up to the end of 1997 and in establishing adequate monitoring and evaluation systems, little accurate measurement of impact up to 31 December 1997 was possible. No mechanism existed for recording actual job creation figures and impact indicators in many cases consisted of estimates, the accuracy of which varied, thus heightening the risk of duplication of attributable impact between the P & R and other EU programmes. This was con- firmed by the mid-term evaluator, who reported in July 1997 that at that time (cid:145)relatively little evidence of impact on the ground (existed) arising from specific output of assisted projects(cid:146). Publicity and information MULTIFUNDED ACTIONS 56. Many of the actions contained within the subprogrammes of the P & R and the programmes of the IFI, the Interreg Community initiative and the Northern Ireland single programme (1994 to 1999) showed a high degree of similarity and a significant degree of duplication of activities in some cases. Furthermore, due to the limited resources available to county councils in the border region of Ireland, it was necessary to combine several funding sources such as LURD (Local Urban and Rural Development OP) and Interreg to finance projects (35). The co-funding of projects under different programmes also presented the risk of double counting in the attribution of projects(cid:146) impact and publicity to individual programmes. 57. One IFI project (the development of an electronic informa- tion reservations system by the tourism boards), which was awarded ECU 1 494 266 in 1989, also received funding from EU sources (36). Despite total expenditure on the project in the period 1990 to 1995 of ECU 11,37 million (of which 52 % derived from EU and IFI sources), the original project was not a success, due to flawed systems architecture and deficiencies in management. In 1997 a majority share of 74 % of the project was sold for only approximately 3 % of the original proportionate cost. In the case of the P & R, although the potential for overlap 58. of actions was recognised, priority was given to the P & R financ- ing for a different and distinctive reason, that is, (cid:145)embedding the peace process and promoting reconciliation(cid:146). This distinction how- ever, failed in operational terms to prevent a duplication of activi- ties, with the introduction of P & R funding leading to a slow- down in the execution of other programmes, in particular Interreg. ADDITIONALITY OF FUNDING 59. It is a condition of the Commission(cid:146)s funding approval that the Community(cid:146)s contribution to the IFI be used as a priority for cross-community projects, thereby encouraging dialogue and rec- onciliation, and that it should have a genuine additional impact and not be used as a substitute for other public or private expen- diture. 55. The P & R lacked a coherent plan of co-ordinated publicity activity. In fact, the introduction of the P & R created consider- able public confusion as to the relationship between it and other EU programmes. Despite the establishment of a committee on information and publicity in 1996, no significant improvements were noted by 31 December 1997. This deficiency was all the more significant, given the obvious benefit of a high public profile 60. However, in a small number of cases (three out of 34 projects examined), displacement of government-funded activities took place, resulting in a reduced specific impact for the IFI, as in the case of the financing of two government departments in the cre- ation of an econometrics model of the agrifood industry (37). 25. 5. 2000 EN Official Journal of the European Communities C 146/13 61. Similarly, with the P & R, two measures, 5. 2 (cid:145)New Industrial Development Services(cid:146) and 5. 3 (cid:145)Trade Development(cid:146), contained actions indistinguishable from mainstream Structural Fund pro- grammes. In this respect, the mid-term evaluator commented in his report on one such project (38), (cid:145)it is not clear why it has been transferred (to the P & R) as it was originally funded under the Economic Development subprogramme of the Northern Ireland single programme(cid:146). sewerage works, were thus sourced, with only two projects hav- ing the direct involvement of the local community. In another case (46), concerning the replacement of street lighting in a coun- cil housing estate, for which the council had previously unsuc- cessfully sought government funding, the application was not submitted until after the works were approved and started and no formal appraisal of the project was carried out. 62. In eight of the 58 projects (39) examined under the P & R, funded activities were found to be mainstream economic develop- ment activities of a type already being funded and carried out by government departments and other EU programmes and which could equally have been absorbed into mainstream Structural Fund programmes. In the case of some implementing agencies of the P & R (40), 63. projects originated from within the agencies themselves. For example, three projects (41) with total grants amounting to ECU 6,2 million had approval dates preceding the official commence- ment date of the P & R. This reduced the additional benefits and impact of peace funding, by the absence of direct community involvement. Similarly, one project (42), which aimed to exploit the natural fishing resources of Northern Ireland, was originally proposed and rejected for national funding in 1989 on the basis that it did not demonstrate value for money. However, an identi- cal project was subsequently proposed and accepted as a joint- funded project with the IFI and Interreg. This project only com- menced on being awarded P & R funding, and without any separate detailed proposal or value-for-money appraisal for the scheme being made under the P & R(cid:146)s specific criteria. 64. A UK/Irish parliamentary committee report in 1996 on (cid:145)EU aid for peace and reconciliation(cid:146) (43), recommended that P & R funds should not be used for pre-existing projects nor substituted for funding which would ordinarily be provided by governments. However, the audit revealed instances of pre-planned projects being assisted, as well as projects which could have proceeded without assistance. In respect of one measure, a survey (44) car- ried out under the mid-term review showed that a total of 53 % of beneficiaries would have proceeded without funding, albeit at a reduced rate or scale. In the same measure, loans approved by the intermediary banks a considerable time prior to their applica- tion for the interest subsidy were also approved for assistance under the programme. CONCLUSION AND RECOMMENDATIONS 66. The circumstances in which both the IFI and P & R community-aid packages, designed to boost the peace process in Northern Ireland and the border counties of Ireland, were devel- oped and implemented were particularly difficult, given the dis- trust between the different communities. In such circumstances a decision was made by the Commis- 67. sion and Member States (cid:145)to take risks for peace(cid:146). The fact that the stability of the regions had not yet been fully established meant that there was still a strong reluctance to make commitments to capital investments and this fact resulted in relatively few viable project proposals involving entirely risk-free investment oppor- tunities. While acknowledging the constraints that this situation placed on the advancement of the programmes, greater effort should have been made to identify promising actions and reach new beneficiaries, in attempting to meet more fully the specific criteria of the actions (paragraphs 32, 52 and 53). 68. However, in a region where little opportunity for cross- community cooperation existed, the P & R provided important structures and incentives which encouraged cooperation. It pro- vided opportunities for partnership and dialogue and brought decision-making and responsibility for community development closer to the people. In spite of the considerable difficulties encoun- tered, the P & R gained acceptance by both communities through the work of community-based funding bodies, thus contributing to the overall objective of improving social and economic condi- tions through the direct involvement of local communities (para- graphs 32 and 41). 69. Nevertheless, these difficult circumstances, far from dispens- ing with the need for introducing appropriate measures for the management and control of the Community funds made avail- able, reinforced the necessity to do so. The Court(cid:146)s audit revealed that the control procedures should be strengthened in order to improve the effectiveness of the funding (paragraphs 19, 20, 22, 47 and 48). 65. With regard to the county council-led task forces which were specially established under the programme, funds were generally applied to projects which arose out of the county council(cid:146)s con- sultation procedure for its five-year development plan and not by direct applications from the public, with the result that little pri- vate funding materialised. For example, in one case (45), nine of the 12 projects realised, concerning footpaths, sign-posting and 70. Specifically, in the case of the IFI, the Court recommends the following: (a) Before payments are made to the IFI, the Commission should carry out an assessment of the IFI(cid:146)s immediate financial needs. The Commission(cid:146)s payment procedures will need to be amended to reflect this new requirement (paragraph 12). C 146/14 EN Official Journal of the European Communities 25. 5. 2000 (b) Delegations of authority by the board of the IFI should be formalised and job descriptions should be compiled for all staff in order to clarify responsibilities (paragraphs 13 and 14). (c) The Commission should ensure through its representation at board meetings of the IFI that the criteria for the evaluation of project applications are appropriate, consistently applied and adhered to (paragraphs 18 to 20). (d) The Commission should routinely monitor the appropriate- ness of Community expenditure incurred on IFI projects, with a view to evaluating the merits of funded projects and pre- senting the findings to the IFI Board, for appropriate consid- eration (paragraph 21). 71. Specific recommendations relating to the P & R programme are as follows: (a) In the context of the partnership principle, the Monitoring Committee for the P & R should give further assistance to implementing bodies, so as to ensure the consistency of selec- tion criteria in the selection of community projects and social groups. Guidance and resources should also be given to ensure that community projects and social groups maximise their contribution to the programme(cid:146)s decision-making and imple- mentation (paragraphs 32 and 33). (b) The Commission should ensure that the financial needs of the P & R are accurately assessed and that the projected activity levels on which financial needs are based are realistically achievable (paragraph 37). (c) As much of the management and decision-making associated with the programme is performed by non-governmental bod- ies, it is essential that the Monitoring Committee reviews the work carried out by these bodies to ensure that their involve- ment is as fully envisaged under the programme (para- graphs 42 and 43). (d) Project appraisals across the P & R should be carried out according to specific, written criteria to ensure consistency of treatment between different projects. The results of project appraisals should be clearly documented (paragraphs 45 to 48). (e) Given the complexity of the P & R and the large number of implementing bodies, the Monitoring Committee of the P & R should ensure that appropriate control mechanisms are in place for safeguarding Community funds. For instance, decla- rations of expenditure from implementing bodies should be subject to a separate audit review (paragraph 44). (f) In the context of multifunded actions and in conformity with Council Regulation (EC) No 2614/97 on IFI funding, the Com- mission services responsible for the management of Commun- ity support measures in Northern Ireland (including the activi- ties of the IFI) should regularly assess proposed activities in order to ensure synergy and coordination and where neces- sary determine which entity is best placed to administer the activity in order to avoid unanticipated overspending and bureaucracy (paragraphs 56 to 58 and 62 to 65). (g) The Commission should ensure that sufficient publicity is given to measures implemented under the P & R programme in order to maximise their impact. The recently formed sub- monitoring committee on publicity should result in increased public awareness of activities undertaken under the P & R programme; the effectiveness of any initiatives introduced by this group should be monitored (paragraph 55). This report was adopted by the Court of Auditors in Luxembourg at its meeting of 23 and 24 February 2000. For the Court of Auditors Jan O. KARLSSON President 25. 5. 2000 EN Official Journal of the European Communities C 146/15 NOTES (1) Irish Treaty Series No 62 (1985). (cid:145)The two Governments shall cooper- ate to promote the economic and social development of those affected areas of both parts of Ireland which have suffered most severely from the consequences of the instability of recent years(cid:146). (2) Special Support Programme for Peace and Reconciliation in Northern Ireland and the border counties of Ireland (1995 to 1999) (para- graph 3. 16). (3) Letter of 21 February 1989, SG(89) D/2399 from the European Com- mission President. (4) Case-C-106/96 UK v Commission. (5) Council Regulation (EC) No 2614/97 of 15 December 1997. (6) See Annex 4, projects Nos: 2 (cid:151) Lough Foyle; 4 (cid:151) Carolls Warehouse; 5 (cid:151) Jones Brothers; 8 (cid:151) Lifford Castle; 14 (cid:151) Seeconnell; 15 (cid:151) Turf Lodge; 17 (cid:151) CMAR; 31 (cid:151) Navan at Armagh. (7) See Annex 4, point 5 (cid:151) Jones Brothers. (8) See Annex 4, point 14 (cid:151) Seeconnell. (9) See Annex 4, point 8 (cid:151) Lifford Castle. (10) See Annex 4, point 15 (cid:151) Turf Lodge. (11) See Annex 4, project Nos: 11 (cid:151) Rathlin Island; 14 (cid:151) Seeconnel; 31 (cid:151) Navan. (12) See Annex 4, point 31 (cid:151) Navan. (13) See Annex 4, projects Nos: 8 (cid:151) Lifford Castle; 9 (cid:151) Gulliver; 11 (cid:151) Rathlin; 14 (cid:151) Seeconnell; 24 (cid:151) Mount Errigal; 31 (cid:151) Navan. (14) See Annex 4, point 14 (cid:151) Seeconnell. (15) See Annex 4, point 11 (cid:151) Rathlin. (16) (cid:145)The International Fund for Ireland, an evaluation report(cid:146), COM(97) 130 of 25 March 1997. (17) NIERC (Northern Ireland Industrial Economic Research Centre). (18) See Annex 4, point 17 (cid:151) CMAR. (19) See Annex 4 point 16 (cid:151) Portavogie. (20) (cid:145)The International Fund has operated as a major and distinctive force in supporting contact, dialogue and reconciliation between the com- munities in Northern Ireland and between Northern Ireland and the South and in the creation of employment in Fund supported projects(cid:146). (21) COM(97) 642 final, of 26 November 1997. (22) The Industrial Development Board (IDB) (23) Subprogramme 5, measure 1, Seed capital (Revolving loan scheme). (24) Local Enterprise Agencies (LEAs). (25) LEDU (Local Economic Development Unit), Northern Ireland. (26) Department of Environment, Northern Ireland; Department of Agri- culture, Northern Ireland; ADM/Combat Poverty Agency; Task Force 1 Monaghan; Task Force 2 Navan; DED Northern Ireland (managing agents); Emerging Business Trust; Cooperation North, Northern Ireland/Ireland. (27) Robson deprivation index, based on a Manchester University study. (28) Measure 2(B)2: Economic and rural development (cid:151) Farm and coun- tryside enhancement scheme (FACES). (29) Emerging Business Trust (Measure 2(B)2: Economic and rural devel- opment). (30) Monaghan County Council-led task force. (31) See Annex 5, project Nos: 10 (cid:151) Mullaghmatt; 11 (cid:151) Killyroan. (32) Clones Diamond (cid:151) Phase II, Monaghan, also Killyroan housing estate. (33) Seed Capital Fund. (34) See Annex 5, point 18 (cid:151) Combra Ltd, 19 Kelly Bros. (35) See Annex 5, point 13 (cid:151) Clones Diamond. (36) STAR, Impact, Telematique and Interreg. (37) See Annex 4, point 32. (38) Mid-term Evaluation Report, July 1997, page B 114 (cid:145)Competitive Analysis Model(cid:146). (39) See Annex 5, project Nos: 8 (cid:151) Belturbet pedestrian links; 9 (cid:151) Balli- nagh sewerage; 10 (cid:151) Mullaghmatt; 11 (cid:151) Killyroan; 12 (cid:151) O(cid:146)Neill(cid:146)s pack; 34 (cid:151) Advance factory; 35 (cid:151) Advance factory; 53 (cid:151) Salmon enhancement. (40) Rivers Agency and the Department of Agriculture, Northern Ireland. (41) See Annex 5, points 56 (cid:151) Forest service, 57 (cid:151) Equiova breeding, 58 (cid:151) Food business units. (42) See Annex 5, point 53. (43) EU Aid for Peace and Reconciliation, July 1996, Committee of the British/Irish Parliamentary Body. (44) Mid-term Evaluation Report. (45) Cavan County Council-led task force. (46) See Annex 5, point 10 (cid:151) Mullaghmatt. C 146/16 EN Official Journal of the European Communities 25. 5. 2000 MANAGEMENT STRUCTURE AND PROGRAMMES OF THE INTERNATIONAL FUND FOR IRELAND ANNEX 1 BOARD MEMBERS (7) OBSERVERS(cid:13) European Union(cid:13) USA(cid:13) Australia Advisory(cid:13) Committee Secretariat(cid:13) of the Fund Development(cid:13) consultants The Fund’s programmes Disadvantaged(cid:13) areas Communities(cid:13) initiative Tourism Wider(cid:13) horizons Urban(cid:13) development Flagship projects Business enterprise 25. 5. 2000 EN Official Journal of the European Communities C 146/17 ANNEX 2A SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION Allocation of funding between subprogrammes Productive investment(cid:13) 15 % Partnership(cid:13) 15 % Social inclusion(cid:13) 22 % Technical assistance(cid:13) 2 % Employment(cid:13) 14 % Cross-border development(cid:13) 15 % Urban and rural regeneration(cid:13) 17 % ANNEX 2B SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION Allocation of funding between Structural Funds European Regional Development Fund(cid:13) 49 % European Social Fund(cid:13) 43 % Financial Instrument(cid:13) for Fisheries Guidance(cid:13) 1 % European Agricultural Guidance(cid:13) Guarantee Fund(cid:13) 7 % C 146/18 EN Official Journal of the European Communities 25. 5. 2000 STRUCTURE OF THE PEACE AND RECONCILIATION PROGRAMME (ERDF RELATED ONLY) ANNEX 3 Strategic objectives To promote social inclusion To boost economic growth and stimulate economic and social inclusion Subprogrammes and(cid:13) Measures(cid:13) Subprogrammes and(cid:13) Measures(cid:13) EMPLOYMENT SOCIAL(cid:13) INCLUSION CROSS-BORDER(cid:13) DEVELOPMENT URBAN(cid:13) REGENERATION RURAL(cid:13) REGENERATION PRODUCTIVE(cid:13) INVESTMENT PARTNERSHIP Boosting growth Grass-root capabilities(cid:13) Inclusion of women Business and cultural(cid:13) links Belfast and(cid:13) Londonderry Community-(cid:13) based actions Investment(cid:13) promotion ERDF- actions Actions for jobs Prevent exclusion Infrastructure regionwide Rural(cid:13) economic(cid:13) development New industrial(cid:13) development services ESF- actions Accessibility of training Inclusion(cid:13) of children Cooperation between(cid:13) public bodies Water-based(cid:13) tourism Trade(cid:13) development EAGGF- actions Infrastructure(cid:13) and equipment Vulnerable groups Cross-border(cid:13) reconciliation Pathways to(cid:13) reconciliation Infrastructure(cid:13) and equipment (cid:13) (cid:13) (cid:13) (cid:13) AUDIT SAMPLE OF PROJECTS OF THE INTERNATIONAL FUND FOR IRELAND ANNEX 4 Project Name Programme Project description 1 Inishowen Rural Regeneration Partnership Rural development Lough Foyle Camp Park Carlingford Lough Aquaculture Association Carroll(cid:146)s warehouse, Dundalk Jones Brothers Irish Equestrian Centre 2 3 4 5 6 Multimedia Interactive systems (Information Technology Centre) 7 Communities in Action Camp Park, Quigley(cid:146)s Point Science and Technology Urban Development programme Tourism programme Technology-based economic development in the border regions Communities in Action Lifford Castle (McGrehagham and Barrett) 8 9 Gulliver Reservations 10 Multi Wire Gamma Camera Project 11 12 Rathlin Island Trust Jobspace (NI) Ltd, Saul Road 13 Department of Informatics 14 15 Seeconnell Initiative Ltd Turf Lodge Enterprises Ltd Portavogie District Community Development Association CMAR (Irish Aquaculture Centre of Excellence) Knockloughrim Windmill Community Information Technology Unit Belfast Frankfurt bookfair 16 17 18 Marine Institute Dublin 19 20 21 Human Resource Development 22 23 Mentor Counselling scheme 24 Mount Errigal Hotel 25 Ulster Farmers Union 26 Tyrone Guthrie Centre 27 Acumen 28 29 30 31 Navan at Armagh 32 Agrifood Model 33 34 Cooperation North Farset Enterprise Park Springvale University Campus Irish Genealogical Centre Season Extension Pilot Programme Total Special projects Tourism programme Science and technology Tourism Business enterprise Technology-based economic development in the border regions Rural development Special projects Fishing Villages initiative Technological cooperation Technology innovation centres Tourism Special projects Product development Marketing Business enterprise Tourism programme Agricultural programme Tourism programme Business enterprise Community relations Business enterprise Flagship Flagship Technological cooperation Tourism programme Tourism programme An initiative to support community economic development in disadvantaged rural areas in Northern Ireland and the southern border counties Provision of an activity centre Shellfish environment and resource survey Conversion of Caroll(cid:146)s warehouse into cultural centre and museum Development of centre for the non-thoroughbred horse industry Development of multimedia interactive systems A programme to fight social exclusion of young people and to develop the social and personal role of women. Conversion of industrial buildings into Language School and leisure amenity Reservations system Research programme in anticipation of commercial development Visitor amenities Support scheme for business organisations which administer revolving funds providing loans for small businesses Establishment of an interactive systems centre to assist commercial exploitation of technol- ogy in Derry/north west area Rural regeneration project Provision of workspace units to provide employment opportunities for the long-term unemployed An initiative to support the economic development on the fishing industry Establishment of an Irish Mariculture Centre of Excellence at Portaferry Feasibility study on marine technology and engineering Restoration of windmill and development of a visitor amenity Development of an area-based consultancy for IT services Joint training for tourist information staff Exhibition costs Conference and leisure Visiting artists(cid:146) centre Cavan Enterprise Board Schools links programme Business development officer Visitors centre Economic model Genealogical project Tourism promotion. 2 5 5 2 0 0 0 IFI Financing ECU 1 063 101 292 221 154 705 462 793 145 449 132 227 255 197 416 514 2 115 624 298 121 277 978 149 427 1 631 514 915 985 522 993 1 067 205 1 000 172 37 357 134 484 112 070 268 968 149 427 324 256 269 117 298 853 186 783 1 246 726 518 510 74 713 7 471 329 1 068 400 448 278 2 248 689 (cid:151) 25 759 186 E N O f f i c i a l J o u r n a l o f t h e E u r o p e a n C o m m u n i t i e s C 1 4 6 / 1 9 C 146/20 EN Official Journal of the European Communities 25. 5. 2000 AUDIT SAMPLE OF PROJECTS OF THE PEACE AND RECONCILIATION PROGRAMME ANNEX 5 Programme Project 1 Urban and rural regeneration, 2C:2 (cid:151) Community-led development 2 Urban and rural regeneration, 2C:2 (cid:151) Community-led development 3 Urban and rural regeneration, 2C:2 (cid:151) Community-led development 4 Urban and rural regeneration, 2C:2 (cid:151) Community-led development 5 Urban and rural regeneration, 2C:2 (cid:151) Community-led development 6 Urban and rural regeneration, 2C:2 (cid:151) Community-led development 7 Urban and village renewal and tourism, 2C1:A 8 Urban and village renewal and tourism, 2C1:A 9 Urban and village renewal and tourism, 2C1:A 10 Urban and village renewal and tourism, 2C1:A 11 Urban and village renewal and tourism, 2C1:A 12 Urban and village renewal and tourism, 2C1:A 13 Urban and village renewal and tourism, 2C1:A 14 Urban and village renewal and tourism, 2C1:A Productive investment, 5. 1 (cid:151) Interest relief scheme 15 Productive investment, 5. 1 (cid:151) Interest relief scheme 16 Productive investment, 5. 1 (cid:151) Interest relief scheme 17 Productive investment, 5. 1 (cid:151) Interest relief scheme 18 Productive investment, 5. 1 (cid:151) Interest relief scheme 19 Productive investment, 5. 1 (cid:151) Interest relief scheme 20 Productive investment, 5. 1 (cid:151) Interest relief scheme 21 Productive investment, 5. 1 (cid:151) Interest relief scheme 22 Productive investment, 5. 1 (cid:151) Interest relief scheme 23 Productive investment, 5. 1 (cid:151) Interest relief scheme 24 Productive investment, 5. 1 (cid:151) Interest relief scheme 25 Productive investment, 5. 1 (cid:151) Interest relief scheme 26 Productive investment, 5. 1 (cid:151) Interest relief scheme 27 Productive investment, 5. 1 (cid:151) Interest relief scheme 28 Productive investment, 5. 1 (cid:151) Seed capital 29 Productive investment, 5. 1 (cid:151) Seed capital 30 Productive investment, 5. 1 (cid:151) Seed capital 31 Productive investment, 5. 1 (cid:151) Seed capital 32 33 Productive investment, 5. 1 (cid:151) Seed capital 34 New industrial development services, 5. 2 35 New industrial development services, 5. 2 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Urban regeneration, 2A. 2 - Regionwide 56 57 58 Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Cross-border development, 3. 1 (cid:151) Business and cultural linkages Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Rural regeneration, 2b:2 Total Community centre Development society Community development company Community training and audit Genealogy centre Community centre Conversion of a gate lodge Pedestrian links Sewerage scheme improvements Public lighting improvements Public playground Public playground Paving of town centre Graveyard restoration Foods company Electronics company Youth hostel Property rental operators Building construction company Hotel Fish processor Self-catering operators Food company Plastics manufacturer Textiles manufacturer Computer components manufacturer Food company Hotel Publishing company Food company Food company Giftware manufacturer Transport company Advance factory Advance factory Farming support Angling marketing Farming support Tourism company Meat(cid:151)processing company Arts feasibility study Tourism feasibility study Marketing company Historic buildings survey Electronics company Business forum Tourism feasibility study Peace organisation Waterways feasibility study Lifeboat Waterways feasibility study Waterways feasibility study Angling development initiative Waterways feasibility study Community regeneration Forestry Fish breeding Food company development (ECU) P & R financing 92 558 10 882 66 113 11 207 76 691 19 834 37 685 54 543 54 543 49 585 49 585 52 891 105 782 14 875 74 713 177 818 40 345 242 070 388 507 10 460 17 931 5 977 64 253 288 393 448 280 400 463 58 276 50 805 8 966 22 414 14 943 29 885 29 885 896 559 896 559 198 146 114 816 1 494 266 11 207 308 570 6 280 6 038 11 879 73 010 138 593 220 752 5 230 89 656 44 828 59 771 280 175 50 431 3 959 804 36 423 (cid:151) 1 570 000 1 510 000 3 140 000 18 194 151 25. 5. 2000 EN Official Journal of the European Communities C 146/21 THE COMMISSION(cid:146)S REPLIES SUMMARY the Court(cid:146)s remarks and refers to its detailed response under the relevant points in the report. In respect of the IFI, the Commission refers to its detailed response to these remarks made under points 14, 19 and 20. Funding arrangements and regulatory framework As regards the findings on the P & R programme (1995 to 1999), which are drawn from an audit the Court carried out as early as 1997, the Commission notes that, in many cases, action has been taken in the meantime by the Monitoring Committee and by the implementing bodies to rectify such early difficulties. With the privilege of hindsight, the Commission now believes that this very ambitious and innovative Community initiative (cid:151) both in terms of objectives (peace and reconciliation) as well as delivery mechanisms (a truly (cid:145)bottom-up(cid:146) approach) (cid:151) has proved to be successfully implemented. 11 and 12. The Commission does not consider that the bank balances held by the Fund represents (cid:145)unused monies(cid:146) as the mon- ies are already committed to programmes. The IFI(cid:146)s accounts in fact show that for 1995, 1996 and 1997 contractual commit- ments to projects exceeded balances held. This arises because the Fund phases the release of its assistance to projects as they progress, and in sequence with the provision of matching funding. Conse- quently, the Fund has to be sure of donor contributions well in advance of final disbursement to projects. However, the Commis- sion will examine the matter and explore the scope for making payments to the Fund in more than the current two annual instal- ments. The political and financial support of the European Union through IFI and the P & R programme has thus helped to underpin the peace and reconciliation process in the region, thereby contribut- ing to the progress at political level. Administrative procedures THE COURT(cid:146)S AUDIT 13 and 14. The Commission accepts the Court(cid:146)s comments on the need to review the IFI(cid:146)s present arrangements concerning staffing and delegation of powers and has raised the matter with the board of the Fund. 3. Concerning the P & R programme, the actual implementation of projects mainly began in 1996 and thus a longer period would be necessary for drawing definite conclusions on the overall effi- ciency and effectiveness of the programme. As the reply of the Commission shows, most of the areas for improvement identified in the report were addressed in the course of the following years. THE INTERNATIONAL FUND FOR IRELAND Summary of the main findings in respect of the IFI Project appraisal procedures 19 and 20. The Commission has asked the Fund to re-examine its procedures for appraising projects in the light of the com- ments made by the Court. The Commission understands that with regard to the cases cited by the Court, assistance was pro- vided by the Fund on the basis of preliminary assessments of the projects and in accordance with the Fund(cid:146)s principle of (cid:145)first money on the table(cid:146), so as to help attract other funding sources to projects. 6. The Commission wishes to emphasise the unique role and sta- tus of the Fund and its operational arrangements. The Fund is an independent legal entity and operates according to funding rules that are different from any EU initiative such as the P & R pro- gramme, which is administered by the Commission and the two Governments. The Commission is concerned that the examina- tion of both vehicles in the same report should be treated with care in order to avoid misunderstandings. The Commission notes Monitoring and evaluation of projects 21. Similar findings on weaknesses in monitoring and evalua- tion were described in the audit report of DG-Audit following the check of October 1998; subsequently the IFI proposed to take a number of measures to rectify this situation. C 146/22 EN Official Journal of the European Communities 25. 5. 2000 Impact of the IFI (For specific comments, see relevant paragraphs) 23. This point should be considered against the background that the IFI is a first funder in many areas precisely because the politi- cal and social circumstances are such as to make access to other public funding very difficult without the sort of pump-priming possibilities offered by the Fund. 24. The estimate of 7 000 jobs created can indeed be taken as a measure of performance in strictly economic terms. It does not, however, reflect the total number of jobs arising from projects supported by the IFI for which it claims a leverage function. The study carried out by KPMG in 1995 would seem to support this approach. 26. The reference to the predominance of government organisa- tions and professional bodies as beneficiaries of cross-border projects should be seen in the context of the sociopolitical situa- tion, particularly in the earlier part of the reference period of this report. 27. The Commission has received assurance from the Fund that this matter is receiving its particular attention. Monitoring by the Commission 28. A detailed financial audit on the management and control system of the IFI and implementation by project managers was carried out by its services in October 1998 in conjunction with an on-the-spot exercise to monitor projects. The audit report con- firmed that the maximum grant rates had been complied with in cases where projects had been co-funded by Structural Funds. A similar on-the-spot audit is under consideration for 2000. Regulatory framework and funding arrangements 32. Given the (cid:145)bottom-up(cid:146) approach followed by the P & R pro- gramme, the nature and specificity of opportunities arising from the cessation of violence was left to the evaluation of the imple- menting bodies themselves and not a priori defined in detail by the programme itself. Implementing bodies thus were required to use appropriate methods of targeting social groups and projects in line with the broad objectives set out by the Programme docu- ment. One obvious example is the case of District partnerships, which received allocations from the Department of Environment on the basis of a ranking determined by the Robson index of dep- rivation combined with regional statistics (population, violence, etc) (1). 33. The efforts by all implementing bodies involved in the P & R programme have proved to be quite efficient, as the analysis of community uptake in Northern Ireland made by T. Haase (2) shows: the programme has achieved an impressive coverage throughout Northern Ireland with over 80 % of electoral districts generating applications; the distribution of both project applica- tions and funding followed the distribution of the population, being particularly concentrated in urban areas. In the border counties, the final evaluation of the programme is expected to confirm that they have also successfully done so. Financial and budgetary execution THE SPECIAL SUPPORT PROGRAMME FOR PEACE AND RECONCILIATION Summary of the main findings in respect of the P & R 29. As regards the Court(cid:146)s findings drawn from the inquiry it carried out as early as 1997, the Commission notes that, in many cases, action has been taken in the meantime by the Monitoring Committee and by the implementing bodies to rectify such defi- ciencies. 34. The financial plan foreseen by the Member States and pro- posed by the Commission in 1995 reflected the decision of the European Council to allocate ECU 100 million per year for the period 1995 to 1997. The Commission agrees that the allocation of funding for a shorter period of time than the foreseen pro- gramme duration may have caused difficulty in the planning in some projects. However, it was not entirely negative, as it helped to create a sense of urgency and a momentum in all who partici- pated in the implementation of the programme. Furthermore, given the potentially unstable political context in the region as well as the special nature and scope of the P & R programme, the Commission(cid:146)s proposal (3) for a review of progress after three years as a condition for further financing was fully justified. With the privilege of hindsight, the Commission believes that this unique Community initiative (cid:151) both in terms of objectives (peace and reconciliation) as well as delivery mechanisms (a truly (cid:145)bot- tomup(cid:146) approach) (cid:151) has proved to be an overall success. (1) See also the reply to paragraph 46. (2) T. Haase and J. Pratschke: (cid:145)EU Special Support Programme for Peace and Reconciliation: Analysis of Community Uptake(cid:146), NISRA, 1999. (3) Communication from the Commission to the Council and the Euro- pean Parliament of 7 December 1994, COM(1994) 607. 25. 5. 2000 EN Official Journal of the European Communities C 146/23 35 to 37. The process of selecting and contracting intermediary funding bodies and of establishing district partnerships and the Northern Ireland Partnership Board necessarily took time and fur- ther time was required by these implementing bodies to become fully operational. Furthermore, the P & R programme attracted a high number of applications (cid:151) over 22 000 in the period up to 31 December 1997 (cid:151) to be examined by the implementing bod- ies. Under such circumstances, the amounts of commitments and payments, as well as expenditure on projects at the end of 1997 were significantly lower than expected when the programme was adopted in mid-1995. The transfers and cancellations of appropriations that took place in 1996 and 1997 were budgetary exercises with the view to real- locating to other Community initiatives the amounts that had not been spent on the P & R programme line. This is normal practice in EU budget management. 38. In its 1997 progress report, the Commission considered that further funding was required to meet existing and future demand and recommended that the budgetary authority approve addi- tional EU funding of ECU 100 million for 1998 and later a similar amount for 1999. The validity of this choice is confirmed by the fact that the programme(cid:146)s resources were fully committed at the end of 1999, benefiting some 12 600 projects. Taking into account the slow uptake of funds for the reasons pre- sented in point 35, the Commission decision on 5 December 1997 was a necessary correction, which aligned financial plan- ning and the execution of the programme. The Commission welcomes the decision of the conclusion of the Berlin European Council, in March 1999, which set the amount to be allocated to the PEACE II programme for the entirety of the new period (2000 to 2004). With regard to the selection of intermediary funding bodies (IFBs), while no competitive selection procedure took place, the Com- mission engaged consultants to evaluate potential candidates. In addition, much discussion with the national authorities and with others, such as the community and voluntary sector, preceded the final selection of IFBs and also the establishment of the Northern Ireland Partnership Board and the district partnerships. While the IDB was foreseen to be delivery mechanism in the Pro- gramme Document (subprogramme 5, measure 2 (cid:145)New industrial development services(cid:146)), the measure was in the end administered by its parent department, the Department of Economic Develop- ment. 43. With a view to ensuring widespread take-up of the Seed Capital Fund under subprogramme 5, measure 7, LEDU engaged a number of agents located in various parts of Northern Ireland. An audit by the Department of Economic Development(cid:146)s Internal Audit Service concluded that LEDU(cid:146)s monitoring arrangements were adequate to fulfil their responsibility for the management of the Fund and that the agents(cid:146) arrangements for delivery of the funding were satisfactory. Information on the names and the activities of the delivery agents was provided in progress reports to the Monitoring Committee. 44. Advance payments are claimed by Member States on the basis of expenditure reported by final beneficiaries. To remove any doubt, the final beneficiaries were definitively identified (1) in the Commission(cid:146)s decision of 10 July 1998 which followed the mid-term review of the programme (2). All implementing bodies are now reporting expenditures on the same basis. The programme(cid:146)s administrative structure Project appraisal procedures 41. Although the scope of the programme is indeed wide and the number of implementing bodies is high, one must bear in mind that the P & R programme is as much about content as about process: from the outset, the programme(cid:146)s administrative structure was therefore designed in order to establish as close contact as possible with grass roots needs within a truly (cid:145)bottom-up(cid:146) approach. 42. Although administrative practices may have varied greatly due to the decentralised nature of the delivery mechanisms, the Monitoring Committee confirmed the validity of the objectives, priorities, and implementing mechanisms. It also provided com- mon guidelines to all implementing bodies. 45. In such a wide-ranging programme, a variety of approaches to project selection is to be expected. An attempt to achieve com- plete standardisation would have lengthened significantly the period required to launch the programme. This does not excuse the absence of adequate appraisal procedures in certain cases and the Court(cid:146)s comments on this point are noted. (1) In accordance with Commission Decision 97/324/EC of 23 April 1997 modifying the decisions approving the Community support frameworks, the single programming documents and the Community initiative programmes in respect of Ireland: datasheet No 1. (2) Commission Decision of 10 July 1998, C(1998) 1632. C 146/24 EN Official Journal of the European Communities 25. 5. 2000 46. With regard to targeting in Northern Ireland, the designa- tion of eligible areas by government departments used the Rob- son deprivation index, sometimes complemented by other indica- tors if the assistance had a special focus (health, environment, employment, etc. ). In the border counties, some IFBs applied a deprivation index in the allocation of assistance. An updated ver- sion of the Gamma studies deprivation index was generally used as criteria for assessing the merits of individual projects. 47 and 48. The Commission notes the findings. It will ensure that specific and written criteria for project selection and appraisal procedures by the implementing bodies, particularly as regards methods for assessing the comparative merits of applications and the ranking of projects by scoring or weighting their merits, will be provided in the future P & R programme (2000 to 2004). Subsequent monitoring of grant-aided projects 49. Until the end of 1997, pending the establishment of a central database, IFBs created their own database to control the applica- tions submitted to them. In the period since the end of 1997, central databases required by the programme have been created, which contain data on project applications and approvals as well as the information provided by project promoters in accordance with the optimum monitoring questionnaire (OMQ). These data have been used in the prepara- tion of progress reports for the Monitoring Committee and have also been used in analyses made by the external evaluator. 50. No quantified physical and impact targets were set in the programme document to reflect the non-prescriptive nature of the programme at that stage. In the course of its execution, a comprehensive set of monitoring indicators has been developed and is now in use to report progress to the Monitoring Commit- tee, drawing on the data provided by the use of the OMQ. With a view to the ex post evaluation of the programme, a strategic evalu- ation model has been drawn up by the external evaluator and other work is in progress to prepare the final evaluation. Impact of the programme 52 and 53. On the issue of targeting as regards the overall objec- tives of the P & R programme, see the reply to paragraph 46. The Commission notes the findings and will examine this further. 54. From 1998 onwards, an adequate monitoring and evalua- tion system was set up in the form of a comprehensive database, with regular input through the OMQs, recording job creation fig- ures and impact indicators (see also the replies to paragraphs 49 and 50). Publicity and information In the early years of the P & R programme, little informa- 55. tion and publicity activity at programme level occurred as the main requirement was to inform potential applicants about the subprogrammes and measures. Information dissemination was however undertaken by implementing bodies for this purpose, with a certain success since the Programme generated a very high level of applications (some 29 000 applications), which is a meas- ure of people(cid:146)s awareness of it and of its relevance to their needs. Increased attention is now given to information and publicity at programme level, with the assistance of experienced consultants specialised in media communication, regularly reporting to the monitoring committee (1). MULTIFUNDED ACTIONS 56. Compared with other EU programmes, the P & R pro- gramme(cid:146)s objectives were substantially different both in terms of overall aims and in the targeting of assistance. As compared to the IFI programmes, the P & R programme was also different with its (cid:145)bottom-up(cid:146) approach to delivery of the programme and the man- agement of a major part of the funds by non-governmental implementing bodies. 51. Separate measures administered by separate implementing bodies is a common feature of Structural Funds programmes. In some cases, this may indeed imply that potential beneficiaries must apply to different bodies in order to finance a multifold project. However, subprogramme leaders (government depart- ments) have played a role in ensuring the implementation of meas- ures was carried out in a complementary manner. The risk of double-counting in the attribution of projects(cid:146) impact and publicity to individual programmes is also a matter of con- cern for the Commission. (1) Some 400 press articles and over 50 appearances on television and radio for the period of the programme were reported to the Monitor- ing Committee on 2 December 1999. 25. 5. 2000 EN Official Journal of the European Communities C 146/25 57. The Commission has taken note of the Court(cid:146)s observations on this project which states that 52 % of the expenditure on the Gulliver project was derived from EU and IFI sources. It would point out however that only half the IFI funding has an EU origin. The Gulliver project was highly innovative and thus inevitably contained a risk factor. CONCLUSION AND RECOMMENDATIONS 58. See the reply to paragraphs 61 and 62. ADDITIONALITY OF FUNDING 60. The Commission agrees that displacement of government- funded activities as a result of IFI funding is exceptional: only one such case is identified in the report, which is also a case which was clearly signalled to the IFI board by the Commission observer at the time and recorded as such in the board minutes. 61 and 62. Overlaps for certain actions were foreseen and will- ingly accepted from the outset: it is normal that some projects may be both eligible under government or EU programmes as well as fulfilling the requirement for a more stable and peaceful society under the P & R programme. It is expected that such projects financed under the P & R programme have a stake in peace and reconciliation, and are thus better targeted. 63. In the Commission(cid:146)s view, projects which comply with P & R programme criteria should not be excluded because they ema- nated from government departments or agencies but it is agreed that they should be evaluated on the same basis as other projects. 66 to 69. The Commission appreciates the Court(cid:146)s recognition of the difficult circumstances in which the P & R programme was initiated and of its value in providing important and innovative structures and incentives, which encouraged cooperation and the involvement of local communities. 70. (a) The Commission will examine the matter and explore the scope for making payments to the Fund in more than the current two instalments. 70. (d) As regards the Court(cid:146)s recommendation, the Commission fully agrees. It would point out that a detailed monitoring exercise of projects was carried out by its services in 1998 and 1999. The report on this exercise also covers arrangements in place designed to prevent any overlap between IFI funding and Structural Funds operations. A similar on-the-spot evaluation will be carried out in the second half of 2000. 71. The Commission welcomes the specific recommendations concerning the P & R programme. It notes that action has already been taken by the P & R Monitoring Committee and implement- ing bodies on several matters to which the Court refers. However, the Commission intends and will ensure that all the Court(cid:146)s re- commendations will receive careful attention in the preparation and approval of the successor programme PEACE II for the period 2000 to 2004. In particular: 64. The Commission shares the Court(cid:146)s view that programme funding should not be substituted for normal government or local authority expenditure. (a) An examination of experience in the implementation of the programme (including matters such as project selection and targeting) will be made by the external evaluator and his report (early 2000) will feed into the design of PEACE II. As to whether projects that could proceed without support should be assisted ((cid:145)dead-weight effect(cid:146)), the Commission recalls that, with a view to consolidating progress towards a peaceful and stable society, an accelerated rate of growth or a wider scale of develop- ment might be particularly desirable. Furthermore, one of the positive effects of the P & R programme being its delivery mecha- nisms, such projects may also generate benefits from the pro- cesses involved in preparing and implementing them. (b) The Commission agrees with this recommendation. Given the experience of the P & R programme, it expects the spending pace of PEACE II will be more in line with other Structural Funds operational programmes. (c) The Commission agrees with this recommendation which is applicable to all implementing bodies. 65. The Commission notes the findings and will be attentive to this matter when the new PEACE II programme is drawn up. (d) The Commission agrees with the fact that project appraisals across the programme should be carried out on the basis of specific written criteria and be clearly documented. C 146/26 EN Official Journal of the European Communities 25. 5. 2000 (e) The Commission agrees with the recommendation of the first sentence and recalls the setting up of the programme(cid:146)s central databases after 1997. (g) The Commission agrees with this recommendation. It will pay close attention to the publicity provisions introduced in the forthcoming PEACE II programme. (f) The Commission will take action in order to reinforce the coordination between its departments on the Community(cid:146)s involvement in the International Fund for Ireland and the PEACE II programme. Synergy between their respective pro- grammes will also be sought in their definition. Despite early difficulties in setting up this very ambitious and innovative Community initiative, the Commission believes that the P & R programme (1995 to 1999) has been successfully implemented. The political and financial support of the European Union has helped to underpin the peace and reconciliation pro- cess in the region, thereby contributing to the progress at politi- cal level