By Jan Strupczewski

BRUSSELS, (Reuters) – The European Commission launched a lengthy-awaited investigation into the question of whether Poland or Hungary should receive billions from the EU budget due to corruption and rule of law issues.

According to documents from the Commission, Saturday’s letters showed that they were sent Friday to Warsaw (and Budapest) asking for clarifications on a new EU law which allows suspension of EU cash in case it is mispent.

Although the law was passed last December, it has not been applied by the Commission. This is despite being sued last month by the European Parliament for its inaction.

A different legal process has seen the Commission suspend billions of EU Recovery Fund grants to Poland and Hungary. It cited the same concerns regarding corruption and rule of law.

These letters, sent Friday by the EU to all countries concerned are only the beginning of a long process that could potentially expose the EU’s cash reserves of tens or billions of euro over seven years.

Two months are allotted to each country for their responses.

The Commission would need to be ruled by the EU’s highest court if it were to declare that EU funds are not secure in Poland or Hungary.

In March, both the EU and the two countries challenged the law. A non-binding opinion from the EU court’s advocate general was expected in December. However, it is possible that a final ruling will not be made until the first quarter in 2022.

For years, Poland and Hungary were under investigation by the EU for attempting to undermine the independence courts and non-governmental organizations.

SPOILER CONCERNS

Warsaw’s relations to the EU are worsening after the Constitutional Tribunal of Poland, which is dominated by the ruling nationist and eurosceptic party, ruled that parts of EU law were inconsistent with the Polish Constitution in October.

In July, the Polish Tribunal also stated that Poland was not required to comply with interim measures imposed in Poland by the EU’s highest court on matters relating to Polish judiciary.

The Commission’s letter to Poland to Reuters stated that “These two judgments by the Constitutional Tribunal could lead to breaches of principles of rule of law…insofar the correct application Union law is concerned and thereby put at danger the application Union primary law, secondary legislation relevant for the protection of financial interests of European Union,”.

Additionally, the letter raises concerns over the impartiality and independence of Poland’s prosecutor. The service is managed by an active member from the ruling party who also serves as justice minister and prosecutor general.

A second concern is that of independence in judges who are appointed by a council controlled by nominated members of the ruling party.

According to the Poland letter, such issues “could impact the effectiveness of and impartiality the judicial proceedings on cases relating to the irregularities of the management of Union funds”.

While the letter addressed to Hungary raised concerns about judges’ independence, it mainly focused on irregularities in EU funds being spent through public procurement.

These concerns are based on reports by OLAF, the EU’s antifraud office. They show that nearly half of public tenders in Hungary involve a single-bid process.

Viktor Orban, the Hungarian Prime Minster, was accused of spending billions of euro of EU and state funds during his decade-long tenure to support a business elite that included close family and friends.

In July’s report on Hungary’s rule of law, the Commission highlighted persistent deficiencies in Hungarian politics financing as well as risks of nepotism and clientelism at high-level government offices.

The letter to Hungary stated that “the identified weaknesses and deficiencies may… pose a serious threat to the sound financial management for the Union budget, or the protection of Union financial interests”