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Ombudsman probes European Commission over late payments

EC does all it can to support SMEs - except pay them

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The European Ombudsman has kicked off an investigation into the European Commission's habit of not paying its suppliers in a timely manner.

P Nikiforos Diamandouros's investigation into the Commission's tendency to bend the cash/time continuum comes as the Commission continues its own efforts to support European firms through the financial crisis, mainly by talking its way through the downturn.

Diamandouros said his probe follows complaints from “companies, associations, NGOs, universities and other organisations involved in EU-funded projects and contracts”. Apparently he has investigated 30 late payment complaints over the last seven years. He kicked off an investigation in December 2007, which closed in July 2008, and found that “more than 22 per cent of all payments made by the Commission involved delays”.

Presumably suppliers aren't finding much improvement since then, hence the new investigation.

In his letter opening the probe, he says, “I would very much appreciate it if the Commission could inform me of the results of the steps it has taken to identify and deal with the causes of delays in making payments to contractors and to beneficiaries of grants and subsidies.

"I would of course also be interested in obtaining information on any further steps the Commission may have taken in this field.”

Late payment is one of the big bugbears of SMEs. As larger entities hoard their own cash, smaller firms see their cashflow reduced to a trickle, quickly sending those smaller suppliers to the wall. Strangely, larger organisations rarely allow smaller organisations the same payment terms they claim for themselves.

The Commission knows all this of course. As far back as 2000 the Council of Industry Ministers approved a directive on late payments. Last year the Commission approved an SME Act to help small businesses. But the act was criticised for not providing a mechanism for overhauling the culture of late payment in Europe. ®

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