Poland risks repaying 150 mln euro in EU farm funds

Poland may have to repay about 150 million euros ($217.6 million) to the European Union as a punishment for administrative flaws in the distribution of the bloc's farm aid funds, an EU source said on Thursday.

The European Commission has proposed to recover the sum, after an audit for 2005-2006 showed irregularities in establishing areas eligible for EU farm payments through the use of satellite pictures.

'We are not talking about corruption, we are talking about administrative flaws,' an official at the European Union executive said, asking not be named.

The Commission will take a final decision on the fine in early 2009 after a conciliation meeting with Polish officials in December, so the lost funds may burden next year's budget.

Poland's farm minister said he hoped the negotiations with Brussels would clarify the case so Poland would not have to repay the money.

'We are in the process of clarifying things with the European Commission and we think the attempt to punish us so severely exceeds our guilt,' Marek Sawicki told Reuters on Thursday. 'We still have some time. Even if the EC sticks to the punishment, it will definitely not be as high as this.'

The Commission may tell a member state to repay up to 50 percent of farm aid funds 'depending on the gravity of the problem', the Commission official said.

More than 40 percent of the EU's annual budget of about 120 billion euros is spent on farm subsidies or rural development projects.

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