The state is demanding the return of close to €700,000 in European Regional Development Fund (ERDF) support from the from the twin municipalities of Valga, in Estonia, and Valka, in Latvia, citing violations of public procurement regulations in the joint construction of a covered plaza.
The Estonian-Latvian border runs through Valga-Valka and the new development, the Valga-Valka keskväljak (pictured), was designed by an architectural firm from Catalunya, and is located close to the border.
Ege Ello, head of the State Shared Service Center' (RTK) cross-border programs department, told ETV news show "Aktuaalne kaamera" (AK) that: "Unfortunately, we found out about the violations after the fact, as a result of an audit, so it was not possible to do anything in advance to prevent or avoid them."
"Many mistakes have been made during the implementation of the project, which likely did not seem so important to Valka and Valka at that moment compared with all the other challenges they had within the project," Ello went on.
Spokespersons from both towns deny any wrongdoing.
On the Estonian side, Valga municipality architect Jiri Tintera told AK that: "Throughout the entire process, all supervisory bodies were involved with us in this process, though we perhaps did not get enough support from them. This is our main complaint."
The development is finished; it is the RTK which is demanding a substantial part of the EU funds to be returned, mostly relating to the extension of the deadline for the execution of the contract.
Contractors had been paid after the work was completed but ahead of occupancy permits being issued, which was another irregularity, the RTK says.
Municipal leaders from both sides of the border deny any wrongdoing.
Vents Armands Krauklis, head of Valka Municipality on the Latvian side, said: "We find that this audit does not reflect the actual situation with the project. Project goals have been met. There was no corruption, price cutting, and no funds were misappropriated either. A very high-quality object has been erected and all project goals attained."
Valga has to return more then €340,000 and Valka over €350,000 in ERDF money, though both municipalities have said they will appeal the decision in court.
The revived central square located between the two towns is considered one of the most successful joint projects from the two countries, both in terms of purpose and architectural solution, AK reported.
Both Tintera and Krauklis said the implementation of cross-border programs and their funding have to be reviewed at domestic state governmental level, adding the system is bureaucratically complex, while the demand for returning the money was: "A show of power based on false foundations," Krauklis said.
AK also questioned why local government fund use had been deemed as correct, but that of ERDF had not.
Editor: Andrew Whyte