THE LONG-running European Union probe into Poland's tottering shipyards finally came to a dramatic end yesterday with Brussels declaring that billions of euro of state aid had been given unlawfully and must be repaid.

But the European Commission said it would accept a plan that would see the Polish authorities sell off assets at the Gdynia and Szczecin yards through an open tender system, and then liquidate the existing companies there.

The decision comes at a time when the EU state aid system is under scrutiny as it tries to cope with member states' plans for rescuing their banking systems.

Yesterday, EU competition commissioner Neelie Kroes admitted that she had been challenged on why shipyards employing thousands faced an adverse decision while national bank bailouts at a time of financial turmoil were being permitted.

Ms Kroes said the banking situation had systemic implications, and that aid there was only being approved on a time-limited basis.

Funds raised by the Gdynia/Szczecin asset sales, due to take place over the next seven months, will go towards meeting creditors' demands and repaying the previously granted state aid.

Companies that buy any of the assets, however, will not be liable for the illegal subsidies - and so can continue shipbuilding activities.

They will also not be obliged to employ workers at the yards, although Ms Kroes said that she was hopeful that "quite a number" of individuals would find sustainable jobs as a result of the plan.

Ms Kroes, who has met workers from the yards three times in recent months and promises to go to Poland shortly to discuss the news, said that yesterday's decision was "one of the hardest" she had confronted during her time as competition commissioner.

The Polish government had put forward various proposals for the yards, which employ 10,000. -