The Government has been ordered to repay €15 million to the European Commission by the European Court of Justice.
This follows the Government's unsuccessful appeal against an earlier decision that it owed this sum because of irregularities surrounding some claims for European Social Fund (ESF) funding.
Under ESF rules the EU funding was not meant to replace public expenditure, and, as a general rule, it was meant to amount to not more than 50 per cent of the total expenditure on specific projects.
The disputed claim arose from the 1994-98 round of funding to the National Training and Development Institute (NTDI) and the Central Remedial Clinic. The managing authority for the programmes was the Department of Enterprise, Trade and Employment.
In November and December 2000 staff of the European Commission went to Dublin to carry out on-the-spot checks and investigations of operations in these organisations. These checks revealed that the amount of national funding put in was only 25 per cent of the total cost of the funding. Irregularities were also found in the manner in which the department adjusted the amounts obtained from the EU following conversion from ecus.
According to the court's judgment, "the Irish authorities conceded that the claims for co-financing submitted by the NTDI had not been drawn up in accordance with ESF best practice ... The Irish authorities accepted that the adjustments of the claims for co-financing by the [ department] were not appropriate."
However, the Government had stated that these adjustments had not led to any over-financing by the EU. Nonetheless, arising out of its investigations, the commission reduced the sum granted by the EU by €15.6 million.
The Government had appealed to the European Court of Justice against this decision, and a full hearing took place in January this year.
Ireland argued that the errors were technical, that the commission had infringed its own rules which were applied retrospectively, and that the penalty was disproportionate. The court rejected these arguments and pointed out that it had already held that only expenditure incurred in strict conformity with the rules could be charged to the EU budget.
Ireland has also been ordered to pay the costs of the legal action.