* Commission said hopes to unfreeze money soon
* Poland has charged road contractors with price-fixing
* Ministers say EU reaction too harsh
(Adds EC spokeswoman on further road financing in para 14)
By Adrian Krajewski
WARSAW, Jan 30 The European Union has frozen
about 890 million euros ($1.20 billion) in aid earmarked for
building Polish roads because of a suspected fraud by
contractors, a Commission spokeswoman said on Wednesday.
The suspension, which is likely to be only temporary, comes
at an awkward time for the Polish government which is already
dealing with a sharp economic slowdown and thousands of lay-offs
in the construction industry.
Poland's Deputy Minister for Regional Development, Adam
Zdzieblo, said the decision was "completely incomprehensible"
and based on questionable assumptions.
Polish officials said they were doing everything they could
to root out the suspected fraud.
The Commission said it acted after Poland launched a
criminal investigation into allegations there was a price-fixing
cartel involving companies bidding for road-building contracts.
Eleven people have been charged, including construction firm
executives and one former director at the state road agency,
A spokesman for the Warsaw prosecutor's office said 10
Polish and foreign executives could face up to three years in
jail on charges of colluding to divide three road building
contracts among their companies.
One of the executives is also accused of giving an expensive
fountain pen to the former agency official, who is suspected of
telling the companies how much it was willing to pay for the
Both face up to eight years in prison on bribery charges.
The spokesman declined to name the people involved.
Poland is the biggest recipient of European Union funds,
much of it spent on improving creaking infrastructure left over
from Communist rule. Poland has generally been seen in Brussels
as a model for the effective use of EU development aid.
"The Commission has prudently interrupted payments until the
situation is cleared and the scope of the problem is
established," said Shirin Wheeler, Commission spokeswoman for
"We would like to see the payments resumed as soon as
possible and are hopeful that this will be the case," she said
in a statement emailed to Reuters.
Wheeler added later on Wednesday that around 4 billion euros
of funds earmarked for ongoing road projects in Poland could
also be blocked in the future, if the situation was unresolved.
Zdzieblo, the Deputy Minister for Regional Development said:
"We believe the Commission will withdraw its decision."
Construction projects have played an important role in
sustaining economic growth, especially in the run-up to last
year's Euro 2012 soccer tournament, co-hosted by Poland and
Ukraine, when the country was in a frenzy of building roads and
But spending on big infrastructure projects has tapered off
since then, contributing to an economic slowdown. Dozens of
construction firms have declared bankruptcy and many more have
laid off workers.
In a separate case, the European Commission is investigating
the way the road agency administered construction contracts that
were partly paid for out of EU funds.
That investigation was launched after foreign contractors
alleged that GDDKiA owed them millions of euros in unpaid fees
for sections of highway they had built. The agency said it had
done nothing wrong.
($1 = 0.7420 euros)
(Additional reporting by Chris Borowski and Sam Harcourt;
Writing by Christian Lowe; Editing by David Cowell and Rosalind