By Jan Strupczewski
BRUSSELS (Reuters) - The European Commission has started a long-awaited probe into whether Poland and Hungary should continue to receive billions of euros from the EU budget because of problems with corruption and the rule of law.
Commission documents on Saturday showed letters were sent to Warsaw and Budapest on Friday asking governments for clarifications under a recent EU law allowing the suspension of EU cash if it may be misspent.
The law was adopted last December but the Commission, the guardian of EU laws, has been slow to apply it, despite pressure from the European Parliament which even sued the Commission last month for inaction.
Under a different legal process, the Commission has already suspended billions in grants to Poland and Hungary from the EU's recovery fund, citing the same concerns over the rule of law and corruption.
The letters sent on Friday are just the first step in a lengthy process, but may put at risk tens of billions of euros in EU cash to the countries over the next seven years.
Both countries have two months to answer the letters.
If the Commission were to conclude EU money was not safe in Poland and Hungary, it would still need a ruling from the EU's top court before it could take action.
Both countries challenged the law in March and while a non-binding view from the EU court's advocate general is expected in early December, a full ruling might not come until the first quarter of 2022.
Poland and Hungary have for years been under formal EU investigation for undermining the independence of the courts, non-governmental organisations and the media.
Warsaw's relations with the EU have worsened after Poland's Constitutional Tribunal, dominated by the ruling nationalist and euro-sceptic party, ruled in October that elements of EU law were incompatible with the Polish constitution.
The Polish tribunal also said in July that Poland did not need to observe interim measures imposed by the EU's top court in matters of Polish judiciary.
"These two judgements of the Constitutional Tribunal could give rise to breaches of the principles of the rule of law ... insofar as the correct application of Union law in Poland is concerned, and thereby put at risk the application of Union primary law and secondary legislation relevant to the protection of the financial interests of the European Union," the Commission letter to Poland, seen by Reuters, said.
The letter also lists concerns about the impartiality of Poland's prosecutors, because the service is run by an active politician from the ruling party, who is justice minister and prosecutor general at the same time.
Another concern listed is the independence of judges appointed by a council dominated by nominees of the ruling party as well as a new disciplinary system for judges which breaks EU treaties, according to ruling by the EU top court.
Such issues "could affect the effectiveness and impartiality of the judicial proceedings on cases related to the irregularities in the management of the Union funds," the letter to Poland said.
The letter to Hungary, while mentioning concerns over the independence of judges, focused mainly on irregularities in spending EU money through public procurement.
The concerns follow reports from the EU's anti-fraud office OLAF showing nearly half of all public tenders in Hungary result in a single-bid procedure.
During a decade in power, Hungarian Prime Minister Viktor Orban has been accused of using billions of euros of state and EU funds to prop up a loyal business elite which includes family members and close friends.
In a report on the rule of law in Hungary in July, the Commission cited persistent shortcomings in Hungarian political party financing and risks of clientelism and nepotism in high-level public administration.
"The identified deficiencies and weaknesses may... present a serious risk that the sound financial management of the Union budget or the protection of the Union financial interests will continue to be affected in the future," the letter to Hungary said.
(Reporting by Jan Strupczewski; Editing by Christina Fincher)