The socialist Spanish government of Prime Minister Pedro Sánchez is facing accusations of embezzling billions in European Union coronavirus recovery funds to fill holes in its welfare and pension budgets.
According to a report from Madrid’s El Mundo newspaper, the Palacio de la Moncloa used upwards of 8.5 billion euros ($10bn) of coronavirus recovery cash from Brussels in 2025 to subsidise budget shortfalls in the pension system for retired government workers, social security, and even the Post Office.
This comes in addition to the 2.4 billion euros ($2.8bn) euros in EU covid recovery funds identified earlier this month by Spain’s Court of Auditors as having been improperly diverted to pay for normal domestic spending by the socialist Sánchez government in 2024.
“In the opinion of the Court, this action has been carried out under legal bases that should have been better justified, given that there is uncertainty about the applicability in 2024 of limitations on the use of surplus credits,” the audit found.
The newspaper noted that the true scale of the financial tactic may be yet to be uncovered, given that the government has yet to account for another 3 billion euros ($3.5bn) in EU funds that may have been spent to pay for the pensions of Spanish bureaucrats, potentially taking the total to over 13 billion euros ($15.3bn).
The government has claimed that the apparent embezzlement of coronavirus funds to support its national budget, well after the disease subsided from crisis levels, was not illegal and that it still plans to spend the equivalent amount for the intended purposes of the recovery funds.
However, the reports have sparked widespread controversy throughout the EU, and particularly in Germany, given that Berlin stands as the largest contributor of any nation within the bloc to the collective funds of the EU.
Michael Jäger, of the European Taxpayers Association, said in comments reported by Die Welt that he viewed the moves by Madrid as a “scandal of the first order”.
“We demand clarification, full disclosure, recovery of funds and criminal consequences,” he said. “It is the money of us taxpayers, it cannot simply be handled carelessly.”
“The EU is not a self-service shop. This undermines credibility and trust in the EU.”
German Member of the European Parliament Andreas Schwab, who serves as the head of the Budget Control Committee, told the paper that it was “absolutely unacceptable to use European funds” to cover up “budget problems in the national pension system.” He added that the EU Parliament will do what it can to “protect the interests of European taxpayers”.
The leader of the eurosceptic Alternative for Germany (AfD) party, Alice Weidel, added: “Spain’s socialists are embezzling ten billion euros from the EU Corona fund. German taxpayer money is financing socialist mismanagement in Europe. The madness of EU joint debt must stop – an AfD government will ensure that!”
During the coronavirus crisis, up to 577 billion euros were allocated by the European Union through loans and grants to member states through its NextGenerationEU fund to help with the recovery after lockdowns. However, the money was not handed out evenly and was even used as a means of pressuring conservative governments like Hungary, with the money being withheld for years after Brussels objected to domestic legislation, including Budapest’s ban on LGBTQ+ content on children’s television programming.
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