EU funding turns sour: How a Croatian anti-corruption NGO fell out with Brussels
PSD’s legal battle with Brussels has taken on broader significance – with the NGO claiming they were ‘used’ to cover up political failings.
Munir Podumljak [Personal archive]
Laurent Geslin Euractiv Jun 25, 2025 06:15 6 min. read
News
BRUSSELS – Munir Podumljak has spent his career rooting out corruption in Southeast Europe, exposing the capture of public resources by political elites through his NGO, the Partnership for Social Development.
Today, the man once hailed as a partner in Europe’s anti-corruption battle is in a very different fight – this time against the European Commission itself.
A Belgian court has ordered PSD to repay nearly €240,000 in grant funding – a decision the group is appealing. PSD claims the Commission punished it for refusing to quietly conform to shifting expectations and politically expedient compromises.
“We were used to cover up the failure of another EU project – and then discarded when we wouldn’t play along,” said Podumljak.
At a time when several EU institutions are reeling from revelations of undue influence and opaque funding arrangements – from Qatargate to more recent lobbying scandals – PSD’s legal battle with Brussels has taken on broader significance. The case offers a sobering look at the risks small civil society organisations face when EU funding, political expectations, and informal understandings collide.
A cautionary tale
PSD – based in Zagreb and founded in 1999 – specialises in documenting state capture and corruption in the Western Balkans. According to Podumljak, his collaboration with the Commission began in late 2016 when a DG NEAR official expressed interest in using PSD’s methodology to assess corruption risks in the region.
A pivotal meeting followed on 10 February 2017 at the European Commission’s offices – with representatives from PSD, the Commission, and Transparency International (TI), which was concluding a €1.7 million EU-funded project.
“We understood that we had been contacted to do the work of TI, before the end of their contract in 2017, while their reports had failed to meet expectations,” explained Munir Podumljak.
An internal Commission email dated 22 November 2016 and seen by Euractiv appeared to confirm this interpretation – noting that TI’s recommendations were “honestly quite general”.
PSD claims the Commission proposed a stopgap solution: TI would issue a “quick and modest” €40,000 subcontract to PSD, followed by a direct EU grant of €300,000, and later a four-year, €2 million framework agreement.
“The plan seemed unconventional, but we accepted because it finally gave us a chance to shape public policy in the region,” said Podumljak.
A TI official confirmed to Euractiv that they were encouraged by the Commission to collaborate with PSD, despite it being outside their usual practice. “We assumed the Commission wanted additional insights into state capture,” the official explained.
From Sarajevo to Brussels
Born in Sarajevo, Podumljak was just over 20 years old when the Bosnian capital came under siege by Serbian forces in 1992. After fighting for three years, he was involved in reconciliation efforts across the former Yugoslavia – a way of distancing himself from the traumas of war, as he himself explains.
In the late 1990s, the young activist worked on a programme aimed at reviving dialogue between the various communities of Eastern Slavonia, a region of Croatia that had been occupied by Serbian forces during the war and over which Zagreb reasserted its authority in 1998.
While international funding for reconstruction was still pouring into the Balkans in the early 2000s, Podumljak realised that the region’s main problem was the capture of public resources by local politicians. He thus dedicated himself to identifying and exposing corruption.
The GRASP project begins
By December 2017, the European Commission had signed a €333,000 direct grant agreement with PSD for the “Governance Risks Assessment Project in Western Balkans” (GRASP). The aim was to create a robust tool for tracking corruption and state capture in EU candidate countries.
PSD began work immediately, and Podumljak says Commission officials verbally assured them that negotiations for the larger framework contract would start in mid-2018. However, in the Commission’s written communications reviewed by Euractiv, no such agreement is explicitly mentioned – only vague references to possible future “funding”.
By autumn, relations had cooled. PSD claims the Commission began linking future funding to the final quality of the GRASP report – a condition that had never been discussed.
“They created an environment in which it was very difficult to meet the new, shifting expectations,” said Podumljak. “We were simply used to cover up the failure of the project signed with TI.”
Munir Podumljak [Photo: supplied.]
A breakdown in trust
According to Annex I of the grant agreement, GRASP was structured around ten sequential actions. PSD says that after submitting reports on six Western Balkan countries, the next step was to collaborate with the Commission on joint recommendations – a step that never materialised.
On 15 February 2019, Commission officials informed PSD that their reports “did not sufficiently meet our expectations in terms of added value” and cancelled participation in associated European Parliament events.
“You are cordially invited to participate” in future competitive calls, the message added – a line that effectively closed the door on the framework agreement.
In the years that followed, both sides remained at an impasse. PSD demanded confirmation of the promised framework, while the Commission pushed for completion of final deliverables. On 28 February 2022, the Commission formally requested repayment of the €239,999.70 advance, prompting PSD to launch legal proceedings in Brussels that May.
A mysterious annex
A potentially key piece of evidence in the case is the Annex A10a – a negotiation report required for every direct grant issued without a public call. The version seen by Euractiv contains several anomalies: no contract reference number, missing project identification codes, and no record of the 10 February 2017 meeting.
While the annex later references the meeting, it curiously claims that “all discussions took place via email and teleconference”.
PSD alleges this document may have been altered to conceal the informal negotiation process, particularly the tripartite meeting involving the Commission, TI, and PSD that it sees as foundational to the entire funding relationship.
The Commission firmly denies these claims. A European source told Euractiv that the annex “has a reference number” and that the grant was issued in full compliance with the Financial Regulation. Given the Belgian court’s decision in the Commission’s favour and PSD’s pending appeal, EU officials declined to comment further.
Broader implications
Today, PSD is out of money. The organisation is unable to pay its three employees or even its electricity bills – surviving only thanks to the support of a small network of friends.
PSD’s case underscores the fragile and sometimes opaque nature of EU–NGO relationships. While EU funding can empower small organisations, it can also place them in a vulnerable, dependent position – especially when informal expectations and shifting goalposts replace formal transparency and accountability.
As PSD awaits its appeal hearing this autumn, its experience may serve as a stark warning to other civil society actors: The support of European institutions can be a double-edged sword – particularly for those unwilling to compromise their independence.
The outcome of the appeal could set an important precedent – not just for PSD, but for any organisation navigating the complex politics of EU funding.
(mk)
Updated: 11:20
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