The Spanish government will have to repay EUR113.4m (US$158m) in European Union (EU) flax production subsidies which the European Commission has claimed were distributed without proper financial controls.

Indeed, EU anti-fraud unit OLAF has concluded that a "very significant amount of EU subsidies for flax production [in Spain] had been wrongly disbursed".

Although the Spanish courts have not found outright fraud involved, the commission demanded the money be repaid.

Spain appealed, but the European Court of Justice has now backed Brussels.

By Keith Nuthall.