REPORT on the nomination of Karel Pinxten as a Member of the Court of Auditors

28.11.2005 - (C6‑0341/2005 – 2005/0813(CNS))

Committee on Budgetary Control
Rapporteur: José Javier Pomés Ruiz
PR_CNS_art101

PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the nomination of Karel Pinxten as a Member of the Court of Auditors

(C6-0341/2005 – 2005/0813(CNS))

The European Parliament,

–   having regard to Article 247(3) of the EC Treaty, and Article 160b(3) of the Euratom Treaty, pursuant to which the Council consulted Parliament (C6-0341/2005),

–   whereas at its meeting of 24 November 2005 the Committee on Budgetary Control heard the Council's nominee for Membership of the Court of Auditors, and considered the nominee's qualifications in the light of the criteria laid down by Articles 247(2) of the EC Treaty and 160b(2) of the Euratom Treaty,

–   having regard to Rule 101 of its Rules of Procedure,

–   having regard to the report of the Committee on Budgetary Control (A6-0371/2005),

1.  Delivers a favourable opinion on the appointment of Karel Pinxten as a Member of the Court of Auditors;

2.  Instructs its President to forward this decision to the Council and, for information, to the Court of Auditors, the other institutions of the European Communities and the Audit Offices of the Member States.

ANNEX 1 : CURRICULUM VITAE OF KAREL PINXTEN

Personal data

Name and First name: Pinxten Karel, Alfons, Hugo, Arnold, Maria

Born:    Overpelt, 19 July 1952

Marital status: married, father of three children

Education

· Grammar school, Sint-Hubertuscollege, Neerpelt

· Bachelor of law, UFSIA, Antwerp

· Master's degree in economics, Catholic University of Leuven

· Doctorate in economics, specialising in public finance and monetary economics, Catholic University of Leuven

· Master’s degree in economics (M. Phil.), Cambridge University, UK, British Council bursary

Study periods abroad

· Six months study in Japan as a winner of the Foreign Trade Ministry prize (1978)

· Study trip to the United States with NATO Young Political Leaders Program (1984)

Professional experience

· Research assistant in the Centre for Economic Studies at the Catholic University of Leuven (1977-1978)

· Auditor with the Belgian Court of Auditors (1980-1995)

Political career

· Mayor of Overpelt (since 1983)

· Chairman of the Police Authority and Police College of the HANO area – Hamont-Achel, Neerpelt, Overpelt (since 2002)

· Adviser in the private office of the Deputy Prime Minister (1984-1985)

· Adviser in the private office of the Finance Minister (1985-1989)

·  Member of the European Parliament, member of the Committee on Budgets and the Committee on Economic and Monetary Affairs of the European Parliament (1989-1991)

·  Member of the Federal Parliament, member of the Finance Committee (1991-1994)

·  Minister of Defence (1994-1995)

·  Minister of Agriculture and SMUs (1995-1999)

·  Member of the Federal Parliament, member of the Finance and Foreign Affairs Committees (1999-2005), currently chairman of the Foreign Affairs Committee (since 2004)

Offices

·  Chairman of the Noord-Limburg intercommunal industry park – Nolimpark (1983-1994 and 1999-2002)

·  Member of the board of NV Tessenderlo Chemical Group, member of the audit committee, remuneration committee and appointments committee (since 2001)

Publications

On public finance and monetary economics

ANNEX 2 : REPLIES OF KAREL PINXTEN TO THE QUESTIONNAIRE

Performance of duties

1.        What do you think of Parliament's criticisms of the DAS as expressed in the 2003 discharge report and the working documents to the financial management seminar?

The Maastricht Treaty gave the Court of Auditors the duty to provide the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions. The methodology used to draw up this statement of assurance was determined by the Court of Auditors in its capacity as an independent audit body.

The statement of assurance plays an important role in Parliament's decision on whether or not to grant the discharge. If the statement of assurance is to help the Parliament as much as possible to carry out its duties in relation to the discharge, it seems both useful and necessary for the Court of Auditors' control methods to be discussed in a completely transparent manner and properly understood.

With regard to the content of the statement of assurance, efforts should be made to provide Parliament with clear and accurate information enabling it to propose preventive measures to reduce or exclude the risk of irregularities.

In this context, I believe that it is important to provide adequate information on the operation of supervisory and control systems as these often lie at the root of errors. The European Parliament therefore rightly draws attention to the fact that it is of overriding importance to identify the origin of weaknesses and errors.

2.        How can the Court of Auditors contribute to giving a positive image to European citizens of the European Union? How could the Court's reports be better presented and made more accessible to the public?

The European Court of Auditors has the task of auditing the collection and spending of European Union resources, assessing how the European institutions have acquitted themselves in this context and making the results of its work public by publishing relevant, objective and up-to-date reports. In its work, the Court of Auditors endeavours to improve financial management and give European citizens a guarantee that their money has been well spent. This is the Court of Auditors' contribution to the positive image of the European Union

Is therefore important to pay full attention to the accessibility of information. A comprehensive and up-to-date source of information is required to ensure that the Court of Auditors reports are accessible. For most audit bodies this means a website. Furthermore, there needs to be an active communications policy through which the Court of Auditors:

1)  is accountable to Parliament, and hence to citizens, for its activities;

2)  presents its audit findings, conclusions and recommendations clearly and unambiguously;

3)  plays proper attention to relations with the press.

3.        What should be the main features of a sound financial management culture in any public service?

Sound financial management in a public service means a management culture that provides the necessary guarantees that resources are used in the best possible way. In other words, that efforts are made to use resources in such a way that objectives are achieved at the lowest possible cost (economy), resources are used to achieve the intended objectives (effectiveness), an optimal balance is found between input and output (efficiency) and the relevant rules are complied with (regularity).

The most important features of a sound financial management culture can be understood as follows:

1)  clearly defined objectives that are translated into relevant programmes and measures, in which the intended and measurable outcomes are defined.

2)  establishment of a chain of responsibilities at all levels of the public service by introducing accountability. In addition, there must be clear and transparent management procedures.

3)  effective management of information and communications systems to provide relevant and timely information on the use of resources and achievement of results.

4)  effective internal controls that are completely separate from management.

Effective internal control and information systems enable a public service to detect departures from the objectives and identify potential risks at an early stage and, if necessary, take remedial action.

Good management systems and procedures are important and, in my view, essential to create a sound financial management culture in which adequate attention is paid to: (a) a greater awareness among staff of the importance of complying with rules and values, (b) a readiness to address problems and identify and generalise good practice, (c) a duty of accountability and a code of conduct for public servants, (d) an effective and open communications culture and (e) active human resources management.

4.        According to the Treaty, the Court shall assist Parliament in exercising its powers of control over the implementation of the budget. How would you describe your duties with regard to reporting to the European Parliament and its Committee on Budgetary Control, in particular? If Parliament invited the Court to prepare a report on an area of concern, how would you respond to this invitation?

It is the task of the Court of Auditors to draw up reports and opinions in order to throw light of important aspects of the management of European resources. The added value and potential impact of the Court of Auditors' work lies not only in submitting the relevant documents but also and, above all, in the follow-up to them. This is Parliament's role. The annual budgetary control exercise provides an opportunity for follow-up to the findings of the Court of Auditors.

In this context, I see my role of reporting to the European Parliament, and to the Committee on Budgetary Control in particular, as follows

-          it is important for a Member of the Court of Auditors to produce reports and opinions  that are materially accurate, in other words, based on adequate, relevant and reliable   information.

- I would ensure that reports are clear and useful and that the conclusions and realistic recommendations follow on logically from the reports' findings.

- as rapporteur of a report, I would discuss the audit findings and recommendations with the Committee on Budgetary Control and with other representatives of the European Parliament. I regard reporting as a dialogue and I am always extremely willing to present reports or explain them in the Committee on Budgetary Control. I would also always answer written or oral questions.

- as far as the planning of controls is concerned, I feel that it is important to take account of requests or questions put by Parliament. If the Parliament itself, or one of its committees, has drawn up a report which is directly related to an audit by the Court of Auditors, it seems to me that such information should also be included in the planning and conduct of the audit and, possibly, contacts should be established with the rapporteur in Parliament.

I am a great supporter of developing a culture of close and mutual trust based on cooperation between the Court of Auditors and the Committee on Budgetary Control of the European Parliament.

5.        As you know, the Commission is revising its Financial Regulation. What could be the added value of such a change, if any?

I am aware of document (COM 2005/181 final – ENG) amending the Financial Regulation applicable to the general budget of the European Communities

The aim of the Commission proposal is to improve efficiency and transparency in the operation of the rules, to simplify the procedural and documentation requirements for contracts and grants, and to clarify and streamline the rules governing methods of management. The Commission rightly attaches importance to maintaining stability, in particular as regards the basic principles, concepts and architecture of the existing 2002 Financial Regulation. Broadly speaking it would appear that the rules have made the work of various bodies more difficult in certain spheres. As a result, there is a risk that the focus is being placed on compliance with formal procedures while substantive aspects are being relegated to the background.

As an illustration, a number of institutions, among them the Parliament, rightly claim that tender procedures are too complicated and too bureaucratic. The complexity of the tender provisions appears to make it difficult for organisations that do not have their own legal service to compile the full dossier that is required to secure funding. The new text (e.g. Article 93) makes the documentation requirements simpler and more flexible.

It has also been said that the rules on grants lack flexibility. The proposed text responds to this, for example by introducing a broader definition of 'grants' (e.g. Articles 105 and 109).

6.        What role could the National Audit Institutions play in helping ensure the correct use of EU funds spent in their countries?

Under the Treaty, the European Court of Auditors carries out its checks in cooperation with the national audit institutions, on the basis of mutual trust and while retaining its independence. This independence relates among other things to the planning, execution and reporting of controls as well as the audit methods used.

The audit institutions of the Member States operate within the framework of their national constitution or law. They audit national income and expenditure which may also include a European portion. They are accountable to their national parliament and/or authorities. In most instances it is the case that, within this framework, European expenditure makes up only a small proportion of the total expenditure to be audited and that the national audit institutions in Member States usually follow national priorities.

In so far as the audits relate to European revenue and expenditure, reports produced by the national audit institutions may contain useful findings, conclusions and recommendations which can be used by the competent authorities as a basis for improving the financial management of European funds. It is customary for auditors to make use of the work of other auditors. Consequently, the European Court of Auditors can make use of the audit findings of the national audit institutions wherever possible, and vice versa.

Despite the specific institutional framework within which the national audit institutions operate, I believe that the EU Contact Committee is an appropriate forum for examining all the different opportunities for cooperation which have an impact on the management of EU funds.

7.        Can you envisage any changes to the structure of the Court that might make it  more efficient?

It is difficult to form an opinion about the efficiency of the structure of the Court of Auditors and possible improvements to it without having experienced at first hand the way in which the Court operates. I believe that the institutional framework of the Community, as established by the Treaty, should be seen as a whole. The institutional repercussions of enlargement were probably difficult to predict before enlargement actually took place. Now that enlargement is a fact of life and further enlargements are in the pipeline, it may be useful to take stock of the situation and suggest ways of improving the way in which the institutions function.

In the first place, it is clear that the audit institutions of the Member States have widely differing structures (chamber-based system, Auditor General, etc). I believe that the smooth functioning of any institution depends on its structure, organisation and allocation of responsibilities. These have to be capable of adjusting to changing circumstances. As I understand it, the working procedures of the Court of Auditors were adapted within the framework of the 2004 enlargement. As Parliament pointed out its report on the granting of the discharge for implementation of the budget for the financial year 2002, the Court of Auditors transferred a large part of its activities to audit groups. This appears to be a move towards a chamber-based system. There may be possibilities of deepening this structure.

As in any modern institution, existing structures and working method should be reviewed periodically and I understand that the Court of Auditors has undertaken to do this.

Independence

8.        How would you describe your obligation to be independent in carrying out your duties and how do you concretely envisage putting this principle into practice?

If an audit institution is to carry out its tasks and responsibilities in an objective and effective way, it has to be independent of the bodies it audits and free from any external influence. In compliance with the usual standards, the Court of Auditors and its Members enjoy operational, institutional, financial and political independence. On that basis, I would understand the principles of independence as follows.

In carrying out my mandate I would avoid any situation that might lead to a conflict of interest and I would act independently in relations with institutions or bodies. This means that I would not take instructions from governments or other bodies and that in carrying out my duties I would adopt a neutral position irrespective of the country in which an audit is taking place. I would also refrain from any professional activities and in particular I would hold no political offices.

The principle of independence goes hand-in-hand with other principles which are crucial to the professionalism of any auditor, more specifically: impartiality, objectivity, effectiveness, professional secrecy, transparency, compliance with legislation and regulations, compliance with auditing rules and standards and finally, respect for the bodies audited.

9.        Could you provide the European Parliament with details of your recent and present business, financial and political interests and positions, and of any other commitment that might clash with your prospective duties?

I have no recent or current business, financial or any other interests which might clash with my prospective duties.

I will no longer be exercising my political offices as a Member of Parliament and mayor. My position will be one of complete political independence. In my view this is essential if I am too be able to work together in a climate of complete trust with all members of the Committee on Budgetary Control of the European Parliament and all other bodies.

Naturally, in all matters I will abide by the rules governing the code of conduct and ethics of Members of the European Court Auditors.

Professional experience

10.      Please highlight the main aspects of your professional experience in public finance, management or management auditing

As you can see from my CV, I studied economics at the universities of Leuven and Cambridge, with public finance and monetary economics and my specialist subject. On leaving Leuven university, I spent some time as a research assistant in the public finance sphere. Following an open competition, I was appointed a deputy auditor and later auditor with the Belgian Court of Auditors. I was primarily responsible for auditing the expenditure of what were called national sectors, i.e. steel, textiles and shipbuilding. In the early 1980s large amounts of public money were spent in these sectors which were facing a serious crisis. I was also responsible for auditing expenditure under the economic expansion legislation.

In 1984 I was seconded as an adviser to the office of the Deputy Prime Minister and then, in 1985, as an adviser to the office of the Minister of Finance.

From the middle of 1989 to the end of 1991 I was a Member of the European Parliament (serving on the Committee on Economic and Monetary Affairs and the Committee on Budgets).

From the end of 1991 until 1994 I was a member of the Belgian Chamber of Representatives and served on the Finance Committee; I was subsequently appointed Minister of Defence and then Minister of Agriculture and small and medium-sized undertakings (SMUs).

I am currently chairman of the Foreign Relations Committee of the Belgian Chamber of Representatives, but I am still a member of the Finance Committee, albeit as a substitute.

In short, I think I can say that two strands have run through my entire career: public finance in the broad sense on the one hand and European and international policy on the other.

11.      If you have already served as a Member of the European Court of Auditors, please describe the contribution that you have made to improving management of the European Union's finances during your time as Member of the European Court of Auditors.

Not applicable.

12.      Would you withdraw your candidacy if Parliament's opinion on your        appointment as Member of the Court were unfavourable?

As I stated earlier, the Court of Auditors has a duty to assist Parliament in exercising control over implementation of the budget. I therefore regard it as extremely important that there should be effective cooperation and understanding with the Parliament. An unfavourable opinion could indicate a lack of understanding and might therefore undermine the effectiveness and efficiency of my future work. International audit standards require members of audit institutions to adhere to the values and principles of independence and professionalism. If the Parliament were to issue an unfavourable opinion on my appointment as a Member of the Court of Auditors and if the reasons and arguments set out in that opinion indicate that I do not meet those conditions, I would be prepared to withdraw my candidacy.

PROCEDURE

Title	Nomination of Karel Pinxten as a Member of the Court of Auditors
References	C6‑0341/2005 – 2005/0813(CNS)
Legal basis	Articles 247(3), first subparagraph, EC and 160b (3) Euratom
Basis in Rules of Procedure	Rule 101
Date of consulting Parliament	14.10.2005
Committee responsible   Date of referral	CONT 27.10.2005
Rapporteur   Date appointed	José Javier Pomés Ruiz 12.09.2005
Discussed in committee	24.11.2005
Date adopted	24.11.2005
Members present for the final vote	Inés Ayala Sender, Herbert Bösch, Mogens N.J. Camre, Paulo Casaca, Lorenzo Cesa, Petr Duchoň, Szabolcs Fazakas, Umberto Guidoni, Hans-Peter Martin, Borut Pahor, José Javier Pomés Ruiz, Bart Staes, Margarita Starkevičiūtė, Kyösti Tapio Virrankoski
Substitutes present for the final vote	Daniel Caspary, Joel Hasse Ferreira, Edit Herczog
Substitutes under Rule 178(2) present for the final vote	Iles Braghetto, Manolis Mavrommatis, Marcello Vernola
Date tabled – A6	28.11.2005		A6-0371/2005