Press release

2004 discharge: sharp criticism but support for purchase of Strasbourg buildings

Budgetary control - 26-09-2006 - 19:15
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MEPs grant its President the discharge for the implementation of the budget for the financial year 2004" with the adoption of Mr Ferber's report. Parliament closely scrutinised the issue of the Winston Churchill and Salvador de Madariaga buildings in Strasbourg and concluded it "could be" reasonable to seek to purchase them. The report on the discharge was adopted with 535 votes in favour, 45 against with 51 abstentions.

This second draft report by Markus FERBER (EPP-ED, DE) on the 2004 discharge, "Section I", devotes several paragraphs to Parliament's property policy, in particular the case of the Winston Churchill (WIC) and Salvador de Madariaga (SDM) buildings.  These two properties which are let to the EP by Strasbourg city council, became the focus of a controversy last March when it emerged that Strasbourg council was to receive payment by the owner, SCI Erasme, under the terms of the sale of the premises agreed with the EP.
The purchase of the WIC and SDM was suspended by the EP and the Budgetary Control Committee set up an informal working party to advise the rapporteur on the allegations concerning the existing rental agreements and the possible purchase by Parliament of the two buildings.
No irregularities found
The draft report's very lengthy paragraph 11 constitutes a "list of grievances" against those responsible for this matter. 
The report says "there are no clear indications that there have been unlawful actions or irregularities in the process of concluding and applying the leases and additional agreements, although there are nevertheless doubts on whether the principle of 'sound financial management' enshrined in the Financial Regulation has been fully respected".
The report also stresses that "Parliament was neither informed that its lease payments were not being passed on in full to SCI Erasme, nor was it ever informed about this matter by the City of Strasbourg itself".   In addition, "only the City of Strasbourg knew of the existence of two different contractual relationships between the three parties involved and only the City of Strasbourg had been aware of the difference between the two amounts since 1981".
"Discourteous" behaviour but no illegal profit
As to whether the profit made by Strasbourg city council in this affair was "illegal", the report states "there are no legal provisions prohibiting a state or local or regional authority from making a profit".  However, it adds that the City of Strasbourg's approach was "discourteous", to say the very least, "since it is contrary to rules on hospitality towards international institutions".  Parliament says it "deeply regrets the lack of good faith demonstrated by both the City of Strasbourg and the private investor, SCI Erasme in their relationship with Parliament". And, according to the draft report, Parliament "strongly regrets that its requests for all relevant documentation from SCI Erasme, the private investor and owner of the buildings, were not acceded to".
Rents to be reviewed
Lastly, Parliament report points out that there is no absolutely reliable basis for setting an appropriate rent for the WIC and SDM buildings, that it is difficult to establish a "fair price" for the rent and hence to assess whether Parliament paid a truly fair rent over the years.
The House says it plans to continue examining Parliament's property policy during the next discharge procedure. The EP administration is asked to "take the necessary measures for a regular review of long-standing contractual obligations towards third parties, e.g. leases or service contracts".
This second report on the 2004 discharge will be put to the vote in Strasbourg on 26 September, following which the Budgets Committee will deliver its opinion on the purchase of the WIC, SDM - and now the IPE3 - buildings.
Voluntary pension scheme
MEPs takes the view that  the relationship between Parliament and the pension fund should be placed on a contractual footing by the end of this year. The committee calls on the Secretary-General to forward to the Committee on Budgetary Control, in December 2006, a report on the progress achieved.
Parliament believes, furthermore, that Members' contributions to the voluntary pension scheme should be paid directly from personal income rather than through the parliamentary allowance system.
The House notes, however, that in respect of the current contribution system in its Opinion No 5/99, the Court of Auditors concluded that "from the Fund's and the members' point of view, the system has worked effectively. Additionally it has enabled Parliament to calculate its own payment obligations correctly since, according to the rules, Parliament has to pay the double of the amount effectively paid by the members". MEPs note that the Court saw no problems in maintaining the system provided that it was better defined and its operation set down in a formal document.
MEPs also note with concern that the deduction of contributions to the pension scheme from the general expenditure allowance leaves Members exposed to allegations that public funds may be put towards the cost of private pension contributions, and therefore call on the Parliament's Bureau to propose before 31 March 2007 measures to ensure that such payments are made directly by pension scheme members through direct debit orders.
REF.: 20060922IPR10877