Report - A5-0094/2002Report
A5-0094/2002
European Parliament

REPORT 1. concerning discharge in respect of the implementation of the general budget of the European Union for the 2000 financial year
Section IV - Court of Justice (SEC(2001) 530 – C5-0240/2001 –2001/2105(DEC))
Section V - Court of Auditors (SEC(2001) 530 – C5-0241/2001 –2001/2106(DEC))
Section VI - Economic and Social Committee (SEC(2001) 530 – C5-0242/2001 –2001/2107(DEC))
Section VII - Committee of the Regions (SEC(2001) 530 – C5-0243/2001 –2001/2108(DEC))
Section VIII - Ombudsman (SEC(2001) 530 – C5-0244/2001 –2001/2109(DEC))
   
and concerning discharge in respect of the implementation of the general budget of the European Union for the 1996-1999 financial years
Section VI – Economic and Social Committee
(SEC(1997) 402 – C4-0197/1997 – 1997/2076(DEC)
SEC(1998) 521 – C4-0353/1998 – 1998/2011(DEC)
SEC(1999) 414 – C5-0008/1999 – 1999/2166 (DEC)
SEC(2000) 539 – C5-312/2000 – 2000/2156 (DEC))

2. on postponement of the decision concerning discharge in respect of the implementation of the general budget of the European Union for the 2000 financial year
Section II – Council
(SEC(2001) 530 – C5-0239/2001 – 2001/2104(DEC))

22 March 2002

Committee on Budgetary Control
Rapporteur: Eluned Morgan

PROCEDURAL PAGE

On 27 April 2001 the Commission forwarded to Parliament, pursuant to Article 275 of the EC Treaty, the revenue and expenditure account and balance sheet for the budget for the 2000 financial year (SEC(2001) 530 – 2001/2104(DEC)).

At the sitting of 11 June 2001 the President of Parliament announced that she had referred this document to the Committee on Budgetary Control as the committee responsible and all other committees for their opinions (C5-0239/2001, C5-0240/2001, C5-0241/2001, C5-0242/2001, C5-0243/2001, C5-0244/2001).

On 12 November 2001 the European Court of Auditors forwarded to Parliament its Annual Report concerning the financial year 2000.

At the sitting of 10 December 2001 the President of Parliament announced that she had referred this report to the Committee on Budgetary Control as the committee responsible (C5-0617/2001).

On 5 March 2002 the Council forwarded to Parliament its recommendation concerning the discharge to be given in respect of the European Union general budget for the 2000 financial year.

At the sitting of 14 March 2002 the President of Parliament announced that he had referred this document to the Committee on Budgetary Control (C5-0124/2002).

At its meeting of 6 November 2001 the Committee on Budgetary Control confirmed the appointment of Eluned Morgan as rapporteur.

The Committee on Budgetary Control considered the draft report at its meetings of 20 February and 20 March 2002.

At the last meeting, it adopted:

1.   The proposal for a decision concerning discharge in respect of the implementation of the general budget of the European Union for the 2000 financial year – Section IV Court of Justice – Section V Court of Auditors – Section VI Economic and Social Committee – Section VII Committee of the Regions – Section VIII Ombudsman and concerning discharge in respect of the implementation of the general budget of the European Union for the 1996-1999 financial years – Section VI Economic and Social Committee, by 10 votes to 2, with 8 abstentions;

2.   The motion for a resolution on postponement of the decision concerning discharge in respect of the implementation of the general budget of the European Union for the 2000 financial year – Section II Council, by 10 votes to 9, with 1 abstention.

The following were present for the vote: Diemut R. Theato, chairman; Herbert Bösch, Paulo Casaca, Freddy Blak, vice-chairmen; Eluned Morgan, rapporteur; María Antonia Avilés Perea, Jean-Louis Bourlanges, Mogens N. J. Camre, Benedetto Della Vedova (for Michael John Holmes), Gianfranco Dell'Alba, Helmut Kuhne, Brigitte Langenhagen, Emmanouil Mastorakis (for Michel-Ange Scarbonchi), John Joseph McCartin (for Christopher Heaton-Harris), Mónica Ridruejo, Ole Sorensen, Bart Staes, Gabriele Stauner, Jeffrey William Titford, Michiel van Hulten, Kyösti Tapio Virrankoski (for Antonio Di Pietro).

The report was tabled on 22 March 2002.

The deadline for tabling amendments will be indicated in the draft agenda for the relevant part-session.

PROPOSAL FOR A DECISION

Decision of the European Parliament concerning discharge in respect of the implementation of the general budget of the European Union for the 2000 financial year

Section IV -   Court of Justice (SEC(2001) 530 – C5-0240/2001 –2001/2105(DEC))

Section V -   Court of Auditors (SEC(2001) 530 – C5-0241/2001 –2001/2106(DEC))

Section VI -    Economic and Social Committee (SEC(2001) 530 – C5-0242/2001 –2001/2107(DEC))

Section VII - Committee of the Regions (SEC(2001) 530 – C5-0243/2001 –
2001/2108(DEC))

Section VIII -   Ombudsman (SEC(2001) 530 – C5-0244/2001 –2001/2109(DEC))


and concerning discharge in respect of the implementation of the general budget of the European Union for the 1996-1999 financial years
Section VI -   Economic and Social Committee
(SEC(1997) 402 – C4-0197/1997 – 1997/2076(DEC)
SEC(1998) 521 – C4-0353/1998 – 1998/2011(DEC)
SEC(1999) 414 – C5-0008/1999 – 1999/2166 (DEC)
SEC(2000) 539 – C5-312/2000 – 2000/2156 (DEC))

The European Parliament,

-   having regard to the Revenue and Expenditure Account and Balance Sheet in respect of the financial year 2000 (SEC(2001) 530 – C5-0240/2001, C5-0241/2001, C5-0242/2001, C5-0243/2001, C5-0244/2001),

-   having regard to the annual report of the European Court of Auditors for the 2000 financial year, together with the replies of the institutions (C5-0617/2001)[1],

-   having regard to the Statement of Assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the European Court of Auditors pursuant to Article 248 of the EC Treaty (C5-0617/2001),

-   having regard to the Council’s recommendation of 5 March 2002, (C5-0124/2002)[2],

-   having regard to Articles 272(10) and 275 of the EC Treaty,

-   having regard to Article 22(2) and (3) of the Financial Regulation,

-   having regard to the report of the Committee on Budgetary Control (A5-0094/2002),

A.   whereas it is incumbent upon Parliament to monitor the efficient use of the European Union’s budget on the basis of reports from the Court of Auditors; this evaluation should involve an assessment of the way in which taxpayers’ money is spent and an appraisal of the effectiveness and impact of the Community budget in carrying out the policies and goals laid down in the Treaties and in secondary legislation;

B.   whereas the concept of value for money is of vital importance in assessing the performance of all EU institutions;

C.   whereas Parliament in its resolution of 4 April 2001 decided to postpone the decision in respect of the Economic and Social Committee’s implementation of its budget for the financial year 1999, following similar postponements in respect of the financial years 1996, 1997 and 1998;

D.   whereas the Treaty of Nice changed the description of the members of the Economic and Social Committee (ESC) so that it will in future – if the Treaty is ratified - consist of “representatives of the various economic and social components of organised civil society” (Article 257 of the EC Treaty); for the Committee of the Regions (CoR) it explicitly states that the members must hold a regional or local electoral mandate or be politically accountable to an elected assembly (Article 263 of the EC Treaty);

E.   whereas in its resolution[3] on the Treaty of Nice and the future of the European Union (paragraph 24) Parliament applauded the provisions relating to the ESC, “which make it more representative of the various sectors of society” and, those relating to the CoR, “the democratic legitimacy of whose members is strengthened”;

F.   whereas in December 1999 the Council adopted a revision of the Financial Regulation[4] for entry into force on 1 January 2000 which stated that the Ombudsman’s budget would in future represent an independent section (Section VIII) within the general budget of the European Union;

G.   whereas under the terms of Article 22(5) of the Financial Regulation, the Ombudsman is to be treated, for the purposes of the Financial Regulation, as an institution of the Communities;

H.   whereas although the Ombudsman is appointed by the European Parliament, he is completely independent in the performance of his duties and he enjoys full budgetary autonomy since 2000 which justifies a discharge decision separate from the one relating to the Secretary-General of the European Parliament;

General matters concerning all Institutions

1.   Notes the Court of Auditors’ observations[5] that the general approach adopted by the Institutions to the analysis of budgetary management does not inform readers of the most significant features of expenditure for the year; agrees with the Court that the Institutions should provide a more global analysis in the future, focussing on the main trends in expenditure and the major capital items, as well as identifying the key savings and measures of efficiency;

2.   Endorses the Court’s recommendation[6] that the Institutions in Brussels should explore the possibility of setting up a joint structure to take charge of the various technical and financial aspects of construction matters; urges the Institutions to pursue their efforts to create a joint structure in Luxembourg;

3.   Invites all institutions to comply with the recommendations of the Court[7] to amend the way they set out their budget so as to distinguish between rent, costs of acquisition and other types of expenditure, such as lease payments where there is an option to purchase;

Section IV – Court of Justice

4.   Welcomes the fact that for the first time the balance sheet includes the value of buildings held by the Court of Justice under a lease with an option to purchase;

5.   Notes with satisfaction the Court of Justice’s reply that when the balance sheet for the financial year 2001 is drawn up, the net accounting value will be amended to take account of the over-valuation of the buildings (incorrect calculation of depreciation) pointed out by the Court of Auditors[8];

6.   Notes the Court of Auditors’ finding[9] that the reliability of the value of the other tangible fixed assets shown on the balance sheet, i.e. €9.8 million in total, cannot be guaranteed; notes that the Court of Justice addresses this point in its replies;

7.   Draws attention to an apparent contradiction between the Court of Auditors’ statement[10] that the Court of Justice has still not implemented the new inventory management system or conducted a full physical inventory and the Court of Justice’s replies to the annual report for 2000 and to the questionnaire forwarded by the Committee on Budgetary Control;

8.   Notes that the Court of Justice’s replies do, however, refer to inconsistencies between the physical inventory and the data recorded in the new computerised system;

9.   Invites the Court of Justice in the interest of clarification to submit a full report to the Committee on Budgetary Control by 1 July 2002 setting out the current position with regard to its inventory management system;

10.   Recalls that in the context of the 1999 discharge procedure it considered the Court of Auditors’ Special Report no 5/2000 on the Court of Justice’s expenditure on buildings and asked to be informed of the conclusions of the expert appointed jointly with the Luxembourg authorities by the first reading of the 2002 draft budget;

11.   Notes that according to paragraph 7.67 of the Court of Auditors’ report these investigations into invoicing irregularities[11] had only just started in June 2001 and that the Court of Justice[12] expects them to be completed during the first half of 2002;

12.   Asks the Court of Justice to forward the expert’s report on invoicing irregularities as soon as it is available to the Committee on Budgetary Control, together with the separate expert’s report determining items of expenditure which should not be included in the final statement of account;

13.   Notes that the Court of Auditors found[13] five cases where the grounds for claiming exemption from tender procedures were questionable, of which four related to the Court of Justice, and one case (also concerning the Court of Justice) where a procurement need appeared to have been split into several contracts; takes note of the replies of the Court of Justice which justify the procedures followed in all five cases; endorses the recommendation of the Court of Auditors (paragraph 7.30) that “all institutions should apply the same thresholds when deciding whether a proposed procurement of services or supplies falls within the scope of Public Procurement Directives 92/50/EEC and 93/96/EEC”;

14.   Notes that the time required for the Court to complete its judicial work has increased, as has the backlog of cases pending; calls on the Court of Justice and the Court of Auditors to make more in-depth assessments of the causes of such problems in order to identify in particular exactly what may be attributed to the court procedures provided for in the Treaty, what to administrative problems that can be resolved and what to a lack of staff and facilities;

Section V - Court of Auditors

15.   Notes the report[14] by the independent auditor (KPMG Audit, Luxembourg) on the Court of Auditors’ accounts for the financial year 2000;

16.   Points out that while the Court of Auditors gives a single Statement of Assurance based on the consolidated accounts of all revenue and expenditure of the Community in accordance with Article 248(1) of the Treaty, that Statement of Assurance nevertheless contains remarks concerning the legality and regularity of the transactions carried out by individual institutions[15]; asks the Court in the interests of greater transparency to examine the possibility of issuing a separate Statement of Assurance for each Institution in its next annual report;

17.   Welcomes the addition to Article 248(1) by the Treaty of Nice of a provision to the effect that the statement of assurance “may be supplemented by specific assessments for each major area of Community activity”;

18.   Calls on the Court of Auditors to adapt the DAS into an instrument enabling the discharge and budgetary authorities to compare and monitor progress in financial management and control over time, preferably in a quantified manner;

19.   Urges the Court to agree with the European Commission on a common methodology for calculating error rates by Directorate-General or by category of expenditure; suggests the Court uses data from Member States resulting from obligatory controls in the field of agriculture and the structural funds in order to increase the sample; expects the Court to publish a global error rate and error rates by Directorate-General or by category of expenditure in the context of the 2001 discharge.

20.   Welcomes the fact that as regards Parliament’s demand for “naming” specific Member States found or suspected to be deficient in protecting the financial interests of the Union, the annual report for 2000 and the special reports published during the year already contain references to individual Member States; regrets that the Court[16] does not consider it appropriate to list in an annex to the annual report the individual errors identified in each Member State in an easily readable way;

21.   Welcomes the priority being given by the Court to improving the presentation of its audit observations in its reports so as to make them more consumer-friendly by the use of more informative headings and more clearly identified recommendations but waits for action on this before making a judgement on its success;

Requests made to the Court of Auditors

22.   Notes that on taking office the members of the Court, in accordance with their code of conduct, complete a form containing information concerning their financial interests and assets which is forwarded to the President of the Court; takes the view that these declarations, like those of Members of the European Parliament and of the Commission, should be published on the Internet as requested in Parliament’s decision on discharge for 1999[17]; invites the Court as recomposed following the new appointments made with effect from 1 January 2002 to take a formal decision on this issue and communicate it in writing to the Committee on Budgetary Control by 1 July 2002;

23.   Asks the Court to include in its work programme for 2003 a timetable indicating anticipated completion of the Court’s special reports.

Section VI - Economic and Social Committee (ESC)

Value for money

24.   Emphasises that the Parliament has a responsibility to ensure that the European taxpayer is well served and that it has a duty to ensure value for money;

25.   Points out that in recent years the views of some of the organisations represented in the ESC have been increasingly channelled through the European Parliament;

26.   Notes that the Social Protocol first referred to in the Maastricht Treaty, and later incorporated into the Social Chapter of the Amsterdam Treaty (Article 138) makes provision for the social partners to be consulted in the formulation of policy;

27.   Points out that the ESC can only be consulted on the formulation of policy and can make recommendations but that the social dialogue by contrast can lead to binding legislation;

28.   Is concerned on the one hand that the social partners are critical about the lack of resources available to them for the social dialogue and on the other hand notes that in 2000 the ESC’s final budget was €80 976 436 ; enlargement is expected to bring its annual expenditure up to €99.6 million[18] by 2004 (although some of this includes joint costs with the CoR);

29.   Points out that this is the first time the Parliament has had the opportunity to assess the value for money of the ESC since the entry into force of the Amsterdam Treaty and since the social dialogue has been set up;

30.   Recognises that the ESC can act as a forum for interest groups which would not otherwise be able to make their voices heard in the EU context;

31.   Believes that there is a real question as to the value for money of running both the ESC and the social dialogue;

32.   Points out that responsibility for nominating Members of the ESC lies with the Member States; urges the Member States to examine carefully their representation within the ESC in the context of the forthcoming renewal of its membership;

33.   Takes the view that ESC Members must improve their efforts to ensure that information about the ESC’s activities reaches the grass roots, e.g. trade unionists in the Member States;

34.   Urges the ESC to continue its efforts on the path towards modernisation;

35.   Invites the ESC to redouble its efforts to consult as wide a network as possible of national contacts in order to increase the visibility of the ESC;

36.   Calls on the Commission to think again about the efficiency and significance of the ESC in the context of the some 300 existing consultative bodies and committees configured around the Commission, so as to avoid overlapping and duplication of effort;

OLAF report

37.   Recalls that in previous years’ discharge procedures Parliament decided to postpone its decision in respect of the ESC for the financial years 1996, 1997, 1998 and 1999 pending clarification of irregularities concerning the payment of Members’ travel allowances in 1995-1996;

38.   Draws attention to paragraph 2 of its resolution[19] of 7 October 1998 on the 1996 discharge procedure in which Parliament called for the issue to be referred to the Court of Auditors and to UCLAF:

  • (i)to enable the reliability of the new reimbursement system recommended by the Court of Auditors and the conditions for the recovery of incorrectly paid expenditure to be checked; and
  • (ii)to enable the extent of administrative involvement or responsibility to be fully determined as regards the entry into the accounts, the commitment, the authorisation and the payment of expenditure;

39.   Notes that following Parliament’s resolution of 7 October 1998:

  • ∙the Court of Auditors confirmed in its annual report for 1999 that between the end of 1998 and the beginning of 2000 the ESC had gradually implemented the measures recommended in its opinion n° 7/98[20] with regard to the reform of its rules and arrangements for the payment of allowances to its Members;
  • ∙on 30 July 2001 by OLAF[21] completed the final report containing its conclusions and recommendations with respect to the reimbursement of the travel expenses of Members of the ESC in 1995 and 1996;

40.   Regrets, however, that OLAF was unwilling to supply a copy of the final report to the Chairman of the Committee on Budgetary Control;

41.   Notes that according to its standard practice OLAF delivered its report to the ESC on the understanding that it was the responsibility of the ESC to pass it on to the European Parliament;

42.   Notes the finding by the OLAF Supervisory Committee (minutes of the Supervisory Committee meeting of 15 and 16 January 2002) that OLAF had not been in a position to handle that case appropriately and that its investigation had been a failure in every respect;

43.   Endorses the call by the OLAF Supervisory Committee for no-holds-barred disclosure of the reasons for that failure and notes that, to date, no credible explanation has been given as to why:

(a)   the investigators were evidently prevented by their superiors from sending a questionnaire to all the ESC Members concerned,

(b)   even the 60 ESC Members most affected were not questioned by OLAF,

(c)   the ESC Directors-General and Secretaries-General responsible at the time in question were not questioned by OLAF either although it had been alleged that they had covered up and hushed up the travel expenses refund fraud which had been committed for years;

(d)   the Belgian judicial authorities had not been involved in time, and the OLAF investigators knew that the courts would have no option but to take no further action because the matter had become time-barred;

44.   Requests the OLAF Supervisory Committee to notify the Committee on Budgetary Control of the outcome of its further investigations into this matter; expects disciplinary proceedings to be instituted if suspicions are confirmed that, in this case, there was gross negligence on the part of OLAF's senior management and that the actions of a number of officials called into question their competence as investigators;

45.   Considers that procedures must be devised to allow Parliament’s competent committee to be given access by OLAF to reports directly concerning the discharge procedure; acknowledges the need for such information to be dealt with on a confidential basis where judicial or analogous investigations are still pending; invites OLAF to submit proposals for the sharing of such information in future cases, subject if necessary to appropriate safeguards;

46.   Commends the current Chairman and Secretary-General of the ESC for their willingness to provide a copy of the OLAF report, albeit on a confidential basis, and all other documentation requested by the Chairman of the Committee on Budgetary Control and the rapporteur;

47.   Regrets that the OLAF report has been so long delayed and that its late arrival now obviates implementation of its recommendations either for the recovery of further sums from its Members or for disciplinary proceedings against officials;

48.   Notes that the Belgian judicial authorities decided in August 2001 to file the matter without further action on the ground inter alia that the facts disclosed were now so old as to be time-barred under the Belgian statute of limitations;

49.   Notes serious worries in the report, such as OLAF’s failure to interview in their capacity as authorising officers the Secretaries-General of the ESC in office at the time of the events in question and immediately thereafter; regrets that as regards its substantive findings, the report does not enable the extent of administrative responsibility to be fully determined;

50.   Points out that it would have been open to the ESC itself to refer the matter to UCLAF or the Belgian judicial authorities when it was first informed of the results of its Financial Controller’s inquiries in 1996 but that it did not do so;

51.   Regrets that so much time was allowed to pass and the apparent lack of any real effort on the part of those in positions of responsibility at the ESC at the relevant time to take early remedial action despite clear knowledge of the seriousness of the irregularities affecting the reimbursement of travel expenses in 1995-1996;

52.   Regrets that OLAF was impeded in the conduct of its inquiries by the reluctance of certain airlines to confirm that specific journeys claimed for by ESC Members had actually been made; believes that it is not acceptable for OLAF’s legitimate inquiries to be thwarted in this way; invites OLAF to submit proposals for dealing with such situations more vigorously should they arise in the future;

53.   Recognises that the members of the ESC receive no remuneration from that Institution for their activities on its behalf other than the reimbursement of travel and subsistence expenses;

54.   Notes as regards the financial year 2000 and the period to date that the ESC has embarked on a substantial programme of modernisation[22] comprising:

  • ∙reorganisation of its decision-making bodies including a reduction in the number of Bureau Members;
  • ∙increasing the number of administrative checks on the reimbursement of Members’ expenses;
  • ∙generalised payments by bank transfer;
  • ∙preparatory work on the drafting of a Members’ statute;
  • ∙expects the Economic and Social Committee to continue to pursue the same course of action over the coming years;

55.   Notes that the ESC failed to make every effort to limit the loss to the taxpayer or make good that loss as far as possible; points out in this connection that:

(a)   right from the outset, given that there had been fraud over many years, the ESC's estimate of the loss was far too low and, for 1995 and 1996 alone, an amount of EUR 830 185.77 ought to have been claimed back,

(b)   only EUR 167 432.39 was actually repaid and the ESC has evidently dispensed with recovering the remainder;

Section VII - Committee of the Regions (CoR)

56.   Notes from its replies to the Court of Auditors report[23] that the CoR is often unable to use the results of tenders organised by other institutions either for official reasons or because they do not take account of the Committee’s specific needs;

57.   Calls upon the larger institutions in the interests of economy and efficiency to make greater use of inter-institutional calls for tender and in the preparatory stages thereof to ensure whenever possible that due account is taken of the specific needs of the smaller institutions; invites all the institutions to examine the feasibility of using other institutions’ tender procedures on the basis of “mutual recognition”;

58.   Notes that as from 1 January 2000 the Common Organisational Structure with the ESC was replaced by a cooperation agreement between the two committees which maintains joint operations in the majority of departments but establishes autonomy in the finance and staff departments; asks the CoR to submit a report evaluating the budgetary advantage of maintaining separate finance and staff departments for the two committees to the Committee on Budgetary Control and to the Committee on Budgets by 1 July 2002;

Buildings policy (ESC and CoR)

59.   Notes that on 15 December 2000 the ESC and the CoR signed contracts each conferring a 27-year lease with an option to purchase the Belliard and Montoyer buildings respectively;

60.   Welcomes the reply[24] by the ESC and the CoR that the capital value of the Montoyer and Belliard buildings will be included in their balance sheets for 2001, together with the advance of €26 million already paid;

61.   Recalls the conclusion of the Court of Auditors[25] that “the committees (ESC and CoR) when renewing and renegotiating the contract concerning the Belliard building formerly occupied by the European Parliament found themselves in a difficult position as a result of an obligation placed upon them by the Parliament, i.e. that of taking over this building, for which the Parliament had signed a lease running until 2007”;

62.   Recalls that in paragraph 9 of its resolution[26] postponing the 1999 discharge for the ESC, Parliament undertook “to examine the conditions of this agreement in next year’s discharge procedure”;

63.   Notes that the essential features of the overall arrangement were as follows:

  • ∙Parliament was released from its obligation to continue to rent the Belliard building until 2007;
  • ∙the owners would reimburse Parliament’s rent payment in respect of the period 1 January - 31 March 2001;
  • ∙the two committees would reimburse Parliament’s rent payments during 2000;
  • ∙Parliament would be released from its obligation to return the building to its original state on termination of its lease;
  • ∙the two committees would in late 2003 or early 2004 occupy a building suitable for their needs with modern technical facilities and meeting high ecological standards;
  • ∙the terms entailed an advance payment of €26 million intended to finance the specific needs of the two committees in a building fully renovated by the owners and an indexed yearly payment of €8.28 million (reduced to €6 709 288 for the period of the renovation work);
  • ∙the committees would have the option to purchase the freehold for €1;

64.   Recalls that by letter of 17 October 2000 the Chairman and rapporteur of the Committee on Budgets informed the ESC and the CoR that the signature of the contract was in line with the principles set by Parliament on 28 March 2000 when it approved the carry-over of €26 million intended to finance the specific functional requirements of the two committees; the Committee on Budgets therefore had no objection to the two committees signing 27-year lease contracts for the Belliard and Montoyer buildings;

65.   Draws attention, however, to the remark[27] by the Court of Auditors that the rental contract also covered refurbishment work which was not put out to tender; notes that the two committees’ replies do not address this point;

66.   Observes that the two committees responded to the Court of Auditors’ suggestion[28] that the contract should be renegotiated forthwith to provide the option of an early repayment under economically reasonable conditions; notes, however, that the owners were unwilling to offer acceptable terms and that the two committees had therefore suspended negotiations;

67.   Points out that while the contracts signed on 15 December 2000 have the advantage of i) providing the two committees with up-to-date accommodation suitable for their needs and which they will ultimately own outright and ii) removing from Parliament’s accounts the budgetary burden of a building which was no longer required after the opening of the D3 (Spinelli building), the Belliard building will have been unoccupied for some six years but with rent still being paid from the Community budget from September 1997 to late 2003 or early 2004;

68.   Observes moreover that the move to the Belliard building will generate further financial consequences, viz.:

  • ∙the cost of removals from the ESC’s and the CoR’s current premises in the Ravenstein building;
  • ∙the cost of restoring the Ravenstein building prior to handing it back to the owners after 40 years occupation;
  • ∙the additional posts in the committees’ establishment plans required to manage the Belliard project;

69.   Notes that as a consequence of the ESC’s takeover of the Belliard building, the owners have avoided a situation in which they would in 2007 have recovered possession of an obsolete building with some asbestos contamination[29] and therefore requiring full renovation at their sole expense in order to be made suitable for re-letting;

70.   Endorses the recommendation[30] by the Court of Auditors, broadly welcomed by the institutions in their replies, for the setting-up of a joint structure to take charge of the technical and financial aspects of construction matters for the EU institutions in Brussels and Luxembourg;

Section VIII - Ombudsman

71.   Recalls that in paragraph 41 of its decision[31] of 4 April 2001 in the context of the 1999 discharge, Parliament pointed out the need to avoid the cancellation of a significant part of the appropriations available to the Ombudsman;

72.   Notes that in the Ombudsman’s implementation of the 2000 budget the proportion of initial appropriations cancelled was 17.52% (1999: 14.46%; 1998: 8.58%), representing an upward trend; repeats its request to the Ombudsman to improve the take-up of the funds placed at his disposal by the budgetary authority;

Discharge decisions

73.   Refuses discharges to the Secretary-General of the Economic and Social Committee in respect of the implementation of its budget for the financial years 1996 and 1997;

74.   Grants discharge to the Secretary-General of the Economic and Social Committee in respect of the implementation of its budget for the financial years 1998 and 1999;

75.   Grants discharge to the Registrar of the Court of Justice, to the Secretaries-General of the Court of Auditors, the Economic and Social Committee and the Committee of the Regions and to the Ombudsman in respect of the implementation of their budgets for the 2000 financial year;

76.   Instructs its President to forward this decision to the Council, the Commission, the Court of Justice, the Court of Auditors, the Economic and Social Committee, the Committee of the Regions and to the Ombudsman and to have it published in the Official Journal (L series).

  • [1] OJ C 359, 15.12.2001
  • [2] OJ not yet published
  • [3] A5-0168/2001, 31.5.2001, OJ C 47 E, not yet published
  • [4] Council Regulation N° 2673/1999, OJ L 326, 18.12.1999, page 1
  • [5] OJ C 359, 15.12.2001, paragraph 7.3
  • [6] OJ C 359, 15.12.2001, paragraph 7.66   
  • [7] OJ C 359, 15.12.2001, paragraph 7.35
  • [8] OJ C 359, 15.12.2001, paragraph 7.14
  • [9] OJ C 359, 15.12.2001, paragraph 7.14
  • [10] OJ C 359, 15.12.2001, paragraph 7.14
  • [11] Special Report n° 5/2000, paragraph 20, OJ C 109, 14.4.2000
  • [12] replies to the questionnaire, paragraph 4.3
  • [13] OJ C 359, 15.12.2001, paragraph 7.27
  • [14] OJ C 312, 7.11.2001
  • [15] OJ C 359, 15.12.2001, paragraph 7.6
  • [16] source : replies to questionnaire, paragraph 6.1
  • [17] OJ L 160, 15.6.2001, paragraph 17
  • [18] source: ESC report to the budgetary authorities, October 2001
  • [19] OJ C 328, 26.10.1998, page 115
  • [20] Opinion n° 7/98 on the effectiveness of the methods of recovery applied by the ESC and on the new system introduced in the ESC for the administration and reimbursement of travel expenses
  • [21] The investigative unit which replaced UCLAF with effect from 1 July 1999 (http://europa.eu.int/comm/dgs/olaf/mission/en.htm)
  • [22] source: “The ESC on the road to modernisation”, October 2000
  • [23] OJ C 359, 15.12.2001, CoR replies to paragraph 7.22
  • [24] OJ C 359, 15.12.2001, paragraph 7.33
  • [25] OJ C 359, 15.12.2001, paragraph 7.68
  • [26] OJ C 21 E, 24.1.2002, page 236
  • [27] OJ C 359, 15.12.2001, paragraph 7.27(c)
  • [28] OJ C 359, 15.12.2001, paragraph 7.68
  • [29] source: ESC/CoR progress reports to the Committee on budgets, 6.10.2000 and 14.6.2001
  • [30] OJ C 359, 15.12.2001, paragraph 7.66
  • [31] OJ C 21 E, 24.1.2002, page 219

MOTION FOR A RESOLUTION

Resolution of the European Parliament postponing the decision concerning discharge in respect of the implementation of the general budget of the European Union for the 2000 financial year

Section II – Council

(SEC(2001) 530 - C5-0239/2001 – 2001/2104(DEC))

The European Parliament,

-   having regard to the revenue and expenditure account and the balance sheet for the 2000 financial year (SEC(2001) 530 – C5-0239/2001),

-   having regard to the Annual Report of the Court of Auditors concerning the financial year 2000, with the replies of the institutions (C5-0617/2001)[1],

-   having regard to the Statement of Assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions provided by the Court of Auditors pursuant to Article 248 of the EC Treaty (C5-0617/2001),

-   having regard to the Council’s recommendation of 5 March 2002, (C5-0124/2002)[2],

-   having regard to Article 272(10) and 275 of the EC Treaty,

-   having regard to Article 22(2) and (3) of the Financial Regulation,

-   having regard to the report of the Committee on Budgetary Control (A5-0094/2002),

1.   Notes the reply from the Chairman of the Permanent Representatives Committee dated 25 January 2002 to the questionnaire sent by the Committee on Budgetary Control on 6 December 2001;

2.   Regrets the Council's complete failure to address the questions relating to budgetary aspects of the Common Foreign and Security Policy; notes that a substantial part of the Council's budget is now spent on activities in the fields of foreign affairs, security and defence policy and justice and home affairs, and that the expenditure in these areas is not currently subject to the same close scrutiny as the administrative and operational expenditure of the other Institutions;

3.   Considers wholly inadequate the Council's reference, in its letter, to its replies contained in the Court of Auditors' annual and special reports;

4.   Accepts that the European Parliament and the Council have not, in the past, scrutinised their respective sections of the budget, but rejects the Council's suggestion that this was the result of a "gentleman's agreement"; considers that in view of the increases in administrative expenditure and the increasingly operational nature of expenditure in the fields of foreign affairs, security and defence policy, and justice and home affairs, the administrative expenditure of both Institutions ought to be scrutinised in the same way as that of the other European Institutions, as part of the discharge procedure foreseen by Article 276 of the Treaty;

5.   Points out that it will not grant discharge to the Council unless by 15 May 2002 it has received a full and satisfactory answer to the questions put by the Committee on Budgetary Control in its letter of 6 December 2001;

6.   Postpones discharge to the Secretary-General of the Council in respect of the implementation of its budget for the 2000 financial year;

7.   Instructs its President to forward this resolution to the Council, the Commission and the Court of Auditors.

  • [1] OJ C 359, 15.12.2001
  • [2] OJ not yet published

EXPLANATORY STATEMENT

Economic and Social Committee

1.   In 1996 the Deputy Financial Controller of the Economic and Social Committee (ESC) carried out checks on a thousand tickets submitted by ESC members during the period June-July 1995 on the basis of information supplied at his request by the relevant airline companies. The airlines were asked to confirm that specific tickets had actually been used. He conducted this investigation with the knowledge of the then Financial Controller but without otherwise informing his superiors at the ESC.

These checks revealed the following irregularities :

  • ∙The same ticket was presented for refund several times ;
  • ∙Airlines had refunded unused tickets which had also been submitted to the ESC for reimbursement ;
  • ∙Tickets had been issued by a travel agency but never registered or invoiced by the airlines in question.

2.   The Deputy Financial Controller communicated his findings to the Financial Controller who by a letter of 3 June 1996 passed them on to the President of the ESC, who in turn notified the then Secretary General.

On his own initiative, the Deputy Financial Controller had also sent the results of his investigation to the Court of Auditors.

3.   In response to the Financial Controller’s findings, the ESC set up a Committee of Wise Men in September which delivered its report in December 1996.

4.   Its main conclusions were as follows :

  • ∙irregularities in the case of 59 members (27% of total) ;
  • ∙concentration of members from four Member States ;
  • ∙high proportion of unused tickets (528 of 1000).

5.   The total value of unused tickets refunded was FB 16.807.802 (ECU 420.000), which when extrapolated from the 1000 tickets sample to the ESC as a whole gave the figure of FB 70.000.000 (ECU 1.750.000) put forward by the Financial Controller, in his letter of 3 June 1996 as an estimate of the amount wrongly paid out in 1995.

6.   Suspicions of irregularities within the ESC had been circulating well before 1996. The Financial Controller had alerted the Secretary General of the ESC by a note dated 20 January 1992 to weaknesses in the institution’s arrangements.

7.   In 1988 according to the report of the ESC’s own internal inquiry the then Director of Personnel and Administration had carried out an inquiry into airline tickets but kept the results to himself.

8.   Moreover, certain practices in relation to the reimbursement of travel expenses had been alluded to in the ESC’s Bureau in the context of discussions on a possible statute (including a salary) for ESC members. Unlike members of other institutions, ESC members do not receive any remuneration for their activities on behalf of the ESC, other than reimbursement of travel and subsistence expenses.

9.   Once the Deputy Financial Controller’s findings were known, the ESC reacted by setting up its Committee of Wise Men (6 September 1996) requiring the submission of boarding cards as proof of travel (1 October 1996), and marking tickets (July 1997).

10.   However, it is worth pointing out that in a memo dated 30 July 1996 the then Secretary-General recorded a conversation in which he asked the Financial Controller to approach the Court of Auditors with a view to devising a formula which "would enable this affair  to be forgotten".

11.   Thus it was not until 18 June 1997 in response to the observations of the Court of Auditors on the 1996 financial year, that the ESC commissioned an internal administrative inquiry. Moreover, as late as mid 1998 the ESC expressed the view that despite the wishes of Parliament it would not be appropriate to refer the matter to UCLAF for various reasons, one being that such an investigation would « damage the internal climate » at a time when a new management team was being put in place.

12.   The tickets case was eventually referred by the ESC to OLAF (UCLAF’s successor) on 27 January 2000, following a refusal by the Committee on Budgetary Control to give discharge until the situation was clarified, and four years after the start of the Deputy Financial Controller’s investigations. OLAF delivered its final report to the ESC on 30 July 2001. Your rapporteur received OLAF’s report on a confidential basis in November 2001, nearly six years after the affair first came to light.

13.   As far as the Court of Auditors is concerned, it dealt with the ESC tickets case in its report on the financial year 1996 and in its opinion no 7/98.

14.   Parliament postponed its decisions concerning discharge for the ESC for the financial years 1996, 1997, 1998, and 1999, pending confirmation by the Court of Auditors that the ESC’s system of allowances was now in order and pending receipt of the OLAF report.

15.   The ESC appointed a new accounting officer in 1997 and installed a new Secretary-General and management team in 1998. Your rapporteur is not aware of any evidence to suggest that the irregularities of 1995-96 persisted beyond the arrival of the new regime. It should also be stressed that the integrity of the new management team is not in question.

16.   However, there is clear evidence in the period 1996-97 of intentional delay and unwillingness on the part of ESC to take timely action. In particular, the ESC can be criticised for :

  • ∙not making a more sustained effort to recover amounts wrongly claimed by ESC Members – OLAF estimates the amount actually recovered at € 167.432,39 as against a total amount owed of € 830.185,77 ;
  • ∙not bringing disciplinary proceedings against officials who may have been associated with the irregularities
  • ∙not referring the matter to UCLAF or, alternatively, to the Belgian judicial authorities as soon as the evidence of undue payments to ESC members came to light.

18.   For this reason your rapporteur recommends that Parliament should refuse the discharge to the ESC in respect of the financial years 1996 and 1997.

19.   The section relating to the ESC also deals with aspects of value for money of the ESC. It is extremely concerning that the current President of the ESC, Göke Frerichs, has sent a letter to members of the Committee on Budgetary control claiming that "the application of the concept of 'value for money' to a body established by the European Treaties is highly questionable and politically unjustifiable" when this is precisely the work of the Committee on Budgetary Control.

20.   The ESC should also take note of a reply to a questionnaire sent to evaluate the work of the ESC: "We do not use the ESC as a vehicle to influence policy debate at European level" and "the ESC appears to be redundant, and we would be content for it to be abolished". Whilst the rapporteur accepts that other organisations have different and more positive views of the ESC, it is worrying that one of the largest trade unions in the UK holds the ESC in such contempt.

Annexe 1

Brussels, 16 November 2001

SEQUENCE OF EVENTS IN THE TICKET IRREGULARITIES AFFAIR

September 1995

ESC Financial Controller initiates inquiry into the use of plane tickets declared by ESC Members

June 1996

Financial Controller submits findings of the inquiry to the ESC President

July 1996

ESC forwards findings of the internal inquiry to the Court of Auditors

September 1996

Group of Experts (three members of the ESC Bureau) set up

May 1997

Final report of the Group of Experts

June 1997

Secretary-General gives instructions for an administrative inquiry to be conducted into internal organisation and officials' responsibility in the affair

September 1997

Discussion within the ESC Bureau

October 1997

Report on the administrative inquiry

October 1997

ESC President calls for amounts unduly paid to Members to be recovered

November 1997

The Court of Auditors 1996 annual report refers to irregularities noted by the ESC Financial Controller and confirmed by a Court of Auditors inquiry

31 December 1997

Final date for repayment of sums unduly paid to ESC Members

March 1998

In-depth revision of the rules on Members' travel and meeting expenses and allowances carried out by the Bureau becomes applicable

October 1998

Court of Auditors Opinion No 7/98 on the effectiveness of the methods of recovery applied by the ESC and on the new system introduced by the ESC for the administration and reimbursement of travel expenses

October 1998

European Parliament adopts resolution deferring discharge in respect of 1996, pending a referral to OLAF

January 2000

ESC Bureau decides to refer the matter to OLAF

August 2001

OLAF final report forwarded to ESC and the Belgian Public Prosecutor

September 2001

Belgian Public Prosecutor decides to take no further action on the matter

Annex 2

Implementation of the 2000 general budget (in €)

Section IV

Section V

Section VI

Section VII

Section VIII

Appropriations budgeted

131 256 645.00

70.312.   467,00

80 976 436.00

35 164 833.00

3 914 584.00

Commitments entered into

129 366 000.08 (98.56% of appropriations budgeted)

66 338 196.81 (94.35% of appropriations budgeted)

77 123 605.35 (95.24% of appropriations budgeted)

32 103 334.67 (91.29% of appropriations budgeted)

3 228 988.95 (82.49% of appropriations budgeted)

Payments made

122 011 479.45 (94.31% of appropriations budgeted)

58 592 180.80 (88.32% of appropriations budgeted)

65 817 768.32 (85.34% of appropriations budgeted)

27 421 697.53 (85.42% of commitments entered into)

2 844 081.27 (or 88.08% of commitments entered into)

Outturn of appropriations automatically carried over from 1999 to 2000

5 951 437.41 (out of 7 075 333.98 - 84.12% of appropriations carried over)

7 449 261.14 (out of 7 752 197.33 – 96.09% of appropriations carried over)

ESC:

1 816 329.83 (out of 1 556 177.35 carried over, or 53.86%)

ex-SOC:

3 148 100.46 (out of 3 665 070.33 carried over, or 85.74%)

857 938.54 (out of 1 858 059.28 – 46.17% of appropriations carried over)

381 212.28 (out of 489 753.81 – 77.84% of appropriations carried over)

Appropriations automatically carried over from 2000 to 2001

7 354 520.63

7 746 016.01

9 975 488.14

4 681 637.14

384 907.68

Source: Revenue and Expenditure Account and Balance Sheet for 2000 (SEC(2001) 530 – FR)

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