REPORT on the nomination of Leonard Orban as a Member of the Court of Auditors

1.10.2012 - (C7‑0153/2012 – 2012/0805(NLE))

Committee on Budgetary Control
Rapporteur: Inés Ayala Sender

PROPOSAL FOR A EUROPEAN PARLIAMENT DECISION

on the nomination of Leonard Orban as a Member of the Court of Auditors

(C7‑0153/2012 – 2012/0805(NLE))

(Consultation)

The European Parliament,

–   having regard to Article 286(2) of the Treaty on the Functioning of the European Union, pursuant to which the Council consulted Parliament (C7-0153/2012),

–   having regard to Rule 108 of its Rules of Procedure,

–   having regard to the report of the Committee on Budgetary Control (A7-0296/2012),

A. whereas Parliament’s Committee on Budgetary Control proceeded to evaluate the credentials of the nominee, in particular in view of the requirements laid down in Article 286(1) of the Treaty on the Functioning of the European Union;

B.  whereas at its meeting of 26 September 2012 the Committee on Budgetary Control heard the Council’s nominee for membership of the Court of Auditors;

1.  Delivers a negative opinion on the Council’s nomination of Leonard Orban as a Member of the Court of Auditors;

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

ANNEX 1: CURRICULUM VITÆ OF LEONARD ORBAN

Date and place of birth: 28 June 1961, Braşov (Romania) Marital status: Married; one child

Main activities

September 2011 - present	Minister of European Affairs Main responsibilities: Coordination of EU Affairs; Coordination and management of Structural Instruments; Management of the European Economic Area Financial Mechanism and of the Norwegian Financial Mechanism.
March 2010 – September 2011	Presidential Adviser on EU Affairs
January 2007 –February 2010	Member of the European Commission responsible for Multilingualism
December 2004 – December 2006	Secretary of State - Ministry of European Integration Main responsibilities: Coordinating Romania’s preparation for accession to the EU; Since June 2006, head of Romania’s delegation for negotiating the accession to the European Economic Area; Since April 2005, coordinating Romania’s positions as active observer at the European Council.
December 2004 - April 2005	Chief Negotiator with the European Union Main responsibilities: Coordinating Romania’s preparation for accession to the EU; Coordinating the drafting of Romania’s Accession Treaty to the EU.
May 2001 - December 2004	Deputy Chief Negotiator with the European Union Main responsibilities: Coordinating, at technical level, Romania’s accession negotiations for all chapters of the acquis.
1993 – 2001	Parliamentary Counsellor on European and International Affairs - Romanian Parliament, Chamber of Deputies Main responsibilities: Managing the relations with the European Parliament; Ensuring the technical expertise on EU affairs for the European Integration Committee of the Romanian Parliament; Starting with 1995, since the entering into force of the Association Agreement with the European Union, technical secretary at the Joint Parliamentary Committee European Union - Romania and for the Delegations of the Romanian Parliament at the European Parliament and COSAC; Managing the relations with the Parliamentary Assembly of the Black Sea Economic Cooperation.
1986 - 1993	Engineer - Institute of Research for Machine Manufacturing Technology Bucharest, Enterprise for Special Industrial Constructions Bucharest, Tractor Manufacturing Company Miercurea Ciuc.

Studies

1987 – 1992 Bachelor degree in economics, Faculty of Management, Academy of Economic Studies, Bucharest

1981 – 1986 Bachelor degree in engineering, Faculty of Mechanical Engineering, University of Braşov

Other

§ Signatory, as Chief Negotiator with the European Union, of the Accession Treaty of Romania to the European Union, 25th of April 2005, Luxembourg

§ EUNIC Honorary Ambassador for Multilingualism

§ Honorary President of the European Institute in Romania until September 2011

§ Former member of several governmental committees related to Romania’s EU accession (European Integration Executive Committee, State Aid Committee, Committee for the Management of EU Funds, Romanian Steel Sector Restructuring)

§ Member of the Romanian Social and Economic Council (2005-2006)

§ Numerous articles and analyses published in Romanian and foreign newspapers and magazines on European affairs and multilingualism since 2001

§ Awards: Knight of “Steaua României” National Order (Star of Romania) awarded in 2002 for the contribution to Romania’s Euro-Atlantic integration

§ Language skills: Romanian (mother tongue), English, French (working languages).

ANNEX 2: ANSWERS BY LEONARD ORBAN TO THE QUESTIONNAIRE

Professional experience

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

My professional career has been inextricably linked with European matters for more than 19 years, while for over 10 years I have fulfilled important functions in the field of public finance, management and management auditing.

From 2001, as the Deputy Chief Negotiator, and then, from 2004, as the Chief Negotiator with the European Union in the preparation of Romania’s accession to the EU, I coordinated the internal preparation for all the chapters negotiated, including those on Chapter 28 – Financial Control. The points covered in that chapter related to the adaptation of Romanian legislation to the EU rules on financial control and the proper adaptation of Romania’s institutions to that new regulatory framework in the following fields: internal financial control, external auditing, control of Community funding and protection of the EU’s financial interests. Implementing the provisions of this negotiating chapter had major implications for the modernisation of financial management and fiscal control in Romania. The main upshot of the work done in the accession negotiations in the field of internal financial control was the drawing‑up by the Ministry of Public Finance of the ‘Strategy for the Development of Internal Public Financial Control’, and the promotion and adoption of legislation on internal auditing. On the institutional side, this led to the creation of the Central Harmonisation Unit for Internal Public Audit within the Ministry of Public Finance, the Committee for Internal Public Audit (CAPI) and internal public audit units within public bodies. As regards external financial audit, I was instrumental in amending the law on the Romanian Court of Accounts, which enabled significant changes to be made to that institution’s procedures, and in finalising the financial audit manual for the Court of Accounts and the performance audit guide. In the same way, I helped to set up the Romanian Audit Authority at the Court of Accounts, which is the body responsible for the external auditing of Community funding allocated to Romania, and the national contact institution for OLAF (now the Fight Against Fraud Department – DLAF).

From 2007, as the European Commissioner for Multilingualism, I was responsible for coordinating the departments covered by my portfolio and, as a member of the College of Commissioners, took part in the decision‑making process. In coordinating the departments under my portfolio (chiefly DG‑Translation, DG‑Interpretation and DG‑Official Publications – whose staff totalled around 3 500 people) I ensured efficient management of the budgetary resources placed at their disposal to perform specific tasks, within the perspective of the internal and external auditing of financial management activities. I oversaw the issuing by the directorates‑general of the annual statements of assurance that the funds managed by those departments had been used for the purposes they were intended and I also monitored the drawing‑up of the annual activity reports. At the same time, during the three years in which I was a member of the Commission, I took part in the management discharge procedure, which was the political facet of the process of external control of the implementation of the budget via which the Commission is granted discharge in respect of its management.

Since September 2011, as the Minister for European Affairs, I have acted as the national coordinator for the structural and cohesion funding allocated to Romania. I also monitor implementation of the recommendations arising from the audit missions conducted by the Romanian Audit Authority and the European Commission, in strict compliance with the EU regulations in the field of the management of structural funding instruments and of the protection of the financial interests of the European Union. To that end, I work with the Ministry of Public Finance and with the Audit Authority on the adoption of national legislation on the prevention, notification and penalising of irregularities in the obtaining and use of EU funding and/or of the corresponding national financing, by establishing internal mechanisms and structures to identify irregularities and recover debts, to ensure there is no impact on the Community budget and that the principles of sound financial management are respected. I coordinate the internal activities intended to ensure the correct functioning of the management and control systems applicable to EU funds. I report regularly to the Romanian Government and suggest ways of remedying the operational shortcomings notified by the financial audit authorities.

I also coordinate the activities of the managing authorities for the Technical Assistance Operational Programme to ensure the rigorous financial management of the projects adopted and developed under that programme. The main beneficiary of that programme is the Authority for the Coordination of Structural Instruments, which forms part of the Ministry of European Affairs. I therefore oversee the whole process, from the identification of the funding requirements for this operational programme, through the public procurement procedures to the signing of contracts and correct implementation of the projects.

In view of the above, I feel that my professional activities have enable me to acquire extensive and sound knowledge in the field of financial control and the management of European public financing.

2. What are the three most important decisions to which you have been party in your professional life?

For almost twenty years, I have participated directly in the whole process of Romania’s European integration and have played an active role in the adoption of many decisions of particular importance to the process of my country’s accession to the EU. I can claim to have made a significant contribution to Romania’s membership of the EU by way of the decisions taken during the accession negotiations and after their conclusion.

On 1 January 2007, I became Romania’s first Commissioner. In that capacity, I sponsored the promotion and adoption of the Commission Communication entitled ‘Multilingualism: an asset for Europe and a shared commitment’. That Communication, which highlighted the role of multilingualism in social cohesion, institutional dialogue and European integration, demonstrated the importance of lifelong learning, highlights the importance of promoting multilingualism as a factor in competitiveness, mobility and employment, and encouraged the promotion of cultural diversity. Last but not least, it also showed the importance of promoting European languages worldwide. I feel that the adoption of that Communication, of Parliament’s resolution and of the Council Conclusions on this matter was a major achievement, and one that formalised the commitment of the EU institutions and the Member States to promoting linguistic diversity as a means of achieving unity within the EU.

A third type of important achievement is connected with my role as Minister for European Affairs, in which, in principle, I have two main responsibilities: on the one hand, the coordination and management of structural instruments and, on the other hand, coordination in the field of European affairs.

When I took over the role of national coordinator for the structural instruments, the absorption rate was extremely low and many cross‑cutting measures of significant impact had to be implemented to rectify the situation. In that connection, I played a decisive role in the decisions taken to improve the legislative and procedural framework by means of accelerating and facilitating the absorption of structural and cohesion funding. One major aspect of this was the implementation of the recommendations of the supervisory authorities and the streamlining of the process of implementing the operational programmes financed under the cohesion policy. Those decisions and measures targeted such areas as: freeing‑up financial flows in the field of managing the structural instruments, simplification of the procedures for verifying repayment claims, checking for conflicts of interest by way of targeted procedures and setting‑up of specialist teams to provide support for the implementation of key infrastructure projects. Besides this, I coordinated the process of improving the legislative and procedural framework for public procurement procedures, which had an impact reaching far beyond the sphere of the absorption of Community funding.

The measures aimed at resolving the issues relating to the current programming period have been supplemented by those targeting internal preparations for the future EU budget for the period 2014‑2020. In this connection, I proposed and promoted the adoption by the Romanian Government of the measures and texts designed to pave the way for the accessing and implementation of EU funding in the period 2014‑2020.

Independence

3. The Treaty stipulates that the Members of the Court of Auditors shall be ‘completely independent’ in the performance of their duties. How would you act on this obligation in the discharge of your prospective duties?

The requirement set out in Article 285 of the Treaty on the Functioning of the European Union (TFEU) that the members of the European Court of Auditors be ‘completely independent’ is the basic principle for their performance of their duties. It is my firm belief that, without genuine independence without any external influence, a member of the Court cannot objectively and efficiently fulfil the tasks entrusted to him.

Hence, should I be appointed member of the Court of Auditors, I will respect the Code of Conduct for the Members of the Court of Auditors, and the provisions of the Treaty concerning independence, and will not seek or take instructions from any government, EU institution, political party or other interest group, or political party. Similarly, I will strictly adhere to the Court’s professional rules (independence, objectivity, impartiality, professionalism), the Court’s guidelines on ethics applicable to all its staff, and particularly to its members, the Court’s rules of procedure and the applicable audit standards and procedures. I will inform the Court of any situation that arises which is incompatible with the performance of my duties and I will not engage in any activity not in keeping with the independence which should be maintained by a member of the Court.

I should make it clear that the principle of independence is one that has guided me throughout my professional career. I do not belong to any political party or political organisation. I enjoy the independence that a member of the Court needs in order to perform his duties, and it will not be possible for interest groups to exert any form of pressure on me or subject me to intimidation.

As the Court will be aware, the post of member of the European Commission, which I held for over three years, called not only for a high level of professionalism, but also for integrity and independence. Subsequently, as Minister for European Affairs, I have adhered to the same principles of correctitude and independence.

4. Have you been granted discharge for the management duties you carried out previously, if such a procedure applies?

There were no official discharge procedures for the duties I performed previously.

5.  Do you have any business or financial holdings or any other commitments, which might conflict, with your prospective duties? Are you prepared to disclose all your financial interests and other commitments to the President of the Court and make them public? If you are involved in any current legal proceedings, would you please give details?

I do not have any business or financial holdings or any other commitments which might conflict with my prospective duties.

In all the posts which I have occupied to date I have applied unreservedly the principle of transparency, and have made declarations of assets held and income received as well as statements relating to conflicts of interest. The last such declarations, relating to the post of Minister for European Affairs, can be found on the website of the Romanian Ministry of European Affairs at (http://www.maeur.ro/articol/leonard-orban). Should I be appointed member of the Court of Auditors, I will continue in the same transparent manner, and will comply with the clauses of the TFEU concerning conflicts of interest and incompatibilities.

I can also state that I am not involved in any current legal proceedings.

6. Are you prepared to step down from any elected office or give up any active function with responsibilities in a political party after your appointment as Court Member?

As I mentioned above, I do not belong to any political party. It follows that I do not hold any posts or positions incompatible with my prospective appointment as a member of the European Court of Auditors.

7. How would you deal with a major irregularity or even fraud and/or corruption case involving persons in your Member State of origin?

In such I situation I would notify the President of the Court and take the necessary steps to refer the matter to OLAF, which is the only body empowered to conduct investigations into such matters.

I consider it vitally important for the Court to help enhance transparency and accountability within the EU framework. The Court can help promote the sound management of EU finances by working closely with OLAF to prevent fraud and irregularities.

I wish to emphasise that I have always promoted the principle of fair and transparent treatment for all EU citizens, and a rigid application of the law at both national and Community level. Hence, I have promoted the interests both of Romanian citizens and of the citizens of the other EU Member States. I will continue to do so in all the duties I am asked to perform.

I will deal with cases of major irregularities or fraud and/or corruption by applying the Court’s rules of procedure, which ensure fair and appropriate treatment in all cases, regardless of the nationality or origins of the persons concerned. I would do so because the members of the Court must show total impartiality. That impartiality, alongside the requirement of independence, dictates that irregularities must be addressed in the same way, regardless of where they are committed or the nationality of the person/s responsible.

Performance of duties

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

The shape of the corporate culture of any public or private‑sector organisation is generally determined at managerial level. The sound management of public finances should be a fundamental objective of any public administration, be this at national or European level. In a public‑sector organisation, sound management means ensuring that work is conducted in compliance with the law and with a clear awareness of accountability in respect of the efficient utilisation of the public funding allocated.

The foundations of sound financial management are built on the principles of economy, efficiency and effectiveness. Using budget allocations in a manner that is economic (minimises resource costs), efficient (ensures a good match between the resources used and the results targeted) and effective (achieves those results) is one of the mainstays of the Financial Regulation applicable to the General Budget of the European Communities. These principles can best be respected if the internal audit system is working correctly to provide reasonable assurance that objectives are being met in terms of the effectiveness and efficiency of transactions, confidence in the reporting system and compliance with the regulatory framework.

Setting objectives and monitoring compliance with these is a major part of the whole process. With regard to monitoring, it is essential when assessing any activity to use suitable performance indicators in order to make the move from resource‑based to result‑based management. Internal and external auditors’ reports are key evaluation (feed‑back) factors for management and form part of the general internal control framework. Producing internal audit findings and formulating recommendations on how to improve activities play an important part in developing an organisational culture aimed at sound financial management in the use of public finances.

Transparency and public access to information throughout the budget cycle is a democratic must which fosters sound management and ensures correct presentation of the accounts. The proper use of public finance is not just in the national and/or European interest and a question of respect for the public; it is also evidence that duties have been performed and objectives have been achieved.

9. Under the Treaty, the Court is required to 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, in particular, its Committee on Budgetary Control?

Good and constant cooperation between the EU institutions is essential to ensuring an efficient and effective decision‑making process. In that perspective, I view the Court of Auditors and the European Parliament, and more specifically its Committee on Budgetary Control, to be natural partners in a relationship which should be based on cooperation, communication and transparency.

Both these institutions have specific and complementary remits to monitor the budget and exercise budgetary control. As the organisation responsible for auditing the revenue and expenditure accounts of the EU and of any body, office or agency established by the EU, the Court assists the European Parliament in exercising control over the implementation of the budget.

It is vital that the Court submit high‑quality reports to Parliament so that it can properly perform its control duties. The Court and its members need to organise and plan their work with an eye to the timing of opinions and the priorities set by the Committee on Budgetary Control, and also to structure their reports to facilitate Parliament’s work. This means there must be permanent and constructive cooperation with Parliament, through the intermediary of the Committee on Budgetary Control. Only in this way can full and worthwhile reports on the activities of the institutions and bodies concerned be submitted to Parliament.

Hence, should I be appointed member of the Court of Auditors, I will encourage close cooperation with the European Parliament as a whole, and with the Committee on Budgetary Control in particular. That cooperation will be characterised by good communication in the form of meetings, consultations and exchanges of opinion whenever these are necessary. Similarly, I will provide the Committee on Budgetary Control with any documents that will actively help it in its work.

10. What added value do you think performance auditing brings and how should the findings be incorporated in management procedures?

Performance auditing provides decision‑makers with essential information on the impact of given policies, and is designed to assess and evaluate the extent to which the use of public finances has led to achievement of the proposed objectives. Public policies are transposed into operational programmes through which to achieve the overall objectives of a policy in a certain area. The programmes also consist of individual projects, which must fit with the programme’s objectives.

The performance audit is generally conducted by considering a sample of individual projects in several Member States and auditing the rules and systems underlying the management of those projects. The audit focuses on the efficiency and effectiveness of the expenditure financed by European funding in a given field of activity, and draws conclusions as to how to set, monitor and achieve objectives. It also assesses whether the EU interventions have had a clear added value in that they have enabled tangible results to be achieved which the Member State could not have achieved by acting alone.

Since they are conducted on completed projects, the audits offer a set of essential information for those responsible for framing similar policies, for future programmes and for those responsible for deciding on strategic guidelines. Performance audits also provide information on the way in which policies are implemented in practice and can help other audit bodies in the Commission or Member States to formulate their own audit activities.

In their findings, performance audit reports provide clear recommendations as to precisely who should do what and what should be done to improve policy implementation. Although they do not make recommendations as regards public policy options, these findings may, by highlighting areas that are not functioning properly, result in the reassessment or reorientation of the policies in question. The organisations or Member States audited are expected to act on the recommendations made by the European Court of Auditors, and the Court monitors whether its recommendations have resulted in concrete action. At the same time, it is to be hoped that the special reports adopted by the Court influence those responsible for the implementation, monitoring and adopting of similar measures by other organisations or Member States, thereby helping to ensure sounder financial management on a far broader scale than that of the beneficiaries audited.

11. How could cooperation between the Court of Auditors, the national audit institutions and the European Parliament (Committee on Budgetary Control) on auditing of the EU budget be improved?

The European Parliament plays a very important role in the process of democratic oversight on the way in which European tax‑payers’ money is invested in the process of attaining the objectives of EU policies. At the same time, since most of the investments are made in Member States, the relations between the Court and the national audit institutions take on special importance. In order to achieve the best results, the audit chain must cover the appropriate level, be this European, national, regional or local.

The Court maintains permanent and constructive relations both with Parliament and with the audit authorities of the Member States. I believe that all the parties concerned are open to developing these relations still further.

The relations between the Court and the national audit authorities are conducted within a specific structure, with this being the contact committee created by the President of the Court and the presidents of the national audit institutions. That committee is helped to conduct its activities by special working groups whose role is to provide a common interpretation for issues that arise and to disseminate good practices. In line with the Court’s single audit model, those relations are geared to ensuring that the decisions adopted by the Court are based on the work and findings of the national audit bodies, with these forming part of the Statement of Assurance (DAS) presented by the Court. This means that the supreme national audit institutions and the Court need to arrive at a unitary approach by using standard methodologies and promoting similar audit objectives.

The cooperation arrangements should continually be developed and must also take into account recent experience arising from joint audits conducted by the Court and national audit institutions. I consider that such an approach needs to be encouraged by supporting the dialogue between the European and national institutions, with that dialogue enabling the main audit objectives to be established and helping to enhance the effect of audits and to rationalise the resources allocated to them. However, that process calls for a major allocation of resources, which will not be easy to secure in the current financial climate. In the long term, I believe that a simplification and rationalisation of the audit process will benefit all the parties concerned.

Other issues

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

Yes.

RESULT OF FINAL VOTE IN COMMITTEE

Date adopted	26.9.2012
Result of final vote	+: –: 0:	12 14 0
Members present for the final vote	Marta Andreasen, Jean-Pierre Audy, Inés Ayala Sender, Zuzana Brzobohatá, Jens Geier, Gerben-Jan Gerbrandy, Ingeborg Gräßle, Cătălin Sorin Ivan, Monica Luisa Macovei, Jan Mulder, Eva Ortiz Vilella, Aldo Patriciello, Crescenzio Rivellini, Theodoros Skylakakis, Bart Staes, Søren Bo Søndergaard
Substitute(s) present for the final vote	Christofer Fjellner, Edit Herczog, Monika Hohlmeier, Derek Vaughan
Substitute(s) under Rule 187(2) present for the final vote	Cristian Silviu Buşoi, Elena Băsescu, Corina Creţu, María Muñiz De Urquiza, Horst Schnellhardt, Traian Ungureanu