Scandals web site: http://www.ex.ac.uk/~RDavies/arian/scandals/political.html#euro
IT
BEGAN with a suspicion in the mind of two MEPs, Ilka Schröder and François
Zimeray, that European Union funding for the Palestinian Authority was being diverted
into the pockets of terrorists. By the time the EU working group had
finished its investigation, it had uncovered evidence to show that Yasser
Arafat, the Palestinian president, had personally signed cheques to people
linked with terrorist activity. This week, fresh allegations have surfaced that
money intended for use by the Palestinian Authority for legitimate purposes has
been siphoned off by corrupt officials, ostensibly to pay the wages of 7,000
non-existent staff. But rather than prosecutions and the recovery of
misappropriated funds, the investigation has concluded with a whimper, petering
out in two conflicting reports and an inconclusive debate. What it is has
provided, however, is a salutary lesson in the labyrinthine workings of the EU
and the possibility that future donations may be subject to rather more scrutiny
than that which applied to the $246 million (£134 million) handed over without
question to the Palestinian Authority. Ms Schröder and Mr Zimeray’s
determination uncovered a murky world where money from the EU’s constituent
states was channelled into the pockets of dubious figures in the Palestinian
Authority, and from there into the pockets of Palestinian terrorist groups. Ms
Schröder was in no doubt about what had happened to the money. In an open
letter, she wrote: "It is a well known fact that the EU-funding for the
Palestinian Authority was channelled to a black budget. It is also well known
that the Palestinian Authority has
financed a murderous anti-Semitic terrorist war against
The
socialists in the European Parliament are in turmoil after one of their own
members made serious allegations that some
members of the group are involved in a expenses scam.
Austrian MEP, Hans-Peter Martin, has alleged that some of his
colleagues have claimed expenses for meetings that they have not attended. He
has subsequently been kicked out of the group. Last
Thursday (5 February) Mr Martin removed an attendance register for a meeting
which he says proves that some MEPs still claim their daily allowance - to which
they are entitled for Parliament attendance in
The head of the UEN group in the European Parliament, Charles Pasqua,
has strenuously denied reports in the French media that he received 12 million barrels of oil from Saddam Hussein as a
"gift". The former French Minster's name was revealed by an official
from the Iraqi oil ministry and the Iraqi media. (EUobserver.com
Fraud against the European Union totaling more than half a billion pounds
have been uncovered in the past year,
according to official figures obtained
by The Times, which show that fraud is far more widespread than had
been thought. The number of
suspected cases has risen by nearly a fifth
in just one year to 3,440, with fraud being discovered in almost all the
institutions of the EU and all its funding programmes. In the last financial
year alone, 252 cases of fraud were proven, leading to 230 cases being
sent to court. Filing false
expenses, claiming for work that has not been
done, evading customs duties, misappropriating funds and padded contracts
to outside suppliers have all been uncovered. One case involved claiming
support for
The
EU anti-fraud office Olaf and the Belgian police are investigating claims that EU funds may
have been channeled to a Palestinian militant group responsible for the
deaths of scores of people in suicide bombings.
The investigations follow claims that money earmarked
for aid was paid to the Al-Aqsa Martyrs’ Brigades through Belgian and German
affiliate organisations. The
Independent reported that the inquiry began in
Martha Andreasen, the whistleblower who
claimed European Union accounts were
open to fraud, is herself facing new charges by the European Commission. Andreasen,
the former EU chief accountant, has been waiting over a year to find
out whether the Commission will formally discipline her. Neil
Kinnock, EU Administration Commissioner, told her this week he wants her
to answer new charges that she spoke at conferences without permission. Andreasen
claims Kinnock is spinning out the disciplinary process so that it
will not be concluded until after he leaves office in October 2004. Andreasen
has been suspended on her full E120,000 salary since August 2002 and
it is exactly a year since she gave evidence to the Commission's investigating
officer, Tom Cranfield, who presented his report to Kinnock in
March. However, according to
Kinnock's spokesman, new facts are coming to light all
the time. "It would be wrong to say this is taking an unusually long time
and it is totally untrue to say that we are kicking it into touch," he said.
Since Cranfield's report was
completed the Commission has been engulfed by the
Eurostat affair, which supported Andreasen's claims the EU budget was open
to abuse. Andreasen was appointed to
reform the EU's accounting systems in January 2002
but her proposals were blocked. Eventually she went public with her concerns
to the European Parliament and the media. (
The
European Commission was facing a crisis last night after its auditors
found
The
Eurostat scandal threatens to spin out of
control, and many fear (or hope …) that it might engulf and bring down the Prodi commission.
Parallels are already being drawn with the Cresson affair which destroyed
the Santer commission in 1999. Romano
Prodi is to be cross-examined on 25th September
by a committee of the European Parliament about the allegations of fraud within
the Commission’s statistical body. At least three commissars are under pressure, and may be forced to
resign: Michaele Schreyer, the
budget commissar; Pedro Solbes, the monetary commissar;
and Neil Kinnock, the
commissar who was retained from the old Santer commission and who was supposed
to clean up the show. Prodi’s own
position is regarded as delicate because he had promised “zero tolerance”
for corruption within the Commission when he became the head of it after the
resignation of the ineffectual Jacques “pousse-café” Santer.
On 25th September,
Prodi is expected to provide more information from the anti-fraud office, OLAF.
Some of the MEPs who initially seemed to be pushing themselves forward as
great anti-corruption campaigners have, in recent days, seemed to back-pedal
somewhat: no doubt they know that,
when the writing is on the wall, the employees of the various heads of the
European hydra need to stick together or else they will hang together.
Hans-Gert Pöttering said that it was too early to say who was
responsible for what, while Enrique Baron Crespo, the head of the socialist
group, said that he was not in favour of a crisis at the end of the European
Parliament’s legislature. On the
other hand, the natural rivalry between the Parliament and the Commission is
exacerbated by the fact that all the three commissars who are currently in hot
water are left-wingers, while the majority in the Parliament is conservative.
[Philippe Ricard, Le Monde, 3rd September
2003]
Dougal Watt, the Court of Auditors
accountant who was sacked after he 'blew the whistle' about allegations of
corruption in the Court, has said his dismissal was unjustified and added it
might be intended to intimidate other staff in the institution. In a letter
to euro-parliamentarians dated today 22 July, Mr Dougal said that the decision
to dismiss him taken by the Court's Secretary General Michel Herve, went against
the opinion taken by the five-member disciplinary board - three of whom had been
selected from a pool of Mr Herve's nominees. Although the board found him guilty
of breaching staff regulations, on two occasions -
Is
fraud politically correct in the European Union? Or let me state it more
precisely: Is there a range of tolerance in which fraud is politically correct?
How else would you interpret the phrase which was made in an official report
about the Eurostat case, that there would be evidence that "serious wrong-doing on a much more widespread scale than previously
thought may have taken place". And then – after that statement –
the Commission got active. So the mere idea, that there would be any fraud
obviously did not bother anybody but luckily this time it was on a "more
widespread scale". For me the message of this
sentence is: There is a kind of fraud which is tolerated because it is within
the bounds of what is expected and therefore does not lead to any consequences.
And there is a kind of fraud, which is so severe that it has to be handled.
However, I will bet that in the Eurostat case no one will have to face real
consequences. I am talking about consequences which every other citizen would
have to face, if he or she did comparable things, like siphoning his
employer’s money into a private bank account or hiding money from the taxman.
Just imagine what you would have to face for that in your country. The
immunity factor If a politician – not only at
the EU level - talks about "facing the consequences" he or she means
resigning from his or her job. But that is not a "consequence", but
only a first step to avoid further damage. Real consequences should follow, in
which he or she should be obliged to compensate for the damage. We are not
talking about mistakes here – which can always happen - but about fraud, which
is a criminal action. But what am I talking about …
I forgot that in the European Union all
civil servants enjoy immunity from prosecution concerning all things they do
in the field of their "business". Therefore it is not surprising that
it makes no sense to go against some small kind of fraud here and there. And
please do not forget that these civil servants are not elected persons who would
have to justify their actions towards the public. They do not have a mandate, to
which they feel obliged. Their only master is the "Brussels System ".
Perhaps one day we will hear: "Case dismissed! - According to the facts of
this case, there is a fraud, committed by an EU civil servant but the fraud is
not severe enough to go through the whole procedure of rescinding his
immunity." This would correspond perfectly with the quality of dispensation
of justice in a feudal system. But please do not misunderstand me. I would never
make a general accusation against all EU civil servants. I just want to stress
that if someone has the intention of committing some criminal action – and I
am convinced that this is a tiny minority – then he or she would find perfect
conditions in the
Dougal
Watt, the Scottish whistleblower who made public his allegations of high-level
corruption in the EU
Court of Auditors has been sacked, the Glasgow Herald reported today.
His dismissal comes at a time when another EU institution,
the Commission, is being blamed for not acting against fraud cases in the EU
statistical arm, Eurostat. According to the newspaper,
Mr Watt was informed on Thursday, on his 39th birthday, that his dismissal was
"appropriate", and that his "infractions" were so great that
they merited more than demotion from his job as an accountant. The
whistleblower was suspended without pay from his post last year after publicly
alleging "systematic corruption and abuse in the European Court of
Auditors". Yet
his claims had been supported by 205 of his colleagues – 40% of the court’s
staff – in a secret ballot. Mr Watt had claimed
systematic fraud was being covered up by powerful figures in
MORE
than half of the agricultural land in the European Union is receiving financial
support from an EU development scheme for poor farmland, the European Court
of Auditors revealed. An audit of the EU¹s rural development scheme for less-favoured
areas (LFAs) reveals that the acreage benefiting from grants and subsidies is
growing despite payments to farmers totalling E:2 billion (£1.4 billion) per
year. In another blow to the European Commission’s accounting practices, the
auditors say they cannot conclude that the ‘less-favoured areas’ are worthy
of the classification. Member states use their own measures to determine what is
less-favoured, with the Commission unable to assess whether the amount of
compensation is justified, the court claimed. Moreover, monitoring
is poor. The auditors were stunned to discover that 56 per cent of Europe¹s
farmland is below par and needs aid. They were even more puzzled
by the rise of LFAs, growing from 36 per cent of all EU farmland in 1975 to 56
per cent in 2000. Aid for LFAs is the second pillar of the Common
Agricultural Policy, alongside market support for farm production. Under EU
rules, three categories of land deserve support: mountainous regions; acres in
danger of abandonment; and areas where the environment and tourism depend on the
survival of farming.
AN
EU fraud scandal in which large sums of money were allegedly siphoned off
into private bank accounts is much worse
than first suspected, the European Commission admitted yesterday. The
commission had fought to quash newspaper allegations that senior officials
failed to act promptly to tackle the allegations at the European Union’s
statistics agency, Eurostat. However Pedro Solbes, the EU’s economic affairs
commissioner, admitted yesterday that the "financial irregularities"
at the Luxembourg-based organisation were worse than feared. "New
developments showed that the problems were far more significant than we had
known. The commission is deeply concerned about the state of affairs," he
told a European Parliament committee. "We take it very seriously." The
allegations focus on alleged irregularities in granting contracts to outside
firms to help gather or distribute Eurostat data and that almost 1 million (£700,000)
was siphoned off. Investigations are under way in
The
European Commission has been accused by its own audit chief of "overstating
knowingly the quality" of the European Union's €100bn accounts. Jules
Muis's claim will be another setback to Michaele Schreyer, the EU budget
commissioner, whose management of the union's finances is coming under intense
scrutiny. "The Commission could be held in contempt of due diligence by
having continued the practice of overstating knowingly the quality of the
accounts for 2001," Mr Muis said in a leaked memo. The memo, written on
March 26 and seen by the Financial Times, came just days after the European
parliament approved the EU's 2001 accounts. Mr Muis, head of the Commission's
internal audit service, says Ms Schreyer's department only stopped making the
claims because of pressure from his team and from Neil Kinnock, EU
administration commissioner. His memo lends further support to the stand taken
by Marta Andreasen, the former EU chief accountant, who was suspended last May
after going public with her criticism of the accounting system. In a previous
leaked memo Mr Muis said Mr Kinnock should have stood by Ms Andreasen and that
removing her would be seen as the Commission retreating on its reform agenda.
The internal audit service report on the EU's accounts, completed on April 15,
paints a picture of "serious
accounting errors and an overstatement of the Commission's assets" and
"poor or non-existent double-entry bookkeeping". According to
memos written by Mr Muis in the past three months, resistance to change appears
embedded in the budget department. On February 17 Luis Romero, Ms Schreyer's top
civil servant, tried to get Mr Muis to tone down his draft report on the EU's
accounting systems because he felt it had "a polemical and negative
tone". Mr Muis fired back on March 26 that Mr Romero's "defensive
response" gave "the impression that the need for reform in the area of
the accounting controls is not as pressing as we firmly believe it to be".
(Financial
Times
As the hoo-hah about the new Constitution rages,
The EU committee that
represents the European Union's local and
regional authorities is being investigated by the EU’s anti-fraud unit, OLAF
for alleged irregularities, reports The Financial Times today. The move by
OLAF officials in
OLAF, the European anti-fraud office, has opened an external investigation concerning allegations of misuse of EU budgetary support to the Palestinian Authority, after evaluation some information it received in the past months. The 10 million euro direct budgetary assistance sent monthly to the Palestinian Authority by the Commission, have been raising concerns over lack of monitoring, and it is alleged that these funds may be used by the Palestinian Authority to fund terrorist activities. (EUobserver.com 06.02.2003)
More on the 17m euro (£11m) fraud at the Madrid based think tank IRELA, the Institute for European-Latin American Relations. The sound of buck-passing by Euro MPs and bureaucrats who allowed taxpayers to be robbed blind by institute staff is now reaching a deafening crescendo. As EYE readers will recall, the unjustified salaries, expenses, travel, training courses and housing allowances for IRELA staff, as well as unsuccessful speculation on the Madrid stock exchange, were well documented in a report by OLAF, the European commission's limp-wristed anti-fraud office. A year on, and following a belated expose in Madrid's EL PAIS, a European parliament spokesman has claimed with perfect mendaciousness that the MEPs and others who were supposed to direct IRELA are in the clear. But they are not and their complicity in the scandal is only too obvious. The commission, meanwhile, has announced that it's holding its own inquiry "to obtain a more precise and complete view of the situation" and that, bizarrely, until this is completed no disciplinary action will be taken against officials who presided over this already perfectly itemised assault on EU funds. Those members of IRELA staff who were honest are still awaiting money owed to them by an outfit which went bust two years ago. *Will the EU's accounts for 2001 ever be signed off - and if so why whom? The commission is now on its fourth chief accounting officer in about as many minutes - well a year anyway. We all know what happened to Marta Andreasen after she refused to sign the accounts because they were so unreliable (she was suspended and is undergoing lengthy disciplinary proceedings). But the commission has now appointed Brian Gray, a Briton, as chief accounting officer. Will he last any longer than his immediate predecessor, Mark Oostens? And will he sign off accounts that allegedly consolidate highly suspect figures from around the regions? Watch this space. (Private Eye 10th Jan, 2003)
The European Commission decided Tuesday to open investigations into Edith Cresson, a commissioner in the late 1990s. Mrs Cresson, a former French prime minister, was accused of corruption in a report by the EU anti-fraud office. The report led to the resignation of the whole commission in 1999. Among the most serious allegations contained in the report was that Mrs Cresson had hired her dentist, Rene Berthelot, to write a scientific report that was not delivered. A spokesperson for the Commission said the decision was the "outcome of an internal procedure" adding that this is the first time that the Commission is taking such a measure against one of its former members. Mrs Cresson will be sent a statement, "in the next few weeks" which sets out "the facts pertaining to possible breaches by Mme Cresson of her obligations when a commissioner." The former commissioner will then have two months to reply. "Her response will be thoroughly considered by the commission before any decision is taken," says a commission statement. In the meantime, Mrs Cresson continues to avail of a generous pension system. She stands to lose this if the charges against her are upheld. The decision by the Commission has been welcomed in some quarters: Chris Heaton-Harris MEP, Conservative Spokesman on Budgetary Control, said: "At long last the Commission is taking steps to investigate its troubled past. The Commission that resigned in 1999 was corrupt, and it is high time that it is held to account for its fraudulent behaviour. How can the Commission ever be trusted if it continues to possess a history of uninvestigated malpractice?" (EUObserver.com 23 Jan 2003)
A number of Members of the European Parliament are trying to get enough support in order to launch an inquiry into allegations that EU funds going to the Palestinian Authority are being used to support terrorist activities. The Commission is opposing this inquiry, leading some MEPs to suppose that the Commission has something to hide. Others, however, believe that launching an inquiry would not be the best way to go, as it risks damaging the Commission, particularly External Relations Commissioner Chris Patten. (19/12/02 EUobserver.com )
Mr Watt joined the court of auditors as a senior secondment from the UK Audit Office after a spell with UK Customs and Excise. His inquiries into tobacco subsidies led to protracted strains with the court as he claimed to be uncovering a series of scandals. Eventually in April this year, he complained formally to the European ombudsman, Euro-MPs, and court staff of "systematic corruption and abuse in the European court of auditors". He produced a bulging dossier to back his claims of nepotism and individuals turning a blind eye to wrongdoing, and was supported by 205 of his colleagues in Luxembourg - 40% of the court's staff - in a secret ballot. They endorsed his findings that 15 members of the court had in some way benefited from corruption and called for their resignation. The call was ignored. Mr Watt told the auditors that the EU's own anti-fraud office had misled investigators and the European Parliament about Dr Quatraro's death. He said he thought Dr Quatraro was "not any Mr Big but was more probably a minor and possibly coerced player in a masonic conspiracy within the European Commission". When the anti-fraud office refused to act on the findings he began to suspect a wider conspiracy and claimed a senior Eurocrat in the commission had been bribed to kill off further questions. Mr Watt, who is now suffering from stress and anxiety, said last night: "I feel my life to be at risk." He added: "My own employer has failed to investigate the allegations which I have submitted and has vilified me for bringing to light its own corruption." He claimed corruption was "permitted to flourish to the benefit of all the institutions' elites" and said that despite his action and that of other "whistle- blowers", the EU accountancy system was now "so degraded it cannot police itself". (Glasgow Herald 16th September 2002 )
The allegations of corruption, including nepotism, which I presented against the Members of the European Court of Auditors on 22 April and substantiated on 18 June, are serious in nature. For example, I alleged Members had paid themselves a salary "weighting" to which they were not entitled. On 1 July - just thirteen days after I substantiated this allegation - the Court announced this practice, which has also benefitted the top rank in other European institutions, to be illegal. One British newspaper subsequently criticised Mr Kinnock for receiving €30,000 a year to which he was not entitled. The illegality of the practice has been known by the audit staff of the Court for many years. But the Members turned a blind eye. They benefitted financially from the illegality. Corruption has been permitted to flourish, to the benefit of all the institutionsÿÿ elites. As shown by the experience of Mr Paul Van Buitenen, and of others who have more recently "blown the whistle" on corruption and mismanagement: the European system is now so degraded that it cannot police itself. The bodies charged with safeguarding the public interest from such corruption - the European Court of Auditors, the European Anti-Fraud Office, the European parliament's Budgetary Control Committee, the Ombudsman - are indolent, if not actively corrupt. The very fabric of democracy in "Europe" is at risk. Financial accountability underpins political accountability; and when neither the accounts nor the audit are reliable, the financial and the political legitimacy of the European endeavour is undermined. I, and 205 of my colleagues, have "blown the whistle" on corruption in the Court of Auditors. We can do no more without the assistance of those beyond the European institutions who are committed to democracy. (Note: This report was written and signed by Robert Dougal Watt. It was published for the first time as an exclusive report by JUST Response on September 16 2002. )
The well known Dutchman and EU whistleblower Paul van Buitenen has announced his candidature for the European elections. (EUobserver.com 21.02.2004)
The Commission appointed by President Jacques Chirac to examine his immunity from prosecution has concluded that be can never be prosecuted while in office. The decision means he cannot be questioned about the many accusations of embezzlement and abuse of public funds against him since becoming president in 1995. The Commission's conclusion was greeted with deep scepticism in France. Since 1998 three separate inquiries have demanded that M Chirac respond to allegations that while mayor of Paris he used public money to pay for private holidays, that he took bribes from builders and created numerous false jobs to buy political support. The current mayor, Bertrand Delanon, is investigating M and Mme Chirac, who refuse to provided information, over embezzlement charges. (Daily Telegraph 12 12 02)
A FORMER IRISH television journalist with the gift of the gab has some explaining to do when he sits down in Copenhagen with the leaders of the European Union. The unfortunate Pat Cox, a reforming liberal whose august post is the pride of Ireland, will be hauled over the coals because the European Parliament continues to shower its members with millions of pounds of taxpayers cash every year. The hope of imminent reform has now been shot down by a German-led offensive that keeps the Strasbourg gravy train firmly on track. One Eurosceptic British member calculates that, exploited to the hilt and allowing for taxes, an MEP's package equates to a UK income of £250,000 a year. "Everyone is on the take, because it's perfectly legal," he says. The tale is not really about fraud because you do not have to cheat. For example, MEPs are reimbursed the cost of a weekly first or business class return air fare from their constituencies to Brussels and Strasbourg, whatever the actual ticket cost. An extra 20 per cent is added for "extras". Daniel Hannan, a Conservative MEP, says: "If you have an imaginative travel agent and you are prepared to do back-to-back tickets staying over a Saturday night, you could easily make £600 a week from the UK. In a sense you have no choice but to do it. And if you admit to giving it away, then the parliament will come after you. This is the really corrupting effect." He is referring to the only case in which money-minders in Brussels have seriously pursued an MEP for abuse. Nigel Farage, one of two members from the UK Independence Party (UKIP), was asked last year to return 10,500 after he handed over unspent travel money to anti-EU causes, including a London butcher who defied the ban on selling beef on the bone. "They said I was defrauding European taxpayers, which I thought was delightfully upside down," a gleeful Farage says. He explains that, with Ryanair flying from Stansted to Strasbourg, "they are giving me £700 for a trip that's costing me £40". Travel remains the chief fount of easy money, but there are plenty of others. The flat rate £160 daily allowance for time spent in Brussels or Strasbourg is notorious. Lucrative earnings can also be banked from the office and staff allowances, MEPs say. Members receive a flat £2,250 a month for office expenses and £7,650 a month to pay staff. Contracts must be shown to claim the staff allowance, but the requirements are minimal. Many MEPs also employ family members and argue that there is nothing wrong with the practice. Like all matters touching this unloved assembly, the picture is not black and white. For Germany, France and much of the southern continent the quarrel has gone unnoticed because the gravy train is simply not news. While Herr Rothley worries about dignity, the endless postponement of reform is now seen by many as hugely damaging to the whole function of the pan-European legislature. In Britain, the damage runs deep. (The Times December 13, 2002)
The European Court of Auditors in Luxembourg has refused to comment on whether Dougal Watt has been suspended today. The official who blew the whistle in April on allegations of corruption and mismanagement at the European Court of Auditors is reported to have been suspended today, Monday. Dougal Watt told the EUobserver that he first learned of his imminent suspension on Friday, during a marathon 3 ½ hour interview with the Court's Secretary General, Michel Herve and the directors of the Court's legal and translation services. However, the Court has refused to confirm whether or not the suspension has gone ahead. Mr Watt believes he has been suspended for breaching staff regulations on confidentiality. In April this year, he complained formally to the European Ombudsman, MEPs and court staff of "systematic corruption and abuse in the European court of auditors." He was subsequently supported by 205 of his colleagues 40% of the court's staff in a secret ballot. The auditor then fled to Scotland where he was diagnosed as suffering from an anxiety disorder. Mr Watt told the Glasgow Herald that he feared for his life after claiming to have exposed mafia-related corruption at the heart of the European Institutions. Brussels-based website, The Sprout, has revealed that in a subsequent lengthy letter to the Court's Secretary General in July, Mr Watt sought to expose Masonic links to the mysterious circumstances surrounding the death of an Italian Commission official, Antonio Quatraro, in 1993. Dr Quatraro was under investigation for alleged fraud and bribery in the tobacco sector when he fell to his death from a Brussels office block. The case was subsequently closed and Mr Watt has questioned why his superiors were never investigated. The Sprout has also revealed that Mr Watt is prepared to speak to OLAF for the first time. He claimed that the Court does not want to admit there is any substance to his allegations by pursuing them further. "This is something very grave that they don't want to look at because it doesn't suit them," he said. He added that the Secretary General had poured scorn on his belief that he would be safer from the mafia in Scotland than in Luxembourg. Mr Watt has not yet received an official response to his July letter from either the court's hierarchy or the chairman of the European Parliament's Budgetary Control Committee, Diemut Theato. (EUobserver.com 09.12.2002 )
The European Court of Auditors has today, in the European Parliament’s Budgetary Control Committee, delivered its verdict on the management of the European Union’s accounts for 2001. And again – like every year since the first Statement of Assurance (DAS) was introduced for the financial year 1994 – the auditors repeated their reservations in respect of the reliability of the accounts. (EUobserver.com 6/11/02)
Denounced by EU spokespeople and publicly lambasted by Commissioners Kinnock and Schreyer, the recommendations for improvement of the Commission's accounting system made last spring by Marta Andreasen - former chief accountant to the European Commission - have been quietly incorporated into Budget Commissioner Schreyer's own recommendations on reform. (EUobserver.com 18.10.2002)
Marta Andreasen, the European Commission's former chief accountant, who publicly compared the EU's accounting system to those of Enron, has been suspended. She has vowed to continue her investigations into alleged accounting irregularities: "I have not gone through all of this to give up." Marta Andreasen, the European Commission's former chief accountant, who publicly compared the EU's accounting system to those of Enron, has been suspended. Ms Andreasen, a Spaniard, has been relieved of all her duties pending disciplinary proceedings, but remains on full pay, reports the Independent. She claims to have learnt of her suspension only after she found she could not get into the Commission computer system on Wednesday. "This morning I came into the office and could not access the system. I thought there was something wrong, but one hour later they came with a letter signed by the personnel and administration director," she told the Independent. (EUobserver.com 30/8/02)
The famous whistleblower, Paul van Buitenen, is quitting the EU Commission and will start a new career as financial controller with the Police in Breda, Holland from mid September, reports the Dutch paper NRC Handelsblad. Mr van Buitenen became known all over Europe, when, as assistant-auditor within the Commission, he decided to co-operate with the European Parliament in investigating the Commission’s poor management of the fight against internal irregularities and fraud. The investigations led directly to the fall of the Santer Commission, 15 March 1999. Mr van Buitenen later had his salary halved and was moved to a very low position inside the Commission. In August last year, he handed in another report of 234 cases to OLAF, the European Anti-Fraud Office, which is still under investigation. Mr van Buitenen is Dutch and Breda is the hometown of his wife. Mr van Buitenen has been knighted by the Dutch Queen and also was rewarded the Frode Jakobsen prize of the Danish June Movement for his braveness and courage. (EUobserver.com 26/8/02)
Most cases of fraud are never detected: Olaf, the fraud-busting body set up by Mr Kinnock in 1999, has so far successfully prosecuted only a handful of cases. One reason is that those dispensing EU cash on the ground have, until now, had little incentive to check it was being used properly. Responsibility was in the hands of a financial control directorate in Brussels, which was supposed to oversee every single one of the 620,000 annual payments. "It just couldn't be done," admits one Commission insider. "They would do a risk assessment and check perhaps one payment in 100 - but that was limited to things like whether the form was correctly completed." The other fundamental problem was the Sincom 2 accounting system used in Brussels, a system so flawed, said Ms Andreasen, that key data could be changed without leaving any audit trail or electronic fingerprints. "I didn't have a clue what I was signing," said Ms Andreasen, who refused to approve the EU's 2001 accounts and was moved from her post shortly afterwards. "The system was open to fraud but there was no way I could tell whether it had been committed or not." Sincom 2 was introduced in 1999 and it has never worked properly. "In its conceptions of the Sincom 2 system the Commission chose not to include some basic accounting functions which could have provided the basis for efficient control procedures," said the court of auditors in its report on the 1999 accounts. Three years later a preliminary paper from the court concluded nothing much had changed. The paper, written in February 2002, said the system had "obvious risks with its reliability" that stemmed in particular from its "lack of security". (Financial Times 3/8/02)
A whistleblower who exposed lax financial controls at the European Commission today said former Labour leader Neil Kinnock tried to silence her. Marta Andreasen spoke out after a leaked report by internal auditors revealed the €63 billion a year European budget is wide open to fraud and abuse. She was sidelined on full pay from her job as the Commission's chief accountant in May. She faces disciplinary proceedings. Today she claimed she had been followed by unknown men, had her emails hacked into, and Mr Kinnock, Commission vice-president, tried to stop her giving evidence to Euro-MPs. Tory spokesman David Davis said "If what she says is true, the Government ought to recall Mr Kinnock and talk to him". The auditors' report, leaked to the Financial Times, says EU accounts suffer "lack of security" and "obvious risks as regards reliability" while "failures abound and are a waste of public money. It is impossible to put a figure on the amount involved". The paper was written by Colin Maynard, a director of the EU Court of Auditors. Commission officials said it may never be published because it "contained inaccuracies and the tone of the language was inappropriate". Ms Andreasen said: "I was asked to contradict regulations by signing off accounts despite knowing them to be untrue. I was threatened with dismissal if I failed to sign. There was a cover-up". The Commission said Ms Andreasen was moved after her accusations against colleagues generated "extreme ill-feeling" and a "total breakdown in relationships". (London Evening Standard 1/8/02) The system was a major candidate for change and reform after the crisis over EC fraud and corruption of three years ago which brought about the (largely symbolic and farcically brief) resignation of the European Commissioners. The clean-up programme instituted after that scandal was placed in the hands of the Commission's vice-president, Neil Kinnock. He was charged not only with transforming the EC's administration practices but with safeguarding the interests of whistle-blowers such as Mrs Andreasen. As the leaked paper testifies, little has been done to make effective improvements in the accounting system. Judging by the treatment of Mrs Andreasen, who was dismissed from her post in May, little has been accomplished either in the way of protecting those who attack EC weaknesses. So eager, in fact, was Mr Kinnock to prevent her testimony from gaining public exposure that he attempted to prevent her from giving evidence to the EP Budgetary Control Commission when it reconvenes in August. He has now launched disciplinary proceedings against her. (Daily Telegraph 02/08/2002)
The auditors reckon that fraud and incompetence cost the EU about £4 billion a year. this shows what jolly useful members we are, as the UK net contribution is between £4 and £5 billion annually, so we just about cover the fraud bill, with a bit left over to give to the Irish, who are anyway richer than we are. (The Oldie 28 Mar 2002)
The European Union anti-fraud office OLAF launched on Wednesday an investigation into allegations of serious wrong doing within the Court of Auditors. An official of the Court accused the institution of nepotism, structural weaknesses and accuses one senior official of sexual harassment in a letter sent to members of the European Parliament and to the European Ombudsman. The president of the Court of Auditors, Mr Juan Manuel Fabra Vallés, reassured on Wednesday the members of the European Parliament Committee on Budgetary Control that allegations formulated in the letter of Mr Watt were currently being considered by the Court. (EUobserver.com 24/5/02)
The leading rapporteur on anti-fraud in the European Parliament Herbert Bösch will present before the summer a report on what the Prodi Commission has done so far to combat fraud. Mr Bösch told EUobserver.com on Monday that the new report compiled by Dutch whistle blower Paul van Buitenen sheds light on deficiencies of the work done by both the Commission and the EU anti-fraud office OLAF to combat fraud. "It is more dangerous to cross the street in Europe than to be accused of misusing the taxpayers’ money" Mr Bösch commented, stressing that many of the wrongdoing cases were simply buried with no consequences for the alleged responsible. The Austrian MEP believes Mr van Buitenen is currently being treated unfairly by the European Commission. "I have doubts on how serious Mr Prodi was about zero tolerance on fraud when I see how Mr van Buitenen is treated now. In my eyes, he should not be in a small office in Luxembourg, but be in the centre again, in Brussels," he commented. Mr Bösch confirmed that Paul van Buitenen applied for a number of posts with the European Commission in Brussels and his application was constantly turned down. "I am not sure this kind of treatment is supporting the pledges Mr Prodi made when he took office: they do not fit with what happened subsequently with Mr van Buitenen," he said. Mr Bösch warned the working document he will be drafting will address highly political issues, as the report compiled by Mr van Buitenen also contains allegations against present commissioners. He also deplored that the culture in Brussels was more to cover wrongdoing than unveil problems. (EUobserver.com 09.04.2002)
THE European Commission is investigating the ex-environment director-general Jim Currie over a possible conflict of interests, after he accepted a directorship with British Nuclear Fuels (BNFL) within four months of leaving his job in Brussels. Margot Wallström, the environment commissioner, said a letter had been sent to Currie asking him to "clarify his situation" after he took up the 32,000 euro non-executive directorship on 1 March. Barely concealing her ire, the commissioner told MEPs in Strasbourg how she had only learned of Currie's new job through the media. She said she felt it necessary to remind him of his obligations under the staff regulations, which state that officials must exercise integrity and discretion when accepting new jobs. Wallström's spokesman Pia Ahrenkilde said yesterday that the commissioner was "worried there might be a conflict of interests". Currie's move is a major embarrassment to the Commission and raises awkward questions about its contacts with companies such as BNFL, as well as Currie's future role in the firm. Wallström's environment department began investigating levels of radioactive discharges from the BNFL-owned Sellafield plant on Britain's north-west coast almost two years before the Scottish director-general's departure last October. Currie's main role at BNFL would be "to give advice to the board", a spokesman for the company said. "There's no conflict of interests - the appointment has been made within all the appropriate rules." But Eric Mamer, spokesman for Staff Commissioner Neil Kinnock, said Currie's failure to report his move to BNFL may breach EU rules on confidentiality and conflicts of interest. "We would have expected Currie to make contact with us before taking this kind of job," he said. "But he didn't." (14 March 2002 European Voice)
Some 600 elected representatives in France are under judicial investigation. (BBC R4 French Transformations 19/3/02)
Four investigations have been opened by the EU anti-fraud office OLAF after Paul van Buitenen, the civil servant who contributed to the fall of the Santer Commission in 1999 over scandals of fraud and corruption, has compiled a new document presenting irregularities within the European Commission. (EUobserver.com 4/3/02)
A leading whistleblower has threatened a showdown by the weekend unless action is taken to end fraud in Brussels, bringing the European Commission on the verge of another corruption scandal only a few years after it last was embroiled. Paul van Buitenen, the Dutch official who forced the mass resignation of the commission led by Jacques Santer three years ago, told European Parliament members that he would speak out unless Neil Kinnock, the commissioner in charge of administrative reform, responded seriously to a 235-page dossier of corruption allegations he submitted last August, reports the Daily Telegraph. The dossier, backed by 5,000 pages of documents, is becoming a test of whether anything has changed in Brussels since the events of 1999. Mr Kinnock has promised radical reforms of the Commission's management and control system and a new anti-fraud office, Olaf, was set up. The Prodi Commission took office in 1999 over pledges to introduce sound management and control of the 20,000 strong administration in Brussels. But allegations of corruption and nepotism practices threaten again the Commission. The European Parliament's anti-fraud rapporteur, the German MEP Gabriel Stauner, says that the climate was already reverting back to the bad old days. She said: "I am getting really angry. The commission has lied to me about this case and I have the strong impression that they're trying to hide everything again," according to the Daily Telegraph. Van Buitenen points to misuse of vocational training funds, of Leonardo program, as well as fraud in construction contracts at future EU buildings in Luxembourg. According to Der Spiegel, Van Buitenen claims two close collaborators of Commission's president Romano Prodi, his spokesman Jonathan Faull and the Secretary General of the Commission David O'Sullivan, former head of cabinet to Prodi, are accused of turning a blind eye to corruption in the running of a key €600m EU programme, the Leonardo education programme. Mr van Buitenen, a mid-ranking official in Luxembourg, who risked being sacked when he first unveiled documents incriminating the Santer Commission in 1999, is also disappointed that civil servants accused of mismanagement have only been rotated to new jobs, without loosing pay or positions. (Euobserver.com 27/2/02) Other claims said to have been levelled by the Dutchman include: Commission officials wangled jobs for their former lovers with firms dependent on the goodwill of Brussels; A top Eurocrat allowed a businesswoman to frame the terms of a tender that was then won by her own company; The commission's statistics office, Eurostat, is riddled with fraudulent practices including cronyism, the manipulation of tender offers and the rigging of travel expenses; Up to 20 of the EU's nuclear inspectors, who lived close to the plants they monitored, systematically cheated European taxpayers by claiming the cost of travel to and from Luxembourg where Euratom - the EU's nuclear agency - is based. (February 28, 2002 The Guardian)
THE EU Commission has ordered an inquiry into Tanaiste Mary Harney's use of a Government plane to open a friend's off-licence. The Progressive Democrats leader flew to Sligo last month in an Air Corps fisheries aircraft at public expense to launch the Next Door store owned by a barrister friend in Manorhamilton, Co Leitrim. It emerged last night that Taoiseach Bertie Ahern had personally sanctioned the controversial use of the CASA plane, which is normally used for enforcing the country's fishing rules. The Opposition has accused both the Taoiseach and the Tanaiste of abuse of power. Fine Gael and Labour have pledged to raise the matter in the Dail when it returns. However, the Irish Independent has learned that the Government will face an even more stringent examination of Ms Harney's use of the plane from the EU Commission. The Commission co-funded the purchase of the two CASA fisheries aircraft in 1994 and footed half of the #38m (Euro48.25) bill, but attached strict conditions to their financial assistance. One of those conditions was that the airplanes had to be used 90pc of the time for fisheries surveillance purposes. A spokesperson for the European Fisheries Commissioner, Franz Fischler, confirmed last night that they were launching a detailed investigation into the Government's use of the aircraft. If Mary Harney and her Cabinet colleagues are found to have breached the terms agreed with Brussels, millions of Euros could be reclaimed by the Commission. "We must look into it to see if they respected this 10pc limit. We are going to look into this record," the Commission spokesperson said. (Irish Independent January 18th 02)
The European Union still has weak control over the EU money spent for agriculture and regional development, the European Court of Auditors said, pointing out that the EU is not able to account for several millions of Euros spent in 2000. In its annual report on how the EU 90's billion Euro budget was executed, the court indicated that little progress was achieved in 2000 in reducing the amount of money not accounted for in agriculture and structural funds (which together account for two third of the EU spending), and the progress has been slow for re-organising the Union's anti-fraud work. 4,5 billion euro might be lost The report notes "weakness in the procedures for control of agricultural and structural expenditure." The court also finds "an unacceptable incidence of errors," as it did in the report on 1999. The report of the Court of Auditors, which is to be presented on Tuesday in the European Parliament by the head of the Court, Jan Karlsson, does not give any figures of EU money lost in 2000, but European officials on Monday indicated the amount is 5 per cent. (EUobserver.com 13.11.2001) The Court has attacked the ECB for the way in which it selected the advertising agency Publicis to promote the euro in the run-up to the physical introduction of notes and coins at the end of the year. "The content and the cost of the advertising campaign was not clearly defined," says the Court’s report, "and the choice of the contractor was not made on any objective basis." Publicis was selected in November 1999 and the campaign will cost some 30 million euros. The report also criticised the fact that the bank has not made use of its budget for certain big projects, such as the construction of an emergency site for use in case the Frankfurt tower is damaged by a catastrophe. [Le Monde, 10th November 2001]
The French ambassador to Bulgaria has been recalled to Paris for questioning in relation to a scandal involving the sale of visas. It has long been suspected that Western embassies in Eastern European capitals are involved in a tidy little trade in visas for the Schengen area. Now, four people have now been placed under police investigation for "assisting people to come to France under irregular conditions" and for "complicity in procuring prostitutes." This last charge relates to the fact that the visas in question have been found in the posession of prostitutes on the streets of … wait for it … Strasbourg. The affair began in 1999 when police in Strasbourg - the seat of the European Parliament, the Council of Europe and the European Court of Human Rights - began to pick up prostitutes who were in possession of business visas delivered by the French embassy at Sofia. They had been issued ostensibly so that the girls could come as trainees to work in French companies. In reality, though, the companies had never invited them. By the end of 2000, 60,000 visas had been issued in this way by the French embassy in Sofia, against 30,000 the previous year. Pending requests stood at 85,000: one in a hundred Bulgarians was therefore supposedly applying to go to France. In reality, of course, not all the applicants were Bulgarians. Meanwhile, the Belgian police had also found girls with these same visas working the streets of Brussels. The Bulgarian press then started to report that an official in the French embassy was giving visas to his mistress, who worked in the visa department, and that she then sold them on for between £100 and £300. When an investigating magistrate finally went to the French embassy in Sofia, he found that "tens of thousands" of visas had been delivered fraudulently. The suspicion is therefore of complicity in a Mafia-run prostitution network. [Sylvia Zappi, Le Monde, 25 August 2001] ( The European Foundation, 5/9/01) http://www.europeanfoundation.org
Italy's chamber of deputies has approved legislation to decriminalise accounting fraud, a move which would absolve prime minister Silvio Berlusconi in two cases and one enquiry against him and his Fininvest media empire. The time to file a complaint under the new law would be halved to 71/2 years. In addition, the Senate upper house gave preliminary approval to guidelines for judicial co-operation between Switzerland and Italy which would impede the exchange of information including that sought by magistrates probing Mr Berlusconi's business. (Financial Times 6/8/01)
Revelations that Jacques Chirac the French President paid £240,000 in cash for himself and his family and friends to make private trips to exotic destinations have sparked furious debate in France about one of the Republic's best kept secrets, - its so-called "special fund". Investigating magistrates have found that between 1992 and 1995, when the president was mayor of Paris, suitcases of money were carried from the town hall to travel agents. The judges suspect the money came from illegal commissions collected from construction companies in exchange for multi-million franc contracts. There is also a £40m unaudited cash fund the French state allocates itself each year for "extraordinary expenses". It is not clear how M Chirac had access to the fund after he was Prime Minister and before he was elected president. (Guardian 30/6/01)
Two years after the entire European Commission resigned under a cloud of corruption and nepotism, it is still struggling to stamp out fraud and irregularities, a report by the UK's National Audit Office (NAO) has concluded. The NAO - a parliamentary watchdog whose role is to keep tabs on taxpayers' money - found "considerable weaknesses in the management and control of Community funds by the Commission and member states" in its review of the EU's spending in 1999. The NAO found problems including unreliable accounting and high levels of fraud. The report praises Mr Kinnock's attempts to introduce reform, but expresses disappointment at the slow pace of progress. For example, although a convention aimed at protecting the EU's financial interests has been agreed, until all 15 member states ratify it the protocols cannot come into force. Anti-fraud activities have also been held up by delays in staffing the European Anti-Fraud Office. Most of the irregularities highlighted in the report involve the Common Agricultural Policy, which gives out subsidies to farmers and Structural Funds, which aim to even out differences between rich and poor regions in the EU. (BBC NEWS 24 BULLETIN Friday, 27 April, 2001)
A British academic Andrew Nickson, an expert on Paraguay, took a job on an EU multi-million pound project in Paraguay run by an EU-appointed Spanish private agency. When he discovered "Jobs for the boys" in Paraguay were being generated for people quite unqualified to do them, friends of politicians, with Brussels turning blind eyes, he blew the whistle and was promptly fired. (BBC R 4 Correspondent programme 8/4/01)
A fraud inquiry is under way into an air service run for the European Community Humanitarian Office (Echo) in Africa. On one occasion a 220-seat Boeing 707 was hired for £166,000 to carry just 24 people. A report has also been commissioned into claims that EU money intended for the Red Cross in Yugoslavia may have been diverted to the Mafia. (Sunday Times 8/4/01)
A report by Freddy Blak, a Danish socialist MEP who led the assembly's annual scrutiny process, is backed by other documents seen by The Sunday Times and reveals examples of alleged waste, mismanagement and fraud. More than £1.5m was apparently spent in 1999 on tackling termites, building a garden wall and repairing the kitchen at the EU's offices in Washington - more than four times the cost of buying the building. In the meantime, its staff worked out of rooms at the city's Four Seasons hotel hired at £12,000 a month. (Sunday Times 8/4/01)
The commissars in Brussels are being haunted by an old corruption scandal and the resurfacing of the affair is making the European Commission very nervous. They concern the Spanish commissar for energy and transport, Loyola de Palacio and the French commissar for external trade, Pascal Lamy – Jacques Delors’ formidable former directeur de cabinet. In fact, on Tuesday evening and Wednesday morning, the budgetary control committee of the European Parliament wanted to question no fewer than four commissars. The affair concerns the export to Russia of butter by the French company Fléchard at the beginning of the 1990s. Because the company hid subsidies, it should have paid a fine of about £10 million. This fine was reduced, however, to £2 million following an intervention by the European Commission – at the very time when Pascal Lamy was Delors’ main henchman. The affair has now be re-opened because Fléchard is now involved in another affair: the allegation is that it has again been covering up subsidies. The Spanish commissar, meanwhile, is the object of allegations that when she was Agriculture Minister in Spain in 1997 and 1998, flax growers in Spain cheated the European Commission out of millions in subsidies. Her political responsibility for this is by no means proven, however, although a recent report on the matter does not entirely exonerate her either. [Die Welt, 21st March 2001]
JACQUES ATTALI, a close adviser to the late President Francois Mitterrand, has been placed under formal investigation in connection with illegal arms dealing in Africa. The case involves the illegal sale in 1993 of £350 million worth of arms to Angola. Judges suspect that the man behind the deal, Pierre Falcone, paid large sums to high-profile political figures to smooth its way. Mitterrand's son, Jean-Christophe, who was African affairs adviser, is also implicated in the scandal and has spent several weeks in custody. M Attali was special adviser to Mitterrand for almost a decade until he became head of the European Bank of Reconstruction and Development in 1991. He was forced out of that post two years later after an outcry over the bank's lavish expenditure under his stewardship. M Attali's lawyers disclosed that he was taken into custody on Wednesday and interviewed for 48 hours before being released on £100,000 bail. He is being investigated for "fraud and influence trafficking". (Telegraph 10/3/01)
ONE of the most persistent critics of European Commission waste and fraud says she has received a menacing telephone call telling her that if she did not "back off" physical harm would come to her, her 10-year-old daughter and her ageing father. Gabriele Stauner, a Euro-MP who sits on the budgetary control committee, said she received a late-night call on her mobile phone at her Strasbourg hotel. Ms Stauner, a lawyer from Bavaria, admitted that she was shaken by the anonymous, German-speaking voice. Police investigations were inconclusive Ms Stauner has been undaunted in her efforts to investigate remaining budgetary abuses by the commission, a hangover from the Santer commission that resigned two years ago. The Budget Commissioner, Michaela Schreyer, takes the view . that the issues are bygones, but Ms Stunner and other MEPs consider that there are still too many accounting errors and, just as bad, an unchanged bureaucratic culture. Gabriele Stauner is among 22 MEPs from nine countries pursuing a class action in the European Court of Justice against the commission president, Romano Prodi, and the parliament's president, Nicole Fontaine, for an allegedly illegal agreement last July restricting the amount of information the commission is obliged to give MEPs. (Daily Telegraph 3/3/01)
A scandal involving the alleged embezzlement of European Union funds by one of the ruling parties in Catalonia is threatening to unravel the coalition that has governed the region for 20 years. Late last year, the EU blocked more than Euros 60m (Dollars 57m) of social funds earmarked for Catalonia, an autonomous regional government within Spain, pending an investigation into the whereabouts of grants earmarked for educational centres for the unemployed. At the same time, in Barcelona an investigating magistrate has been trying to track down the destination of these funds and has brought charges of forgery, conspiracy to defraud the EU, and financial irregularities against an Andorran businessman who ran several grant-assisted retraining centres in Catalonia. The magistrate alleges that the businessman, Mr Fidel Pallerols, inflated the enrolment lists at his education centres to qualify for bigger EU grants. The police have also uncovered letters, bank accounts and videos allegedly showing that several members of the Unio Democratica de Catalunya (UDC), the junior partner in the Catalan government, were on his payroll. In addition a registry of educational centres in receipt of EU grants shows that no fewer than 102 were owned by Unio party members or their relatives. Mr Pallerols denies any wrongdoing. (Financial Times; Jan 31, 2001)
THE past is catching up with three European commissioners, in a way that may take the gloss off the reformist image of Romano Prodi's administration. Viviane Reding, in charge of education and sport, is under investigation in her native Luxembourg for possible tax avoidance after allegedly declaring a suspiciously low price in property transaction, cutting a tax bill by £20,000. Pascal Lamy, the French trade commissioner, is being asked by the European Parliament if he had a role in slashing a fine on the French firm Flechard, from £10 million to £2 million. The firm was implicated in the fraudulent sale of subsidised butter in Poland in the early Nineties, when Mr Lamy was chief of staff to Jacques Delors. The minutes of a key meeting have disappeared. The European Parliament is threatening to withold discharge of the European Union budget until it gets answers. Loyola de Palacio, the transport and energy commissioner, is under attack for tolerating the abuse of EU flax subsidies when she was Spanish agriculture minister in the late Nineties. At the time, she dismissed criticism as "an electoral ploy" by the opposition socialists. Now the Spanish government admits that there was "generalised fraud" over flax and that much of Spain's flax production was fictitious. (Daily Telegraph 24/2/01)
"The (MEP's expense allowance) rate, I later discovered, is worked out so that even if you travel business class you make a tidy profit. If you employ an imaginative travel agent you can trouser hundreds of pounds a week - thousands if you come from one of the more peripheral countries. The system puts honourable MEPs - they do exist - in rather a pickle. The trouble is, you cannot just claim for what you spend on your ticket: you either take the standard rate, or nothing at all. You might think that the obvious thing would be to give any surplus away to charity, perhaps, or to your local party. Think again. Two MEPs from the UK Independence Party (UKIP) are facing disciplinary action for doing exactly that. Nigel Farage and Jeffrey Titford promised in their manifesto to donate any excess expenses to "victims of the EU". At their last annual meeting they published accounts showing that they had contributed £11,500 to shopkeepers defying the metrication directive. Now they are being ordered to repay the entire sum. I cannot help wondering whether all this would be happening if the two MEPs concerned were federalists. During the last parliament, for example, a number of MEPs were "randomly" selected for audit. The procedure somehow picked six out of the then 18 Tories, but only one of the 62 Labour members - a proportion that has less than a one in a million chance of happening. Brussels operates as much by unwritten rules as by written ones. If, for example, two organisations, one sceptic and the other federalist, apply to the commission for funds, everyone knows which one will succeed. There is no explanation: it just happens."(Daily Telegraph 21/1/01 Daniel Hannan is a Conservative MEP for South-East England)
THE European Commission wasted up to £4 billion of taxpayers' money during 1999, according to a damning annual report by independent auditors. Their verdict is acutely embarrassing for Romano Prodi, the commission president, who had pledged to reform the institution after the fall of his predecessor, Jacques Santer, in March last year. Mr Prodi has since proclaimed a "new era of efficiency" in Brussels. In an indictment of commission practices, the European Court of Auditors found that lucrative farm subsidies have been consistently misallocated, aid payments are barely being monitored and millions of pounds are still being spent on misguided projects. One commission official said: "The report indicated that some of the bad old habits of the Santer days are still very much around." The auditors refused to state the exact sum squandered but one of the report's authors said that the figure was "between 5.5 and seven per cent" of the commission's £60 billion budget - an even higher level of waste than before. Subsidy payments made to farmers across the European Union were found to be error-ridden and chronically vulnerable to fraud. Farmers "overdeclared either surface area or the number of head of livestock". Other bogus payments were made for non-existent storage costs and special beef premiums were given to German farmers who provided no proof that they had slaughtered any cattle. Last year more than £35 million intended as farm subsidies in Greece was used instead to set up an insurance fund for farm workers and pay for the administrative costs of farmers' unions. A project to rebuild 6,255 houses for returning refugees in Bosnia is singled out as an expensive failure. On average each house cost between £6,000 and £7,000 to reconstruct... and almost a third of the houses are still unoccupied. The stage is set for another confrontation between the European Parliament and the commission in April, when MEPs will vote on whether to accept the 1999 accounts and write off the money lost to fraud and mismanagement. (Sunday Telegraph 19/11/00)
The European Commission's accounts for last year contained major inaccuracies and errors, according to a report by the EU's financial watchdog. It was the sixth consecutive year the EU's accounts failed to win a clean bill of health. John Wiggins, the British member of the EU court of auditors, said there was a problem in the culture at the heart of the EU's financial management. "There is a concentration on procedures, with layers of control operating to ensure that the details of the regulations are followed in full, while there has been far too little interest in outcomes," he said. He called for a widespread simplification in the Commission's bureaucracy. The accounts show errors involving roughly Euros 4bn (Dollars 3.4bn) - or 5 per cent - of the EU's Euros 87bn budget, a similar level as in previous years. The report refers to last year, the final nine months of the discredited Jacques Santer Commission. Mr Wiggins stressed the new Commission could not have had much effect on the financial disbursements already made by the time it came into office. He said reforms to the budget by the current Commission headed by Romano Prodi would probably take a couple of years to bite. In the introduction to the accounts, the auditors say that while the Commission is taking the first steps on reform, the programme has still mostly to be implemented. The auditors criticise the Commission's bureaucracy for slowing down the disbursements of emergency aid programmes so that by the time the money is ready to be paid out, the emergency has passed. (Financial Times; Nov 15, 2000)
An independent report which was drawn up by five independent experts including the secretary-general of Interpol, paints a picture of the fraud unit, Olaf, as an understaffed institution drowning in red tape. It will give comfort to would-be euro counterfeiters in the 11 nations adopting the new coins and notes from January 1 2002, and is likely to embarrass the European commission and the European central bank, both keen to be seen to be doing their utmost to guard against the risk of fraud. "The slowness of the recruitment process gives rise to concerns that the transition [to an efficient unit] will still take many months and risks compromising the efficiency of its investigations, both within EU institutions and EU members," the report warns. Although Olaf was set up on June 1 last year, the report says it was not until March of this year that its director-general, Franz-Hermann Bruener, took up his post. The report goes on to describe an organisation struggling to get its act together. Carole Brigaudeau, an expert on the euro at the pan-European retail federation Eurocommerce, pointed out that Olaf would not be taking responsibility for combating all fraud and would be backed up by member states. (The Guardian Wednesday 30th August 2000) When the new unit was announced Commissioner Neil Kinnock said there would be an "acceleration" in the drive to eliminate fraud and mismanagement - Ed
Romano Prodi ordered an enquiry into allegations that three former commissioners offered to sell access for cash rewards. The move is a result of a newspaper sting operation that allegedly lured Jacques Santer, Martin Bangemann and Padraig Flynn into tendering their services to a fictitious lobbying company. All were members of the team that was forced to resign last year in a nepotism and mismanagement scandal. None is accused of breaking any laws and no contracts were signed. Mr. Bangemann was allegedly caught on tape negotiating a fee of £150 per hour, plus travel expenses to and from his chateau in Poitiers. Mr. Flynn allegedly sought a package of rewards including a £10,000 retainer for a year plus £500 per day. (D Telegraph 28/3/00)
THE man who triggered the
collapse of Jacques Santer's Commission has warned that he could spark a
"showdown" with Romano Prodi's administration if fresh claims of
mismanagement in the EU executive are not probed with adequate vigour. Dutch
official Paul van Buitenen recently sent a dossier outlining several
suspected cases of professional wrongdoing in the European Commission to its
anti-fraud office, OLAF. "It could be that this will go to another
showdown," van Buitenen told European Voice. A spokesman for OLAF said the
documents compiled by van Buitenen are being examined seriously but that it
would be premature to say when the investigation would be completed. Widely
known as 'The Whistleblower', the Commission's former internal auditor was key
in bringing down the Santer team in 1999. After feeling that incidents of fraud
and impropriety within the Commission were not being taken seriously by his
superiors, he prepared a litany of allegations for officials of other EU
institutions. Containing serious charges of cronyism against former commissioner
Edith Cresson, the dossier's explosive revelations eventually led to all 20
members of the Santer team resigning. Van Buitenen has also strongly attacked
proposals by Internal Reform Commissioner Neil Kinnock to establish an advice
service to aid officials wishing to report suspected wrongdoing by colleagues.
In a letter published in European Voice today, the Dutchman argues that he is
opposed to the 'help-desk' idea because it is an attempt to put the "burden
of proof entirely on the shoulders of the whistleblower. "In my opinion, the
new procedure has nothing to do with protection of whistleblowers. A real
whistleblowing procedure should leave the Commission official free in his choice
of disclosure channels." But Kinnock's spokesman Eric Mamer said "the
burden of proof will ... be on the investigators. As punishment for exposing
fraud during the Santer years, van Buitenen was suspended on half pay for four
months in 1998. Since then, the Commission has spurned all his requests to
return to his original job. Stating that he is unhappy in his current role
working for the directorate-general on food safety and consumer protection, he
added that he "could be doing much more important things for the Commission
that would also match my personal capabilities and my recent experiences".
"Despite wide recognition for what I did, Mr Kinnock still addresses me
as that guy who went out on a frolic and went against staff regulations and
had to be punished. I am getting frustrated about the lack of reforms and
consider the present reforms more and more as just window-dressing (European
Voice 6 December
2001)
Officials involved in irregularities have been confirmed in their jobs
Fifteen people, including the present Mayor of Paris’ first deputy, have been put under formal police investigation for their alleged role in the "false voters" scandal. According to the allegations, the City Hall of Paris conspired to include on the electoral registers the names of fictitious voters. The other people charged include officials of the electoral process itself, who are accused of perverting the course of fair elections. The political significance of this is obviously that the Mayor of Paris at the time when it is alleged that the elections were rigged is now President of the Republic. [Le Monde, 31st May 2000]
Lack of clarity in the accounts for the European Union contributed to errors totalling an estimated £3bn, according to a National Audit Office report. And NAO chief Sir John Bourn expressed serious concern that the European Court of Auditors could not provide a positive Statement of Assurance on the legality and regularity of the transactions underlying payments. For the fifth year in succession the Court found significant weaknesses in the management of the £60bn budget. Bourn urged the Commission to put clear accounting policies in place to improve the quality of the Community's accounts and the quality of financial reporting, and approved the action member states - such as the UK - are taking to improve the management of funds. (AccountingWEB 28/4/00)
An auditor has discovered numerous irregularities within the finances of the European Parliament itself. The irregularities include things like diverting DM 500,000 (£170,000) from the interpreters' budget to the MEPs canteen, in order to keep prices down there for the parliamentarians; the disappearance of some 12,000 pieces of equipment from offices, including computers; and the overall fact that one in ten of the entries in the Parliament's accounts is faulty. Payments worth over one million marks (£300,000) are made without being signed for, even though this is naturally against all regulations. [Die Welt, 5th April 2000]
A leading CDU politician has said that he wants an enquiry into alleged secret bank accounts with which Chancellor Schröder is said to have financed his election campaign in 1998. Andreas Schmidt, the head of the CDU contingent in the committee examining the secret funds which Helmut Kohl ran in his own party, says that Schröder used "millions" from such accounts to get himself elected. He claimed that the SPD had used accountancy tricks to indulge in "massive" misrepresentation of the party’s true financial position, "thus infringing the law and the constitution". He claimed that the SPD had behaved particularly badly in hiding a substantial part of its stakes in industry. [Die Welt, 1st May 2000]
Public prosecutors in Germany have opened an investigation into Chancellor Gerhard Schröder's former close aide, Bodo Hombach, on suspicion of embezzlement. Mr Hombach, who is now the co-ordinator of the European Union Balkans Stability Pact, is suspected of having taken one hundred-and-fifty-thousand dollars from the Preussag Handel company when he was its director in the mid-90s. An audit of the firm is to be undertaken. Mr Hombach has denied all the allegations. He was credited with engineering the Social Democrats' victory in legislative elections in 1998. [BBC News Online, 16th March 2000]
A very damaging report has been issued by the rapporteur to the parliament's budgetary committee (the committee to which Paul van Buitenen made his devastating leaks last year). The rapporteur, a CSU deputy called Gabriele Stauner, has focussed especially on the so-called Echo scandal, in which funds from the EU's humanitarian budget were misused. Her report concludes that although the Commission promised "thorough-going reform", the progress made over the last six months (since it was appointed in December) has been "unsatisfactory" and that the "necessary decisiveness" had been lacking. One of the main points in the report is the call made for investigations to be re-opened into the former director of the office for humanitarian aid, Santiago Gomez Reino. Last year, this senior Spanish official was exonerated of any guilt in the Echo affair and he is due to take up a position as EU ambassador to Argentina. However, the findings of the report are very damaging for him. It claims that he was responsible for fictitious invoices and the irregular use of outside contracts. The report also points the finger at Pascal Lamy, the trade commissioner who used to be chef de cabinet to Jacques Delors. There is a scandal surrounding the export of butter from Ireland to the former Soviet Union, and Lamy is supposed to be mixed up in it. Both Lamy and Reino deny the charges. [Süddeutsche Zeitung, 17th March 2000]
The European Commissioner with responsibility for the budget has decided that no further investigations are to be conducted into the three main scandals which led to the resignation of the Santer commission in 1999. She is thereby throwing down the gauntlet to the European Parliament’s budgetary committee, which demanded in March that a special investigative committee be set up. The Parliament threatened to withhold approval for the 1998 budget if its demands were not met. One of the reasons why the Commission may be keen to cast a veil over these affairs is that one of them, the Fléchard case, concerns a man who is now a Commissioner himself. Pascal Lamy was chef de cabinet to Jacques Delors at the time when it is alleged the Commission intervened to reduce a fine imposed on a French company for cheating on subsidies. [Die Welt, 15th May 2000]
In recent years, major corruption scandals have plagued the governments or parties in Belgium, France, Germany, Italy, Spain and even the European Union itself, whose commission resigned en masse last year. This is not surprising; in many of the countries back-room politics are the norm, and the same politicians who work at the national level are then reassigned to the EU. ( http://www.stratfor.com/ 3/3/00)
MILLIONS of pounds of European aid intended for healthcare in a poor African country have been embezzled. Some of the money may have found its way into the funds of political parties in Europe. But Thierry Jean-Pierre, the French MEP and anti-corruption crusader who unearthed the Ivory Coast fraud last week, sounded blasé as he discussed it. To him, it was just the latest in a long line of political scandals. In the 1990s, when M Jean-Pierre was an investigating magistrate, he uncovered the rotten core of President Mitterrand's ruling Socialist Party. He was the first judge to pinpoint what he describes as the "systematic extortion" of funds from private business to finance the left-wing movement. In a judicial report, he said that Roger-Patrice Pelat, Mitterrand's closest friend, had been paid commission of Fr25 million (£2.3 million) after diplomatic transactions between Paris and Kim Il Sung, the late North Korean tyrant. Nor was M Jean-Pierre surprised at claims this week that the French oil group Elf-Aquitaine had paid Fr256 million (£23.6 million) to Chancellor Kohl's Christian Democratic Union on Mitterrand's orders in 1992. "There is exactly the same type of corruption in Europe now as there was in France when I was a magistrate in the early 1990s," he said. The only difference was that European fraud was bigger. The Ivory Coast scam is one example among many. About £16.5 million of European taxpayers' money was earmarked for hospitals and democratic elections in the West African country. Only a tiny proportion arrived, as M Jean-Pierre reported after a fact-finding mission to Abidjan last week. "The whole thing was covered by a system of false accounting," he said. "For example, I found that weighing scales for babies, which cost Fr300 (£275) each, had been invoiced at Fr12,900 (£1,190). (The Times 29/1/00) . The CEC claim that it was the fault of the Ivorians, saying " Whilst carrying out its responsibility for verification, the Commission uncovered the irregularities which occurred between the end of 1998 and June 1999. The EU's budgetary aid was immediately suspended and the Ivorian government has since reimbursed the funds in question. (CEC Press Release 13/4/00)
European Union anti-fraud officers and the Stockholm police are investigating the European Commission's representative office in Sweden after claims of irregularities in invoices it has paid out. The inquiry follows an interview given on Sweden's TV4 Channel when journalists produced three invoices for payments made by the office that they said referred to people who did not exist or who said they have never worked for the office. (FT 20/11/99).
A consultancy business set up by Edith Cresson, the former French Premier and EU Commissioner, received a FF3m contract in the early nineties from Elf. The consultancy was linked to Elf’s investment in the Leuna refinery in East Germany – a project exposed in recent weeks as a big source of illicit funding for Germany’s CDU party of former chancellor Helmut Kohl. The revelation added a further twist to the extensive network of contracts and deals carried out by Elf on behalf of associates of the late President Mitterand. (FT 24/2/00)
The Court rejected the EU's accounts as "incorrect or incomplete" and declined to give them " a positive statement of legality and regularity" for the fourth year running. The Court condemned the Commission for its high-spending culture. This means bureaucrats embark on ill-targeted spending sprees at the end of the year to ensure their budgets were not cut. (D Telegraph 17/11/99). The EU Court of Auditors issued its report for 1998 that suggested that about 5% of payments made out of the EU's 90 billion euro budget last year contained errors. Fraud connected with the Common Agricultural Policy totalled 20 million euros in 1998. (FT 20/11/99). The biggest problem area was research policy, last year part of the domain of Ex-commissioner Edith Cresson. Here the Court found errors and inexactitudes in almost two thirds of cases. Expenses claimed by recipients were overstated by an average of one third. (FT 15/11/99)
The European Parliament’s own auditors have issued a devastating critique of the way the institution spends its own money. The internal paper catalogues a litany of abuses including overcharging by outside contractors, fraudulent allowance claims by officials, breaches of public procurement rules and widespread pilfering of Parliament property. The financial controller said in 1998 almost one in ten documents presented to it was faulty and that it was indicative of continuing inadequacies in the control procedures applied by many officials. The report details dozens of alleged abuses of Parliament funds totaling millions of euros. In one case an official based in Luxembourg shortchanged the assembly of €30,000 in false expenses. Inaction resulted in Parliament failing to collect 18 months of rent on vacated property. The most serious mishandling of funds was the failure to complete stocktaking. It is estimated that between 1998 and 1999, 11,887 items went missing at a cost to the taxpayer of €5m. A paper by the German MEP Helmut Kuhne said that favouritism played a significant role in the granting of high-grade posts and he urges the improvement of tendering procedures to avoid allegations of a "closed shop". He also chides the Ombudsman for alleged shoddy accounting. (European Voice 30/3/00)
THE European Parliament generated the sort of farcical scenes of which it is uniquely capable yesterday after being convulsed by a fit of pique and self-importance. Its leaders were so furious that the annual report of the European Court of Auditors, the EU's financial watchdog, was leaked before yesterday's planned presentation to MEPs that they banned the court's president from giving a press conference. In addition, the MEPs voted by 171 to 120 to postpone their debate on the report for a fortnight. "We can't accept that the public should get information from leaks before the European Parliament is given it officially," Hans-Gert Pöttering, leader of the Parliament's Centre-Right and largest grouping, said. Thus a 456-page report was published with the Parliament alone being unable to comment on it. the report's contents were almost entirely ignored amid the palaver. The court withheld its approval of the Commission's accounts for the fifth year in succession because of its lax financial management. But the accounts were for 1998, the last year of Jacques Santer's Commission, which resigned in disgrace last March. (The Times November 17 1999)
TOURISM. This relates to a programme for subsidising schemes in Member countries for the promotion of Tourism and which started in 1989 with the launch in 1990 of the European Year of Tourism. The official Committee of Independent Experts was faced with 76 cases where criminal proceedings were in progress and in consequence confined the whole of its report to 3 specific matters relating to internal disciplinary measures and contracts with outside companies. The press has largely ignored the fact that the majority of allegations were never considered by the Committee at all. (Extract from Mr van Buitenen's report on fraud in the Commission. UKIP 4/4/99) www.independenceuk.org.uk
Paul van Buitenen in his book "Blowing the Whistle" puts names to more general allegations made in his original explosive denunciations. On page 62/3 he refers to auditors coming across accounts for work never done; reports never written, false invoices, invoices for phantom experts, accounts for consultancy work for which there was no contract, invoices with no proof of delivery, and "invoices for amounts that bore no relation to the work done He goes on." One example of excessive expenditure was the _annual_ payment of £40,000 sterling to the University of Exeter in England for consultancy. This was based on a daily fee of no less than £1,700 for Sir Rodney Netherby, a professor at the university, which had never been approved by the Commission. (Blowing the Whistle,