Institutions at loggerheads over alleged ‘double funding’

By David Cronin

Date: 13/11/03

SHARP disagreements have emerged between two EU institutions over how the European Commission pays for civil servants from national and regional governments, which already receive salaries from their own authorities.

The alleged practice of "double funding" is highlighted in a report by the Court of Auditors on the Financial Instrument for the Environment (LIFE). The biggest area of spending under the environment heading of the Union's budget, LIFE encompasses projects ranging from waste and water management to the promotion of ecologically sound tourism.

An 18-month probe into the 1996-99 phase of LIFE, which involved payments worth €435 million, revealed that a "significant portion of the expenditure" went towards the salaries of civil servants for national authorities which were acting as "partners" with the Commission.

According to the financial watchdog, the Commission is "really reimbursing expenditure which the member states would have to bear in any case" and it should alter its rules to "exclude the possibility of financing the salaries of civil servants".

The Luxembourg-based court said that of the projects it audited, "staff expenditure represented 41% of total certified costs". Without identifying specific examples, it stated that "in certain cases, the contribution by the staff to [European] Community actions is charged at an hourly rate which is higher than the actual salary rate, with no justification given".

But a Commission source involved in LIFE's administration said it is "completely untrue" to suggest that the officials in question are paid twice over. Rather than paying the officials directly, the source explained that the Commission pays the authorities concerned for the hours which their staff have spent working on LIFE schemes.

Describing the salary issue as "delicate", the source added that the Commission is likely to make a recommendation about changing the existing system for the next phase of LIFE (the current one expires at the end of 2004).

One possibility under discussion is that external consultants could be hired to do the work currently done by civil servants.

But it is feared that such an idea may encounter resistance from some EU member states.

The Court's paper states that it has transferred four dossiers on LIFE to the EU's anti-fraud office OLAF. In at least two of these cases, suspicions were raised because "the same expenditure had been declared twice", the report states.

The Court argues that the Commission's computer accounting system, Sincom, does not contain "adequate information" to verify if beneficiaries of LIFE projects could already be receiving money from other areas of EU finance, such as its research programmes or the structural funds. Sincom became the subject of a major furore last year, when Marta Andreasen was removed from her post as the Commission's accounting officer after telling MEPs and the Court that the system was "vulnerable to fraud".

Environment Commissioner Margot Wallström admitted last week that the EU executive had discovered a case in which a LIFE project was also receiving money from the structural funds and had passed on details of this double funding instance to OLAF.

But she insisted: "LIFE is a very specific programme. It is not easy to have a lot of double-funding with the kind of controls we have."

A report by the European Court of Auditors published on 4 November 2003 on the Financial Instrument for the Environment (LIFE) has revealed that a 'significant portion of the expenditure' that went into the 1996-1999 phase of LIFE contributed to salaries of civil servants for national authorities that were acting as 'partners' with the Commission. The Court's report reveals concerns about 'double funding' whereby the European Commission is reimbursing Member States for expenditure they 'would have to bear in any case'.
The Court of Auditors has passed four dossiers on LIFE to OLAF, The European Union's anti-fraud office.