New financial broom sweeps through the Union

Date: 21/12/1995

By Rory Watson

A NEW climate entered the EU in 1995.

It is now fashionable to talk publicly in serious terms about professional financial and personnel management. This is not to suggest such cardinal virtues were previously absent, but they are now being pursued in a more systematic and rigorous way.

The reasons are obvious. With an annual budget of over 80 billion ecu, the EU must convince its critics it can handle taxpayer's money wisely. Stories of wide-scale fraud, even if inaccurate, damage the Union's credibility.

Equally importantly, there is now general recognition that it is not just the EU institutions which need to tighten up their behaviour, but that member states, who handle 80&percent; of the budget, are in the front line as well.

Within the European Commission, President Jacques Santer specifically entrusted the fight against fraud and introduction of a new budgetary culture to two new Nordic members, Finn Erkki Liikanen and Swede Anita Gradin.

Liikanen, a former finance minister, has introduced internal changes to give budgetary checks a higher priority within the institution and to raise the professional status of officials carrying out such tasks. The next stage of the programme will involve closer partnership with member states in tackling fraudulent use of EU funds. As the year ends, Liikanen is aiming to apply the same management principles to the Commission's personnel policy.

Another aspect of the new financial broom is the Commission's decision to hold a policy debate in January to determine the budget priorities for the coming year. This will take account of day-to-day management and staffing needs - issues previously considered only when major, and frequently costly, policy decisions had already been taken.

EU governments were also told at the Madrid summit that they needed to step up their own anti-fraud measures and were urged to agree on an accepted definition of crimes against the EU's finances and on suitable penalties for those guilty of defrauding the Union budget.

November saw the first use of a further budgetary initiative introduced by Maastricht when the Court of Auditors issued its statement of assurance on the way the 1994 Union budget had been implemented, although it was given somewhat grudgingly and highlighted improvements which need to be made.