Fraud-busters investigate Committee of the Regions

By Simon Taylor

Date: 23/03/06

The EU's anti-fraud unit OLAF has launched an investigation into the payment of salaries to staff at the Committee of the Regions (CoR), an EU consultative body.

The inquiries follow a damning internal audit report, seen by European Voice and some members of the European Parliament's budgetary control committee, which alleges that "the code of ethics of the CoR is remarkable by its absence".

In April 2004, the CoR paid advances on some officials' monthly salaries to help them qualify for cost-of-living indexation, thereby boosting their salary for the next five years.

The indexation was being phased out from May 2004, under reforms to the EU's staff regulations. Officials had been allowed to have part of their salary paid to a country other than Belgium. No new requests for salary transfers were allowed after 1 May 2004, but for transfers put in place before 1 May the benefits continue until 1 January 2009.

According to the report, ahead of the May 2004 deadline CoR officials resident in Belgium took out investment schemes linked to housing outside Belgium.

The payments qualified for indexation, which, depending on the country where the investment was made, can increase parts of the civil servant's pay by as much as 40%.

The external auditor, the European Court of Auditors, in its annual report published last November, criticised control of these expatriate allowances, observing that in various cases "transfers were granted which were not supported by adequate evidence of the officials' right to the transfers requested" and that the number of cases was significant in the case of the CoR.

The internal audit report details what underlay the court's criticisms.

The CoR told European Voice yesterday (22 March) that after its own internal examination of an existing 123 transfers it had decided to stop 15.

CoR spokesman Dennis Abbott said that bringing forward part of the salary payments to April was "the simplest and fairest way to pay the sums officials were entitled to".

He said that the CoR's Secretary-General Gerhard Stahl had introduced "a vigorous administrative reform policy" and added: "We are confident that our administrative systems are second to none."

The CoR's finances were the subject of heated argument between MEPs on Parliament's budgetary control committee on Monday (20 March).

The committee had been scheduled to hear from two former internal auditors of the CoR in a closed door session on Tuesday (21 March) but the invitation to the internal auditors was withdrawn on Monday. Swedish Independence and Democracy MEP Nils Lundgren, who was drafting the committee's report on approving the CoR's 2004 accounts, said that the decision was "outrageous" and had been stitched up by MEPs from the three largest groups. The centre-right EPP-ED group instructed its committee members how to vote.

Dutch Green MEP Paul van Buitenen said he was disgusted and he withdrew a report he had drafted on whistleblowers. "Being a former whistleblower, how can I treat the study as if nothing has happened?" he said.

The committee voted to approve the CoR's accounts but called on the court of auditors to look at the CoR's use of "off-budget accounts".

Van Buitenen said that Stahl had lobbied MEPs in Strasbourg the week before to get the hearings with the auditors cancelled.

Abbott confirmed that Stahl had spoken to MEPs in Strasbourg on March 14 about the discharge.

Article reports that the EU's anti-fraud office, OLAF, launched an investigation into the payment of salaries to staff at the Committee of the Regions (CoR). The Committee's internal finances were also debated at the European Parliament's Budgetary Control Committee on 20 March 2006.

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