MEPs consider funding in light of MED chaos

Date: 10/07/1997

By Mark Turner

A TALE of financial mismanagement, 'irregularities' and lost money will be outlined to the European Parliament next week in a controversial report on EU funding to the Mediterranean.

The interim report by Spanish centre-right MEP Juan Manuel Fabra Vallés charts the inability of the Commission to manage a 'decentralised cooperation' programme of aid to the Mediterranean in the early 1990s, and the scheme's eventual suspension amidst allegations of financial irregularities.

On the Parliament's vote hangs not only the reputation of the Commission, but also the future of a new style of development aid which circumvents strict state-to-state links by focusing directly on those in need of funding.

The story began in 1992, when the then External Relations Commissioner Abel Matutes, acting under orders from national governments, offered decentralised cooperation to cities, universities, the media and small enterprises in North Africa.

Since the Commission did not have enough staff to manage the minutiae of the programme itself, it set up an umbrella body ARTM (Agency for Trans-Mediterranean Networks) and, underneath, four BATs (Technical Assistance Bureaux) to administer it.

These BATs were tasked with monitoring wide-ranging networks, which soon began to run out of control. Furthermore, four of the BAT managers were also administrators on the ARTM, blurring functions which should have been separate.

In October 1995, the Court of Auditors told the Commission that it suspected some severe problems with the programme's financial management.

The new External Relations Commissioner Manuel Marín immediately halted the programme, broke the Commission's contacts with the ARTM and subsidiaries, and launched an internal investigation.

In May 1996, the Court reported officially that “the administration of the MED programmes was established with insufficient analysis”, that “serious confusions of interest developed in the implementation of the MED programmes which the Commission failed to put an end to in a timely manner”, and that “at all levels of the financial management of the MED programmes there are serious shortcomings and irregularities”.

The Commission replied to these and other criticisms by pleading that there was little it could do given its lack of resources and the political priority attached to the programmes.

It accepted that “certain irregularities occurred”, but said reforms had been initiated in 1994 and more drastic measures taken later on. It has since demanded that ARTM repay around 350,000 ecu and the BATs 2.2 million ecu, including 2 million from one of the companies, Ismeri Europa, alone.

More recently, the Commission asked the Italian authorities to investigate the conduct of Ismeri Europa thoroughly for evidence of possible wrong-doing.

Aides to Marín stress that they have designed new, tighter contracts and a more visible administrative structure which would prevent a repeat of past mistakes. Internal investigations into the conduct of its own officials and the wider implications for other Commission programmes have also been launched in recent weeks.

MEPs will have to decide whether they are satisfied with these measures next week, and assess whether the Commission has done enough to allow decentralised cooperation to be relaunched.

Whatever they decide, the saga is far from over. The Court of Auditors is preparing a far wider assessment of Commission aid schemes and the latter's internal investigation is continuing.