Parliament may have paid Strasbourg €60m too much

The European Parliament may have overpaid the city of Strasbourg up to €60 million to rent two office buildings in the Alsatian capital, according to a confidential external audit report.

A report into the rental of the buildings commissioned by the Parliament from the accountancy group PwC has estimated that the city of Strasbourg has failed to justify spending of up to €59 million, compared to an earlier estimate of €32m.

The city has argued that it is entitled to a share of the €10.5m rent paid by the Parliament for the two buildings because of costs it has incurred for modernisation, insuring against loss of rental income and currency conversion costs.

The news that the city of Strasbourg has received more money than it was entitled to coincides with a deadlock between the city and the Parliament over the price for buying the two sites.

The Parliament's bureau, made up of the president and 14 vice-presidents, wants to buy the buildings for a maximum of €107m and is refusing to pay the city any compensation for the loss of its share of the rental income, estimated at €4m a year.

Some MEPs also want the city to agree to give the Parliament the land on which the buildings stand for free. But Strasbourg is arguing for a higher price than €107m to allow it to receive some level of compensation, saying that it is entitled to money for ceding the land or terminating the lease it has with the ultimate owner of the properties, Dutch pension fund SCI-Erasme, which runs until 2047.

Dutch Liberal MEP Jan Mulder said: "Strasbourg wants compensation but we think this is inappropriate."

At a meeting this week with Parliament President Josep Borrell and other Parliament representatives to discuss the state of negotiations, Strasbourg Mayor Fabienne Keller proposed arbitration in order to resolve the stand-off between the two parties. Mulder said he was open to the proposal if it helped reached an agreement but said that it would not "change the material facts".

Next week German centre-right MEP Markus Ferber will present a draft report by a special working group set up to look into the issue to the Parliament's budgetary control committee. Parliament officials said that if the committee endorsed language which was strongly critical of the city's behaviour over the rent it would help to harden the assembly's stance in negotiations with the city.

The bureau has decided to delay a decision on buying the buildings until the results of the working group are finalised but a meeting has been scheduled for 4 September to consider a decision.

The Parliament is currently withholding rent from Strasbourg until the matter is resolved.

The European Parliament may have overpaid the city of Strasbourg up to €60 million to rent two office buildings in the Alsatian capital, according to a confidential external audit report.

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