Parliament under fire over handling of taxpayers’ cash

Date: 30/03/2000

By Gareth Harding

THE European Parliament's own auditors have issued a devastating critique of the way the institution spends its money.

Their confidential report is likely to be seized upon by champions of reform as evidence of the need for a shake-up in the way the assembly handles more than €1 billion of EU taxpayers' money.

The internal paper catalogues a litany of abuses of funds including overcharging by outside contractors, fraudulent allowance claims by officials, breaches of public procurement rules and widespread pilfering of Parliament property.

The assembly's financial controller says that in 1998, almost one in every ten documents presented to it was faulty and that this was "indicative of continuing inadequacies" in the control procedures applied by many officials.

The report, which was sent to members of the Parliament's budgetary control committee last week, also criticises the lack of staff with appropriate financial and accounting knowledge and a "failure" to ensure that officials responsible for managing the institution's budget are aware of the relevant rules.

The report details dozens of alleged abuses of Parliament funds totalling millions of euro.

In one case, an official claiming to be based in Luxembourg short-changed the assembly of €30,000 in false expenses. In another, officials' "inaction" resulted in the Parliament failing to collect 18 months of rent on Brussels buildings it vacated in March 1998.

But the most serious mishandling of funds concerns the assembly's stock-taking. Its records were supposed to have been updated in mid-1998, but this process has yet to be completed. The report estimates that in 1998 and 1999, 11,887 items went missing, at a cost to the taxpayer of more than €5 million.

A letter from Parliament Secretary-General Julian Priestley to budgetary control committee chairman Diemut Theato admits that the percentage of errors remains "too high", but rejects many of the accusations made in the paper.

However, a separate report by German Socialist Helmut Kuhne on the Parliament's 1998 budget adds weight to the criticisms contained in the financial controller's paper.

Kuhne's report, which was discussed by MEPs last week, reserves its harshest words for the assembly's personnel policy. A draft copy "deplores the unnecessary financial costs" and damage to the Parliament's image resulting from a spate of recent cases in which the European Court of Justice has ruled against the assembly.

It adds that the residual impression left by these actions is "that favouritism plays a significant role in the granting of high-grade posts within the administration of Parliament".

The German Socialist's paper also urges the institution to improve its tendering procedures to avoid allegations of 'closed-shop' practices, calls on Priestley to set out a long-term policy for staff recruitment based strictly on merit by the end of June, and chides the European Ombudsman for alleged shoddy accounting.

Kuhne's report will be voted on next month to allow MEPs' time to digest the internal auditors' findings. The full assembly is also expected to support delaying signing off the EU's budget for 1998 in a bid to reduce the number of errors in the way the European Commission handles taxpayers' money.

MEPs on the budgetary control committee last week overwhelmingly adopted a report by German Christian Democrat Gabriele Stauner calling for the discharge of the budget to be postponed until the Commission signs up to targets aimed at slashing the number of budgetary abuses.

The draft resolution also calls on the EU executive to reopen the investigation into the alleged misuse of funds in the Union's humanitarian office ECHO and to provide a full report on the outcome of all disciplinary proceedings in 1998 by mid-May.

The European Parliament's own auditors have issued a devastating critique of the way the institution spends its money.