The problem of EU corruption
by Marta Andreasen - former chief accounting officer of the European Commission
speech to an International Rally hosted by the DM, CAEF & TEAM, 9th April 2005

Thank you very much. I'm honoured to be here and be able to share my experience at the European Commission as accounting officer. You will have to excuse my Spanish version of your language.

I want to share with you my experience because I believe it is important at this time when we are about to decide on a Constitution for Europe. My experience, I believe, demonstrates the level of accountability and transparancy that you can expect from the European institutions, not limited to the European Commission, but also a couple of the others.

This Constitution, as you may be aware, is going to grant further powers to all these institutions in Brussels. And I believe that from my human point of view, the way things developed in my case, and even the way I was treated, is the evidence of how the European institutions care for the European citizens. Moreover it's the evidence of how they interpret public service.

"One wonders what aim the Commission had to reform if it took them two years to appoint a qualified accountant to manage and adminster the funds of the European Union."

I was appointed Chief Accounting Officer of the European Commission in January 2003. I was the first qualified accountant to be in the job for the history of the European Commission. I was particularly proud of exercising this function, because I believed, and I thought, that the European Commission was an institution that would be a shining example of reliable and transparant financial management.

However, very soon, one month later, I found out that far from my idealistic view of the European Commission, this was an institution that happily allowed its financial systems to be open to fraud. And it still does, three years after my suspension, it still does allow its systems to be open to fraud.

The European Commission is the executive arm and regulator of the European Union, and I emphasise these two roles which are very important, moreover in the light of the voting on the Constitution, because it is the main issue where they relate to the European citizens.

"And believe me, I know, by my experience, that shared control is equal to say no controls. It's only a method of shifting the responsibility somewhere else."

Up until now, and according to the treaties, the European Commission has had shared responsibility in the running of the programmes of the European Union, but the financial control of the funds of the European Union rested solely with the European Commission. The new Constitution is dispersing this responsibility by referring to shared control with member countries on the European funds.

And believe me, I know, by my experience, that shared control is equal to say no controls. It's only a method of shifting the responsibility somewhere else. Effectively the new Constitution is making official what has been my practice for the last 40 years.

In the last two years, the European Commission, who has been criticised for leaving its accounting system open to fraud, has made, or blamed, member countries for any fraud that may occur. As regulator, the European Commission issues a series of directives that include, amongst others, those related to accounting standards, corporate governance, transparancy and accountability. And in these specific areas I can confirm to you that it literally preaches the opposite of what it observes in its internal administration.

The annual budget of the European Union amounts to £65 billion. 85% of this budget is dedicated to agriculture, agricultural and structural funds. In this big portion of the budget the only value that the European Commission is adding is simply controlling that those funds are properly spent, and reach the right beneficiaries. In the rest of the budget, 15% is dedicated to internal policies and in this, other than the control of the funds, they obviously have regulatory capacity.

"When I joined I found that the system was open to any fraud, and that all the issues that had been raised two years before remained unresolved and even unaddressed."

I'm going to go back to history a little bit for you, to understand what was my situation when I joined the European Commission. In 1998 there were allegations of financial mismanagement and fraud and this, as you may remember, brought down the Santer Commission, who had to resign on those allegations.

A group of 'wise men' was brought in to analyse and determine if the allegations were correct or not. The wise men concluded that the allegations were correct and that there was need for a reform action plan. This reform action plan was presented at the end of 1999 and in the year 2000 it was supposed to be started to be implemented.

However, I was only, as the first qualified accountant in the job of Chief Accounting Officer, I was only hired in 2002. One wonders what aim the Commission had to reform if it took them two years to appoint a qualified accountant to manage and adminster the funds of the European Union.

When I joined I found that the system was open to any fraud, and that all the issues that had been raised two years before remained unresolved and even unaddressed. And I can tell you today that the last report from the Court of Auditors, the external auditors of the European Union, states - this last report was published in November 2004 - states that the situation continues to be the same. Moreover, they confirm that the main issues about the lack of reliability and security of the computer system on which the funds were managed remains, has not even been addressed.

To give you a specific example, though not with names and amounts, of what I had to live literally every day. I was responsible for all the payments out of the £65bn budget - and literally I faced situations where I was not able to determine if the beneficiary for whom I was signing a payment was the right beneficiary; if the purpose of the payment was the right purpose or the approved purpose; and if the amount was even correct.

This situation, for a person responsible for the funds, was, in my opinion, totally unacceptable.

The European Court of Auditors, as I stated before, has for the 10th year in a row refused to give clearance to 95% of the budget - none less than 95% of the budget. They repeat year after year the same observations on the reliability of the accounts. However, the European Court of Auditors has also joined the European Commission in trying to blame the member countries for the lack of control.

"I felt that I had the right, but also the obligation, to raise my concerns and make all authorities aware of the unreliability of the system, of the risk of fraud, that I was experiencing."

I said at the beginning my experience relates basically to the European Commission but I have been able to experience the lack of accountability of the other institutions. The wise men's report concluded, basically, and the most important statement it made was, that it was very difficult to find anybody who would take any responsibility for the European funds within the European Commission.

The administrative reform that was put in place in the year 2000 was supposed to resolve this situation and get people to assume responsibility. However, what they decided was that they would decentralise responsibility and make the different Directorate Generals responsible for their portions of the budget.

But alas, you know, to make somebody responsible you need to give these people the means - the tools - to be able to be responsible. And the most monumental tool that they needed was an accounting system - a reporting system - that would allow them to control every day what they were spending.

They today refuse to take responsibility on the budget because of the unreliability of the accounting system. So the reform gave them the responsibility, but it also gave them the excuse not to accept this responsibility.

"I was asking the Commission simply to allow me to have an independent Treasury audit; to allow me to rotate the Treasurer; and to allow me to introduce a computer system that would be integrated and would give reliable information."

In my role as Chief Accounting Officer of the European Commission, I had the highest fiduciary responsibility on the funds of the European Union. And I felt that I had the right, but also the obligation, to bring, to raise my concerns and make all authorities aware of the unreliability of the system, of the risk of fraud, that I was experiencing. I was responsible for all the payments and I was aware that it was, there was a great possibility of many of those payments being irregular, so to speak.

To give you some example also of how this elite in Brussels operates. Most of these people who manage the funds have been in their posts for years - there is no rotation. And I myself had to put up with a situation where the Treasurer had been in the job for 14 years without ever having a Treasury audit made. What I asked the Commission was not like sending man to the moon or building a cathedral. I was asking the Commission simply to allow me to have an independent Treasury audit; to allow me to rotate the Treasurer; and to allow me to introduce a computer system that would be integrated and would give reliable information.

Today, the Chief Accounting Officer who has replaced me - or who has stolen my job, I would say - openly states that he is not responsible for the accounts; he openly states that he is not responsible for the payments out of the budget. So who is then responsible for the European Union funds? What is the Accounting Officer's responsibility? What are you European citizens paying for?

[interruption]

"I have been asking the European Parliament to hear me on the severe risks of fraud and errors in the accounting system that the European Union has. And I can tell you that they have refused once and again the possibility of me explaining the situation."

Instead of getting responses to my requests I was removed and suspended. And later on I was judged by the same officials who had been in their jobs for years, managing the funds without any control in the knowledge that there was no control. And obviously I was dismissed, and guess for what; I was dismissed for disloyalty.

And I asked myself, to whom was I not loyal? I wonder who can say that I'm not a true European, so to speak. I have been called eurosceptic and anti-European when I risked my job for defending the interests of the citizens of Europe.

I can tell you also that since I had these experiences in the year 2002, I have been asking the European Parliament - the people who should represent your interests in Brussels - to hear me on the risks - on the severe risks - of fraud and errors in the accounting system that the European Union has. And I can tell you that they have refused once and again the possibility of me explaining the situation. I have reiterated my offer just one month ago and it has been refused once more.

In the middle of my story, the Eurostat case occured. For those of you who are unaware of what Eurostat is, Eurostat is the statistics office of the European Union. On the basis of the statistics that they develop, the contributions from the member countries are requested and the subsidies to the member countries - the agricultural and the structural funds - are paid back to the countries. So they really have an important role.

"The fraud consisted in the discovery of slush funds belonging to the European Commission that had been channelled to unofficial bank accounts and used for unauthorised purposes. Nobody was held responsible."

In May 2003, a French court uncovered fraud in the Eurostat office and, in this case, directors of this office were involved. The fraud consisted in the discovery of slush funds belonging to the European Commission that had been channelled to unofficial bank accounts and used for unauthorised purposes.

Nobody was held responsible. The Commissioners claimed ignorance. But they knew since one year before, because I had informed them that the system was open to this type of fraud. I had asked for the Treasury audit. There was no news in the fact that there would be unofficial bank accounts when the Treasury had not been audited for years.

My treatment, I was suspended and finally dismissed, has to be compared to the treatment that those officials - the directors in Eurostat involved in fraud and which are at present being prosecuted and investigated by a French court - to the treatment I then received. I was suspended and dismissed. They were never suspended; they still continue to work for the European Commission; they still have access to all the records; and they still have the ability to continue with the fraud that they allegedly had performed in the past.

I believe that it is important that you bear this in mind, specifically this treatment; how the European institutions treat those who involve themselves in irregularities and how they treat those who speak out about irregularities. Because the new Constitution, under Protocol 7, Article 2, continues to grant immunity from legal proceedings to all officials for their actions while they are in office, even after they have left office.

"What is the situation today? The European Commission continues to manage funds on a system that everybody knows is vulnerable to fraud."

You should know, ladies and gentlemen, that my battle has been hard, and continues to be hard. And while officials involved in irregularities are protected by the institutions, I am jobless, facing serious difficulties even to find a lawyer who is willing to confront the European Commission in my defence.

What is the situation today? The European Commission continues to manage funds on a system that everybody knows is vulnerable to fraud. It is not integrated, and lacks security. And this has been confirmed by the European Court of Auditors. Knowing that no Treasury audit has been performed in the last 14 years.

The famous anti-fraud office, OLAF, that also reports to the European Commission and therefore lacks the necessary independence to investigate fraud that may originate in Brussels, curiously can never find enough rules to prosecute those who violate the law.

In the wise men recommendations the different Directorate Generals who were supposed to take responsibility on the European Union budgets continue to avoid this responsibility, or refuse to take this responsibility, due to the irregularities in the accounting system. The European Court of Auditors continues to refuse clearance on the legality and regularity of 95% of the budget.

But what is worse than everything is that, every year, the European Parliament has to discharge the Commission on their financial responsibilities. And in the knowledge that this is the situation, and continues to be the situation, the European Parliament, which should be representing the interests of the taxpayers around Europe, grants this charge to the Commission year after year.

"On the basis of my experience, I believe we are at great risk if we vote a Constitution that increases the powers of the institutions which are proved up until now that are totally unaccountable and non-transparant."

And you will probably see in the next two or three weeks that they will, once more, grant this charge to the Commission, in the knowledge of these irregularities and even in the knowledge of what happened in the case of Eurostat.

I'm not a jurist and therefore cannot refer to the complete aspects of the new Constitution. I believe however that the fundamental task of a Constitution is that of an institutional structure, and not that of policy.

But on the basis of my experience, I believe we are at great risk if we vote a Constitution that increases the powers of the institutions which are proved up until now that are totally unaccountable and non-transparant. I believe European citizens deserve better, and if we let go of this opportunity to express our dissent, there will be no other opportunity again.

I repeat what my, what Neil Herron said - it is up to us the people. It's not on the hands of anybody else but us at this point to decide what we want in the future. I have done my best in the interests of the public and have paid a high price. And now I wish that my effort are not lost and that you're able to take advantage of this opportunity and pursue the respect of your lawmakers.

Thank you for your attention.

[Ends]

This speech was delivered to the Democracy Movement's International Rally against the EU Constitution 'Europeans for Diversity - No to the EU Constitution', held at the Conway Hall, London on the 9th April 2005.

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