This past week the hearings of commissioners on the discharge for 2008 accounts took place at the Budgetary Control Committee meetings.
 
The discharge is the procedure by which the European Parliament approves the EU annual accounts and the implementation of the EU budget (that is, the proper use of the EU funds) by the European Commission. The decision to give, postpone or refuse discharge should be based on the annual report from the European Court of Auditors... Nothing further from reality if you stop and think that during the last 15 years these auditors have refused to clear the accounts but nevertheless the European Parliament has still discharged the Commission year after year. The only exception happened in 1998 when the Parliament decided to postpone discharge because allegations of financial wrongdoing forced the resignation of the Santer commission, after which discharge was eventually given.
 
The procedure for the hearing is that first the member of the Court of Auditors responsible for a specific area of expenditure that will be dealt with, makes a presentation on the opinion that the Court has reached. Then the floor is given to the Commissioner responsible for the said area of expenditure after which the floor is open for the members of the Parliament who want to put questions to either commissioner or member of the Court of Auditors.
 
It would too lengthy and boring to go over all the hearings but some of them are worth referring to in some detail.
 
Research is one of the areas where the Auditors have found the highest level of errors and for which their opinion has been totally adverse. Janez Potocknik from Slovenia who has until now been responsible for this area (and will in the future take over Environment) came to explain the unexplainable. Research is an area managed directly by the Commission so the strategy of blaming the member states for the errors does not work out here, but Potocknik immediately claimed that the rules were too complex and that " simpler rules lead to fewer errors" ignoring the fact that it is the Commission who lays out the rules. He tried to divert the attention by saying that more than controlling where the funds are spent we should be looking for results. Indeed I thought it would be good to see the results but first we have to see that the money is really going to those who can produce the results.... He proposed the introduction of lump sums and flat rates instead of real costs and I thought to myself that this methodology of reimbursement could go in the wrong direction in regards to the measuring of results. In any case he ended up saying that the auditors recorded an improvement and that the error rate of 8% in 2006 had been reduced to 6%...and this should be a matter of celebration.
 
Then came Benita Ferrero-Waldner from Austria who was responsible for External Relations (Relex) another area with a high level of "error" (note the new terminology being used to refer to a financial irregularity). The Auditors were scathing and although she tried to explain herself she ended up saying "I did my best" to which I responded that her best did not appear to be enough. I pointed out that a report issued by the Internal Audit service on cooperation with the United Nations had not had a follow up until three years after. I also questioned the lack of improvement of the common Relex computer system "CRIS" about which shortcomings I became aware seven years ago when I was Chief Accountant and which she tried to refer to as a recent revelation.
 
Catherine Day, Irish, the present Secretary General came to respond to general questions on administrative matters. She showed little patience with any criticism or even any suggestion on much needed reforms. Some of her responses were quite surprising and demonstrative that she was not there looking for reelection – she does not need it, she is a civil servant and was appointed internally without any real selection procedure.
 
I asked her if she was committed to implementing a new Code of Conduct for Commissioners. I went on to ask if she was aware that the European Parliament had requested a consultant to study the present code and that the conclusions revealed fundamental shortcomings such as the lack of definition of conflict of interest and the course of action to follow when there was such conflict or when there was a breach of the code. She bluntly responded that there existed a code of conduct for commissioners and there was no need to change it. I then asked about changing the staff regulations at least in what relates to whistleblowing rules, to which she also responded negatively indicating that whistleblowers were encouraged by the safe environment that the European Commission fosters and that it is this that makes people come forward and not the rules... interesting, I thought as I did not experience such "encouraging environment" when I was there. And since my time there have been no other whistleblowers... coincidence? She asserted that any changes to the staff rules or the financial regulation would be limited to what is required by the Lisbon Treaty specifically in what is related to external action. Really?
 
Next day we heard Semeta who is at present Budget and Programming Commissioner and intends to be reappointed as Taxation, Internal Audit and Anti-fraud Commissioner. I have already explained my views on such appointment in previous blogs so I will not reiterate the opinion I have of him.
 
The hearing started with the member of the Court of Auditors, Mr Bonici, announcing that the EU accounts were "fair". Expecting I would come back at this as I had done when the annual report was presented by Mr Caldeira (the president of the Court of Auditors) back in November, he asserted that "fair" was the same as "true and fair". I obviously challenged him into explaining why he did not use the "true and fair" formula then and if it was possible to declare the accounts were true and fair when at the same time they could not clear 90% of the payments out of the budget.  I then questioned Semeta about the continued failure to operate an integrated accounting system and the lack of approval by the Chief Accountant of computer systems used in areas with high level of error such as External Relations (Relex). I also queried him on his policy of "tolerable risk of error" compared to Prodi’s famous statement about "zero tolerance to fraud". As you can probably imagine by now, my questions received no response but just the usual blah, blah on the great progress made....
 
Another member asked the Auditor to confirm – in view to giving discharge – if the opinion on the 2008 accounts was positive or negative. And this was the start of the hilarious part of the meeting: Bonici stated that the important thing was the "evolution" and not if it was "negative or positive".

Funny enough at this point of the session an unexpected intervention from a substitute member of the committee, who had just joined the debate 10 minutes ago, put me under the spotlight. Mr Schmidt, a Swedish MEP, asked for the floor and instead of addressing a question or comment to the commissioner or the member of the Court of Auditors he criticised me heavily for being always "so negative" about the "achievements" of the Commission. He added that he had read my book and understood what I was trying to do and that it was good to have people who were critical but that I was always on the half empty bottle side. I had to ask for the floor to respond to him.
 
I simply said that I was glad to know that he understood what I was trying to do but that I did not understand what HE was trying to do with his constant unreserved defence of the Commission and the EU in general even when related to financial irregularities. Going back to the auditors last response I told him that I was there to defend the interest of European taxpayers and that these people just wanted to know if their money was properly spent or not and frankly were not there to monitor or hear speeches about the "evolution" of the control on spending.

Before Semeta finished, Commissioner Kallas was in. At present he is responsible for Internal Audit, Administration and Anti-Fraud, a similar portfolio than the one Semeta is intending to get, so the fact that they coincided in the same room made it quite an interesting situation. Kallas appeared pretty experienced on how to face the inquisition compared to Semeta.

I took the opportunity to reiterate to him my question to Semeta about the downgrading from Prodi’s "zero tolerance to fraud" and his own "tolerable risk of error". I also asked him about the Commission´s readiness to block funds to areas where corruption was widespread even if it did not specifically involve EU funds, such the case of the urban planning corruption in Spain about which I challenged Mr. Zapatero, the Spanish prime minister, in Strasbourg back in the middle of January. He appeared to fail to understand the questions though it was clear to me that this was his strategy to get the difficult questions out of the way.
 
It is interesting to point out that 14 of the present commissioners are bound to be reappointed on new portfolios next week in Strasbourg. What will happen if after the reappointment the European Parliament finds it cannot give discharge to the present Commission on 2008 accounts? Will the reappointed resign? Or is it the strategy that by getting the main incumbents reappointed this will inhibit the European Parliament from postponing or withholding discharge so as not to look like fools?