The European Parliament is the discharge authority. Each year it must close the financial year on the basis of the recommendation of the Council and the Statement of Assurance (DAS) provided by the Court of Auditors. By granting a discharge Parliament approves the implementation of the budget in respect of the relevant financial year.
On 23 April, the European Parliament has given a discharge to the Commission for the execution of funds in 2007, even if the Court of Auditors was not able to deliver a positive DAS. It is well known that the EU Court of Auditors for the 14 year in a row has not signed the EU accounts. According to the European Court of Auditors report the EU payments "have a too high level of error" and from €42bn paid out under cohesion policies "at least 11 per cent of the reimbursed cost claims should not have been paid out.” The European Parliament acknowledges it but considers that efforts have been made and that the rate of errors does not only depend on the Commission as member states co-manage 80% of the funds. MEPs have therefore urged the member states to cooperate more closely in checking on EU spending and recovering incorrectly spent funds.
The European Parliament has voted to postpone the grant of discharge to the Council for the 2007 budget owing to the Council’s refusal to provide information on its accounts. According to the MEPs, the Council is increasingly using part of its administrative budget for operational expenditure, chiefly in the area of foreign affairs and security policy. They believe that the "administrative expenditure of the Council ought to be scrutinized in the same way as that of the other European institutions as part of the discharge procedure.”
Unsurprisingly, the Council has rejected the European Parliament’s arguments. The Council pointed out that the Treaty gives the European Parliament the power to issue discharge solely to the Commission and not to the Council or any other institution or body. According to the Council, it was the Parliament itself that introduced the practice of drawing up a discharge report on all the institutions. The Council also stressed that “The position taken by the Parliament is not based on any factual observation relating to the quality of financial management by the Council” as the European Court of Auditors has found no irregularities concerning the Council’s 2007 budget. Moreover, the Council pointed out that its budget covers only administrative expenditure and not operational expenditure which is financed either by the Community budget or by Athena which is a mechanism made up of contributions exclusively from Member States for military operations. The Council bases its position on the 1970 ‘gentlemen’s agreement’, under which Parliament and the Council do not scrutinise the implementation of their respective budgets. Hence, the Council, respecting the gentlemen's agreement does not formally respond to European Parliament’s requests relating to the discharge. The MEPs have accused the Council of using funds designated for administrative costs for foreign policy, defence and crisis management operations. The European Parliament has noted that up to 66% of budget line 2202 was transferred from interpretation to CFSP/ESDP travels and that in 2006 this amount was EUR 12 672 984. It has therefore asked to be informed of the amount for the same budget line for 2007 and demanded “the creation of an appropriate budget line for these purposes.”
The vote on discharge for the Council’s 2007 budget will take place in six months. The Council has till November to provide the information requested otherwise the European Parliament might reject its accounts for 2007.
The European Parliament also decided to postpone the discharge for the European Police College because of lack of information. CEPOL was created by the Council in 2001 as an intergovernmental body but since 2006 is an EU agency funded from the general budget of the European Union.
The European Parliament has noted that the College did not have a proper commitment accounting system until November 2007 and it has failed to meet the deadline of June 2008 set in the 2006 discharge resolution to bring its financial management in line with the Financial Regulation. Moreover, it has not provided a report on internal audits for 2007 and provided incomplete information on the private use of public money detected by the ECA. The ECA found that appropriations were used to finance the private expenditure of CEPOL´s staff including mobile phones and furniture. According to the information which CEPOL provided at the request of the European Parliament rapporteur, the amount is around £20 000. CEPOL is under OLAF investigation.
The European Parliament has also approved its own discharge for 2007. The European Parliament noted that the voluntary pension fund for Members had an actuarial deficit of by EUR 30 917 229 as at 31 December 2007. However, the deficit has risen to €120 million by the end of 2008 following the financial instability in the markets. The European Parliament has guaranteed that all members of the voluntary supplementary pension scheme will receive their full entitlements despite the fund deficit.
The scheme had 1113 members, by spring 2008, including 478 active MEPs, 493 pensioners and 142 deferred members. The MEPs pay €1194 a month into the supplementary scheme and Parliament contributes with €2388. Hence, taxpayers already pay part of this pension which comes on top of national pension. Moreover, the members of the fund have been paying their one-third contribution from the general expenditure allowance rather from their salary.
The Bureau has recognized that the European Parliament has the legal obligation to guarantee the supplemental pension rights of current fund members. It approved measures to increase the fund’s liquidity in order to avoid the need for the Parliament to allocate extra money to the fund meaning using taxpayer’s money. The Bureau has increased the retirement age for all members from 60 to 63, scrapped the option of taking out 25% of acquired rights in a lump sum and scrapped the option of early retirement at 50 on a reduced pension. However, such decision is not free from being challenged by members of the fund since according to the Members of the European Parliament Statute “Acquired rights and future entitlements will be maintained in full.”
The European Parliament pointed out that according to the external auditor's statement “the final responsibility for the payment of benefits rests with Parliament, as provided for by Article 27 of the Statute for Members of the European Parliament (…), which provides that "acquired rights and entitlements shall be maintained in full.” Nevertheless, calls on its Legal Service to provide its views “on the question as to whether ultimate financial responsibility for the voluntary pension fund lies with the fund and its members or with Parliament, bearing clearly in mind the interests of European taxpayers.” The MEPs voted to say that “under no circumstances will Parliament in the prevailing economic situation provide extra money from the budget to cover the fund's deficit, as it did in the past, and that if it has to guarantee pension rights, Parliament should have full control over the fund and its investment policies.”
Bruno Waterfield has said that “The European Parliament vote and the declaration are entirely meaningless.” He pointed out that under the Statute for Members of the European Parliament “(…) public funds will be used, if needed, to make up the shortfall” and that such obligation may only be changed by the Council. Consequently, he stressed that “This EU law (which gives the legal basis for the existence of MEPs) guarantees a bailout – regardless of how Euro-MPs voted on Thurs.” Hence, taxpayers might have to cover the shortfall of the pension fund.
