Margarida Vasconcelos: The European Parliament by granting discharge gives the illusion that EU taxpayers’ money is being properly spent

The European Parliament is the discharge authority. By granting a discharge the MEPs approve the implementation of the EU budget for a given year. Hence, they declare that a particular EU institution or agency has spent EU taxpayers’ money in line with EU rules that govern the implementation of the EU budget. The European Parliament can also refuse or postpone the discharge, if spending was not in line with these rules. It is important to note that the European Parliament grants a budget discharge on the basis of a recommendation of the Council and the Statement of Assurance (DAS) provided by the European Court of Auditors (ECA).

It is well known that the Court for the 17th year in a row has not signed the EU accounts. The Court has issued an unqualified opinion on the reliability of the 2010 EU accounts, however it has refused to sign off on how the money from the EU's 2010 budget had been spent. In fact, the European Court of Auditors has been unable, year after year, to grant a positive unqualified statement of assurance on the EU budget as a whole. The EU spending continues to be affected by “material error.” The Court has estimated the error rate for payments from the €122.2 billion 2010 EU budget at 3.7%. There has been, therefore, an error rate increase from 3.3 % in 2009 to 3.7 % in 2010. This means that €4.6bn was spent against EU rules governing the spending. Moreover, the EU monitoring and accounting system is still inadequate. The ECA concluded, “The control systems tested across the EU budget were still only partially effective in ensuring the regularity of payments”. It is important to recall that the UK as well as the Netherlands and Sweden voted against discharging the accounts for the 2010 EU budget, showing, in this way, their concerns over lack of accountability and transparency on how EU money is spent. They could not block the approval of the EU’s accounts for 2010, as they were approved by qualified majority. Consequently, the Council recommended the European Parliament to give a discharge to the Commission in respect of the implementation of the 2010 budget. The European Parliament granted on 10 May a budget discharge to the European Commission as well as to almost all the other EU institutions and agencies, and postponed the discharge for the Council of Ministers and the EU Agencies for Food Safety, Medicines and the Environment.

The ECA has been unable, for the 17th year in a row, to deliver a positive statement of assurance, nevertheless the European Parliament has given a discharge to the Commission for the execution of funds in 2010. The European Parliament acknowledges it, but notes 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 assume more responsibility for the management of EU funds. As noted by Philip Bradbourn MEP "It isn't just the amount of waste that is a disgrace; it's that things are getting worse instead of better.” Moreover, he said "Instead of deflecting blame, the commission itself must ensure proper arrangements are in place to check the effectiveness, efficiency and probity of the schemes it funds – so it keeps track of every single euro of the taxpayer billions it dishes out." In the meantime taxpayers' money is being spent in a system that does not work. The European Parliament by granting discharge gives the illusion that EU taxpayers' money is being properly spent. As Ryszard Czarnecki MEP, ECR budgetary control spokesman, said “MEPs are rightly critical of many areas of EU spending but they will never send a clear message by grumbling about the accounts and then signing them off regardless.” He stressed, “The annual budgetary discharge only serves to reinforce the view that the EU budget is marked by waste and error.” The European Parliament should have followed the European Conservatives and Reformists group that opposed granting discharge to any part of the EU budget.

Unsurprisingly, the European Parliament voted to postpone the grant of discharge to the Council for the 2010 budget. Every year the MEPs decided to postpone signing off the Council’ accounts due to the Council refusal to provide information on them. According to the MEPs 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.” However, according to the Council, the European Parliament has no power to issue discharge, as it bases its position on the 1970 ‘gentlemen’s agreement’, whereby 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 European Parliament pointed out that the ECA “criticised the financing of the Residence Palace building project because of the advance payments made by the Council totalled EUR 235 000 000”, and noted “that the amounts paid came from under-utilised budget lines” meaning 'over-budgeted'. Moreover, the MEPs noted “that in 2010 the Council increased the budget line for ‘Acquisition of immovable property’ by EUR 40 000 000”. The European Parliament also wants to know the total amount of Common Foreign and Security Policy (CFSP)/Common Security and Defence Policy (CSDP) expenditure in 2009. The vote on discharge for the Council’s 2010 budget will take place within few months. Until then, the Council should provide the information requested otherwise the European Parliament might reject its accounts for 2010.

There is an endless list of EU agencies, most of them are useless and a waste of taxpayers money. In fact, there are several issues in the way that several EU agencies manage their budgets. Monica Macovei MEP, rapporteur on the European Parliament position on granting a discharge to each agency, said "It is scandalous that at a time when governments are struggling to borrow money at high costs, these agencies do not return anything to the EU budget. It is as if they are living in a parallel world, untouched by the economic crisis". The European Parliament signed off the 2010 accounts of most of the 24 EU agencies. But, it has not endorsed the 2010 accounts of the European Food Safety Authority (EFSA) based in Parma, the European Medicines Agency (EMA) based in London and the European Environment Agency (EEA) based in Copenhagen. The MEPs decided to postpone the discharge for these agencies due to alleged conflicts of interest and irregular use of EU funds.

It is important to recall that the EU contribution to the European Food Safety Authority for 2010 amounted to EUR 72 991 000. The European Parliament pointed out that the Management Board of the Authority is composed of only 15 members, nevertheless each meeting costs around EUR 92 630, which represents EUR 6 175 per member. The MEPs described such situation as “unacceptable” and called for the Management Board meetings costs to “be reduced drastically.”

Moreover, the European Parliament noted that the Chair of the Management Board allegedly had direct links to the food industry, and failed, in 2010, to declare to be a member of the Board of Directors of the International Life Science Institute (ILSI), which is financed by firms in the food, chemical and pharmaceutical sectors. Consequently, the European Parliament asked the Authority “to consider as a conflict of interest the current or recent past participation of its Management Board, panel and working group members or staff in ILSI activities such as taskforces, scientific committees or chairs for conferences”. The European Court of Auditors is also investigating these alleged conflicts of interest at EFSA. Obviously, such conflicts of interest undermine the independence and credibility of the Authority as well as the integrity of risk assessment procedures. It is important to note that the European Food Safety Authority has asked that Diána Bánáti resign as member and Chair of the Management Board, two days before Parliament voted, when learned about her return to the ILSI. Diána Bánáti is to become the executive and scientific director at ILSI, and, according to EFSA, this position is “not compatible with her role as member and Chair of the EFSA Management Board.”

Hence, the European Parliament decided to postpone the closure of the 2010 accounts of the European Food Safety Authority. Nonetheless, it is important to note that there was a slim majority whereas 321 MEPs voted in favour of postponing discharge 306 opposed and 14 abstained.

The EU contribution to the European Medicines Agency for 2010 amounted to EUR 36 600 100. The European Parliament also postponed its decision on granting the Executive Director of the Agency discharge in respect of the implementation of the Agency's 2010 budget. The MEPs are particularly concerned about procurement and contract management procedures and the impartiality of the agency's employees and national experts. Several employees and national experts of the European Medicines Agency have allegedly close links with the pharmaceutical industry.

The European Parliament noted that the budget of the European Environment Agency for the year 2010 was EUR 50 600 000, which represents a 26 % increase comparing to 2009. There was also an increase of 2% in the EU contribution to the budget of the Agency, which was EUR 34 560 000 in 2009 and EUR 35 258 000 in 2010.

Moreover, according to the European Parliament, the Executive Director of the Agency, from June 2010 until April 2011, was a trustee and a member of the International Advisory Board of Earthwatch and member of the European Advisory Board of Worldwatch Europe. The MEPs noted that the Agency’s Executive Director resigned from her positions in Earthwatch in April 2011 “following advice from the President of the Court of Auditors in the context of a possible conflict of interests”. However, the European Parliament is very concerned that the Agency paid a total of EUR 33 791,28, to Earthwatch for staff training in Caribbean and Mediteranean based biodiversity projects managed by it, while the Executive Director was still a member of the International Advisory Board of the NGO. Hence, the European Parliament postponed its decision on granting the Executive Director of the European Environment Agency discharge in respect of the implementation of the Agency's 2010 budget. In the meantime, the MEPs called on the Agency, in order to expose any potential conflicts, “to adopt immediately an action plan to publish on its website the declarations of interest and, when they are not available, the curriculum vitae – including at least the educational and work background – for the management staff, the members of the scientific committee, the experts and the members of the Management Board by 30 June 2012”. As Ingeborg Grässle, the EPP's spokeswoman on budgetary control, said: “A discharge for the environment agency would have been a blank cheque for the careless use of taxpayers' money.”

The above-mentioned agencies have until September to address the issues raised by the MEPs, then the European Parliament will vote later in October on whether to approve or reject their accounts.