Court of Auditors: EU budget money is there to be spent not to create value

José Manuel Barroso, President of the European Commission (on the right), and Vítor Caldeira, President of the European Court of Auditors, participated in the annual joint meeting between the Court of Auditors and the College of the EC. (EC Audiovisual Services).

 José Manuel Barroso, President of the European Commission (on the right – forefront), and Vítor Caldeira, President of the European Court of Auditors, participated in the annual joint meeting between the Court of Auditors and the College of the EC. (EC Audiovisual Services).

The European Court of Auditors, the independent audit institution of the EU, today signed off the 2012 EU Budget, but it added a lot of asterisks and remarks over the Union’s payments for last year, singling out inappropriate, ineligible and illegal spending. A first and general comment by the ECA is that “Looking at the EU budget as a whole, the ECA’s estimate of the error rate for spending is 4.8 % for the 2012 financial year (3.9% in 2011)”.

This is a 1% increase in the error margin meaning that €1.3 billion more of EU money was spent more or less illegally. At a time of crisis and increasing fiscal difficulties all over the EU, the Commission should have reduced the error margin rather than letting it inflate. This 4.8% error margin corresponds to €6.5bn of EU taxpayers’ money being spent under obscure conditions. This conclusion comes naturally after the ECA’s remark that those resources were handed out illegally.

Illegal but not fraudulent?

Of course the ECA, in order to dispel any ‘bad’ thoughts about EU spending handling, stressed that “The estimate of the error rate is not a measure of fraud or waste. It is an estimate of the money that should not have been paid out because it was not used in accordance with the legislation concerned”. However, this doesn’t mean that fraud, or inappropriate handling of EU budget items, is ruled out.

OLAF, the EU’s anti-fraud office mandate, is exactly to check for fraud over the entire EU budget exercise, incomes included. The main spending categories that OLAF examines are: structural funds, agricultural policy & rural development, direct expenditure and external aid. Understandably, OLAF’s investigations are primarily directed to areas where the ECA finds that, “Typical errors include payments for beneficiaries or projects that were ineligible or for purchases of services, goods or investments without proper application of public purchasing rules”.

What do member states care for?

Given that at least 80% of EU spending involves the national authorities in all member states, things become even more complicated, while examining the appropriateness of EU expenditures. It’s a complete disappointment hearing the ECA stress that in the rules governing the entire 2007-2013 spending period, there were no incentives for “Member States to use financial management systems more effectively. For example, in cohesion spending erroneous claims can just be withdrawn and replaced without losing money from the EU budget”.

This observation brings us to the commonly heard cry in EU member states about ‘absorbing all the EU resources’ allotted to them. More often than not, in order to service this purpose, national authorities turn a blind eye to legality. This leads to the next severe comment by the ECA, related to the adequacy of the EU budget resources. Homeric fighting takes place every year between the three EU institutions about that. Usually the Parliamentarians are asking for more money, the Commission cutting down some items and the Council invariably demanding for more cuts.

In view of that, the following ECA comment answers the heart of the problem. The auditors clearly say that “The 2014–2020 programming period looks likely to remain expenditure oriented – designed for getting the EU budget allocated and spent – rather than focusing on the value it is intended to bring”. This is a completely debilitating observation for all the interested parties. In short, the auditors mean that as things stand now, EU budgets’ money is there mainly in order to be…spent. In reality, nobody cares about creating value out of EU spending. This is a killing remark for the entire Brussels edifice.

 

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