Fainting in Coyles
An occasional letter from the Heart of Euroville

Wednesday, February 04, 2004  

From The Sprout in February
European Politicians hauled over the coals in secret audit report - Presidents of political groups accused of double-invoicing expenses

All aspects of taxpayer funding to Euro parliamentarians have come under severe criticism in an internal report leaked to The Sprout. Recently, the European Court of Auditors produced a confidential memo which accuses political groups of drawing scores of millions of euros from the parliament’s central fund for their own purposes. - purposes that can’t be checked and are thought to have been paid for already from the MEPs separate allowances.

Not including their wages, the taxpayer funds MEPs activities to the tune of over 34 million euro in a single budget line defined as for “secretarial expenses, current administrative expenditure and expenditure relating to the political and information activities of the political groups”.

According to the report though much of this money is non-audited or audited in an opaque and fallible way. The report has discovered that the financial affairs of the Groups are riddled with opportunities for “double funding” where it finds the “risk particularly high in the context of general expenditure, travel, subsistence and secretarial allowances,”; or, in other words almost everything. The indictment will not be received well by the main three chairmen of the respective groups - Graham Watson (liberals), Hans-Gert Poettering (centre-right), and Baron Crespo (socialists) – whose personal expenditure comes under fire.

“All the reports we have seen from OLAF and the Court of Auditors confirms that we need clearer rules on the expenditure of the political groups”, said veteran budgetary hawk, the Danish Socialist MEP Freddy Blak, “it is about time we set the same standards for money spent in our own house as we do for money spent by the Commission or the Committee of the Regions”.

If an MEP spends their entire personal budget, the group can hand over unlimited cash and not account for it. The only requirement set by the Group is that the MEP “declare on their honour that they have used up their own” – a practice common for the group Presidents who usually have extra expenses, which go unchecked and bypass an audit.
The Court has turned its guns on the most senior members of Parliament, the Chairmen of the groups and their coteries known as ‘the Presidency’. The Groups pay their senior figures a monthly stipend but these payments are queried, “it is not clear why the membership of a political groups Presidency should cause costs that are not covered by the individual general and specific allowances available to every member of Parliament.”

The political system within the parliament is idiosyncratic. An individual MEP is a member of their own national political party, described in the parliament as a ‘national delegation’. The delegation is affiliated to a political Group and in some cases the group has a separate existence as a European Political Party. In a small minority of cases, members are not part of a Group and are described as ‘Non-éscrits’.

In the case of individual MEPs, there are two significant points made in the report, the way in which their secretarial allowance is handled and what can politely be called ‘discretional’ spending on, “Members’ social activities (e.g. meals, cocktails, etc.)”. Thus parliamentary piss ups can be “loosely justified as political or information activities”, but the efficacy of taxpayers money spent in this highly pleasurable way cannot be audited and is thus open to abuse. More serious is the way in which the secretarial allowance is allowed to be spent.
The Court is incensed by the way in which members are able to dodge normal employment procedures. It is impossible for the auditors to know how many staff are employed and how much they are paid. Back in 2000 the Parliament agreed to publish a list of “all assistants”, yet the publication on the web is an incomplete list that does not require those employed in the home country to appear. Worse, the report stresses that the MEP as an employer has no need to provide basic employment rights to their staff. Because every MEP sets his or her own contract conditions, the variety is massive. The member has to file a copy of the contract but it does not have to include “copies of payslips, proofs of membership of a social security scheme, proofs of payment of social security contributions…”. Furthermore, though the members have now started handing in the contracts – often merely a letter of a single paragraph - the Parliament’s secretariat, under Julian Priestly, has singularly failed to do its job. The CoA report pulls no punches on this and damns Priestly by writing that his department failed to “carry out any check and the forwarded documents were simply filed”.

National delegations
Within national delegations, whose expenses take up about half of the total of the 34m euro, the spending is not broken down in the accounts and is thus impossible to track. Invoices are missing, the auditors never left Brussels, therefore were unable to check office expenses which “can only be verified on the spot”, and again the Parliament’s own secretariat failed to cross-check contracts, the report reveals. In a hard-hitting comment it states, “the validity of certain practices seems doubtful with regard to national labour, tax and social security laws.”
Reading between the lines of the report, the multi-national groups themselves, such as the European Peoples Party or the Party of European Socialists (whose Chairmen take ultimate responsibility for all these funds), find themselves accused of creative accounting. The groups do not treat unspent monies rolled over from previous years (in 2001 20.5 million euro - 70% of the previous years appropriations) as assets, and do not even break down how they are used. Each different group has different accountants and different accounting methodologies, which results in a near impossible task for the Court of Auditors to treat like with like. In some cases the Groups mirror the disgraced American company Enron and employ the external accountants for other purposes “which have not been separately and properly reflected in terms of engagement and could have compromised their independence”.
Astonishingly, weaknesses in the accounts were also noted “in particular…the proof of the eligibility of certain activities…evidence of certain expenses, the avoidance of any conflict of interests…”.

posted by Eliab | 5:05 pm
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