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The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

EU Unfit for Purpose: So EU Court of Auditors report indicates

The European Union Court of Auditors key assessment on how our money is spent.

EU Unfit for Purpose So EU Court of Auditors report indicates

In a damning indictment of the Brussels institutions, the clear message of the EU’s very own Court of Auditors report is one of fraud, mismanagement and waste.

Commenting, EU expert Dr Lee Rotherham said,

Dr Lee Rotherham

“We are witness to another catalogue of failings and missed opportunities. One or two departments have been seriously fighting the tide, but the overwhelming majority have been idly paddling.

“We don’t even see some of the key hidden issues, like the massive uncertain pensions liabilities of the institutions. But once again, we learn that the EU remains unfit for purpose."

The Bruges Group provides this highlight of the key elements to help media commentators, with the most controversial elements highlighted in bold.

Summary of the Court of Auditors report

    (Page, Paragraph)
    (p. 13, VI+) The Commission amended the provisional accounts several times after they were submitted, because their data management system was so poor (out by a factor of some €200 million)

    (13, VIII) DG Education and Culture was such a bad bookkeeper that the Auditors cannot be sure what its assets and liabilities actually are

    (14, X) Funds for acceding and candidate countries are at risk across the board

    (15, d) On funding activity outside the EU, it notes a “lack of a comprehensive approach to the supervision, control and audit of these organizations”.

    (19-20, 1.13) The CoA possibly hints that senior management stalled internal reforms by delaying the annual audit itself

    (20, 1.14) “In many Directorates-General audited by the Court, several weaknesses were identified concerning the validation of the data: weak supervision, lack of staff assigned to the task and inadequate documentation of the work done. The figures presented in the financial annex of the annual activity reports by some operational Directorates-General contained errors” – ie major failure by senior management to get a grip

    (25, 1.40) In a random sample of141 invoices, there was a “material level of error” (ie there were a number of them) where the figures were wrong or recipients were being paid twice. Exactly the same level of incorrect payments applies (1.52) for money let out as pre-financing – which in DG Education (1.53) is impossible to gage because of the complexity of the paper trail. See also 1.54 for other accounts found to be flawed, indicating the faults to lie across the whole funding lifespan.

    (33, Table 1.1) The Commission has increased the number of times when submitting reports for audit saying that it will correct any transaction failing the CoA spots – but there is no proof that it does or will.

    (48, 2.16) Over half of the declarations made by senior staff about their budgets contained reservations – ie the department leaders themselves had found their budgetary control to be flawed

    (77, 4.14) Member states have issued a high level of statements of reservation about the VAT take that they hand over to the EU. The Commission has not worked out how much money it should be getting. Nor (4.15) does the Commission know for sure if national governments are being accurate in terms of their hand over of the % of their national income that goes into the Brussels coffers.

    (79, see footnotes) In the case of the UK, Customs and Excise may have allowed dues on temporarily stored goods to slip. Indeed, assessments have been taking so long that time barring may be kicking in, so that EU taxes might be completely avoided! As with all other states assessed, there was no risk assessment that funds were being missed in compiling the national accounts. This means (4.30) that the UK Government’s own data on how wealthy we are as a nation could be wrong.

    (91-92, 5.8) On the CAP. Suspiciously, audits of pre-chosen projects in certain member states are once again found to have had a lower error rate than those chosen randomly. i.e. suspicion of state cover up

    (92, 5.9) 40% of payments tested by the CoA showed claimed fields were larger than the real fields.

    (92, 5.10) Particular attention is paid to the CAP in Greece – especially

“(a) the quality of inspections is low and findings are poorly or not at all documented, reporting of results is unreliable and is not always based on genuine inspections;
(b) in certain local authorities in Greece, the techniques used when measuring parcels lead to a higher technical tolerance than the maximum allowed (5 %). The financial impact of this practice cannot be quantified;
(c) farmers’ unions control the input of all data into the computer system. None of the data in the system are secure and they can be and are modified by the farmers’ unions at any time before payment. The computer system does not record when and why changes to the original data are made. Many of these changes are irregular but cannot be precisely quantified”

    i.e. there is official collusion and the farmers unions change the records for their members’ benefit

    (93, 5.14) In Hungary and Slovakia, farmers may have been punished because of false claims by their neighbours because of the management system. (5.15) Poland operates a system of give-and-take.

    (93 footnote 14) Of the SAPS samples taken, there was a 13% margin of error.

    (94, 5.19) Hungary paid one set of aid twice instead of once.

    (94, 5.20) One in four tested Single Area Payment Scheme grants was overpayed

    (94, 5.21) 11.4% of Italian suckler cows either didn’t exist or weren’t suckler cows. But the figure in Slovenia was nearly half. Meanwhile, over one in ten special beef premium cows in Malta didn’t exist or weren’t premium, one in five in Italy, and over half in Slovenia. See Graph 5.4 (p. 114)

    (94, 5.22) Phantom sheep and goats also appeared – one in ten in Italy, and one in four in Slovenia. Maltese aid was “systematically calculated incorrectly”.

    (94, 5.25) Olive oil grants are worth €2 bn. All cases tested found errors or overpayments, and also revealed two cases of suggested fraud.

    (94, 5.26) The CoA intimates that as the reforms have not been implemented, with the new system about to come on line, existing fraud will be regularized for the future.

    (96, 5.29) On aid to poorer/weaker farming communities worth over €6 bn – high incidence in errors as claimants were simply not eligible and no-one checked correctly

    (96, 5.31) A tenth of the Polish farmers getting grants for good farming practices (worth €225m) were using bad ones

    (97, 5.35) The UK has been one of several countries tipping off businesses about paperwork checks; jobsworths have been checking on material which are of small value; two countries have allowed exporters to put their own customs seals on; the UK systematically (thanks to computerization) fails to inspect seals haven’t been broken.

    (100, footnote 34) The Commission seems to have swept two investigations under the carpet

    (101, 5.50) In five of the Commission’s own audits it didn’t use audit procedures

    Crucially, the CoA website has a number of unintentionally blanked out pages here covering some interesting bits, for which we await the printed text for detailed examples. All we know for now is that (137, 6.13) two thirds of audited structural funds had “material errors”

    (160, 7.9) For one transport scheme, the Commission failed to spot it could only finance 10% and not 50% of the project, resulting in an overspend of €146 million. Meanwhile, the funding of €78m towards the controversial Galileo project had no legal basis.

    (160, 7.11) Damningly, in this whole area, “The Commission does not have a clear approach or strategy on the coordination of key control procedures, such as the use of audit certificates, desk reviews of cost claims (basic checks or in-depth desk audits) and on-the-spot audits, to reduce the over-declaration of cost claims, and does not compare the costs of controls with the benefits they provide.”

    (182, 8.19) Local administration of a project in Albania was so bad that the Commission had to go back in and take control. This happened because no-one had thought to properly assess if the local team were up to it.

    Again the whole section on pre-accession countries has been blanked out by some computer glitch. We know from separate reports on Bulgaria and Romania what to expect.

    (213, 10.18) The Committee of the Regions has failed to reclaim money from several members who had fiddled their claims

    (216, Table 10.2) There remains a backlog of untaken leave by employees across the institution, which can be swapped for cash. This previously identified liability (which runs into many millions) remains on the books.

    Also, MEPs’ second pensions continue presently to be illegal, and remain an unfunded liability.

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