# CE2004065EN.01010501.xml

| 13.3.2004 | EN | Official Journal of the European Union | CE 65/105 |
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13.3.2004

EN

Official Journal of the European Union

CE 65/105

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(2004/C 65 E/117)

WRITTEN QUESTION E-1950/03

by Daniel Cohn-Bendit (Verts/ALE) and Monica Frassoni (Verts/ALE) to the Commission

(13 June 2003)

Subject:   Eurostat case

Subject:

Given the serious problems within Eurostat in managing external contracts, can the Commission present an action plan with a view to ensuring that conflicts of interests may be eliminated when contracts are awarded?

Can it present a timetable indicating the administrative and disciplinary measures that it is going to take in order to improve procedures and ensure that a sense of responsibility prevails?

What measures will the Commission take in order to ensure that recommendations in audit reports are implemented and that the findings are communicated to the right level with a view to pinpointing who is responsible for any action taken or any failure to act?

Answer given by Mrs Schreyer on behalf of the Commission

(8 September 2003)

(8 September 2003)

| 1. | The Commission is working to implement fully the new Financial Regulation (1) (FR) which contains detailed provisions covering conflicts of interest regarding its personnel and contractors.
  Vis-à-vis potential contractors/beneficiaries
  Article 94 FR forbids the award of a contract to candidates or tenders (and Article 114(2) the award of grants to applicants) that are subject to a conflict of interests.
  The Implementing Rules (IR) of the FR (Article 135(2) (a) IR) make it an obligation for the Authorising Officer to check in every procurement procedure this possible ground for exclusion and to record any such exclusion (naming candidates concerned and reasons) in the final results of the evaluation (Article 147(2) (b) IR). The same rules apply in the award of grants (Article 178(4) (c) IR).
  Vis-à-vis its personnel
  As regards any financial actor, Article 52 FR and Article 34 IR have now introduced:






  — | a wide definition of what is to be understood by conflict of interests (There is a conflict of interests where the impartial and objective exercise of the functions of a player in the implementation of the budget or an internal auditor is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other shared interest with the beneficiary"); |
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1.

The Commission is working to implement fully the new Financial Regulation (1) (FR) which contains detailed provisions covering conflicts of interest regarding its personnel and contractors.

1

Vis-à-vis potential contractors/beneficiaries

Article 94 FR forbids the award of a contract to candidates or tenders (and Article 114(2) the award of grants to applicants) that are subject to a conflict of interests.

The Implementing Rules (IR) of the FR (Article 135(2) (a) IR) make it an obligation for the Authorising Officer to check in every procurement procedure this possible ground for exclusion and to record any such exclusion (naming candidates concerned and reasons) in the final results of the evaluation (Article 147(2) (b) IR). The same rules apply in the award of grants (Article 178(4) (c) IR).

Vis-à-vis its personnel

As regards any financial actor, Article 52 FR and Article 34 IR have now introduced:

—

a wide definition of what is to be understood by conflict of interests (There is a conflict of interests where the impartial and objective exercise of the functions of a player in the implementation of the budget or an internal auditor is compromised for reasons involving family, emotional life, political or national affinity, economic interest or any other shared interest with the beneficiary");

| — | a prohibition for any financial actor to take any measure of budgetary implementation which may bring his/her own interests into conflict with those of the Communities; |
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—

a prohibition for any financial actor to take any measure of budgetary implementation which may bring his/her own interests into conflict with those of the Communities;

| — | as well as a clear procedure in case such a situation should arise (referral to the hierarchical superior who shall confirm in writing whether or not there is a conflict of interests, and if there is, then the hierarchical superior is to take personally any appropriate decision). |
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—

as well as a clear procedure in case such a situation should arise (referral to the hierarchical superior who shall confirm in writing whether or not there is a conflict of interests, and if there is, then the hierarchical superior is to take personally any appropriate decision).

| 2. | The Commission Reform White Paper of March 2000 aimed inter alia to clarify the responsibilities of the major actors managing Community resources.
  The Commission has just completed a major overhaul of its disciplinary provisions and structures. Firstly, a specialised Investigation and Disciplinary Office of the Commission (IDOC) was established under the administrative reform by Commission decision of 19 February 2002. This decision provides in its Article 6(6) that IDOC shall report on each inquiry and shall address in these reports the individual responsibilities of the official(s) concerned in relation to possible infringements of applicable rules, including the Financial Regulation. IDOC has a general investigatory responsibility on matters not falling within the scope of OLAF's investigative responsibilities. In order to avoid conflicts of responsibilities, Article 5 (2) of the same decision provides that before opening an administrative inquiry, OLAF mustbe consulted to check if OLAF itself is undertaking an inquiry or does intend to do so, and if so, IDOC would have to give priority to OLAF.
  In addition, the Commission has proposed amendments to the Staff Regulations in order to improve the way in which disciplinary proceedings are conducted. By virtue of the Commission Decision of 19 February 2002, the permanent Disciplinary Board must be chaired by a former member of one of the other Union institutions or a former official; the current chair is a former President of the Court of First Instance. The Commission has adopted on 24 July 2003 a consultative document containing detailed Draft Guidelines on the application of Article 22 of the Staff Regulations concerning remedies in the case of financial irresponsibility or negligence and leading to recovery or reparation for ‘damages suffered by the Communities’.
  The recast Financial Regulation (FR) adopted on 25 June 2002 set out the responsibilities of financial actors, described in the detailed implementing rules adopted in December 2002. Article 66(4) FR, created the legal base and the obligation for each institution to set up a specialised financial irregularities panel functioning independently, whose main task is, without prejudice to the power of the European Anti-Fraud Office (OLAF), to provide the Appointing Authority (AA) with an expertise on potential financial irregularities. The Commission has approved on 9 July 2003 the creation of an internal Financial Irregularities Panel (FIP), which will assess potential breaches of the Financial Regulation.
  The Commission Reform requires the delegated authorising officers, that is the Directors General and the Heads of Service, to submit annual activity reports and statements of assurance, accompanied by observations and reserves, if appropriate, for their areas of competence. The Commission prepares a Synthesis Report on these, and sends both the Synthesis and the Annual Activity Reports to the European Parliament and the Court of Auditors. The first set of reports were submitted in July 2002 for the 2001 year. |
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2.

The Commission Reform White Paper of March 2000 aimed inter alia to clarify the responsibilities of the major actors managing Community resources.

The Commission has just completed a major overhaul of its disciplinary provisions and structures. Firstly, a specialised Investigation and Disciplinary Office of the Commission (IDOC) was established under the administrative reform by Commission decision of 19 February 2002. This decision provides in its Article 6(6) that IDOC shall report on each inquiry and shall address in these reports the individual responsibilities of the official(s) concerned in relation to possible infringements of applicable rules, including the Financial Regulation. IDOC has a general investigatory responsibility on matters not falling within the scope of OLAF's investigative responsibilities. In order to avoid conflicts of responsibilities, Article 5 (2) of the same decision provides that before opening an administrative inquiry, OLAF mustbe consulted to check if OLAF itself is undertaking an inquiry or does intend to do so, and if so, IDOC would have to give priority to OLAF.

In addition, the Commission has proposed amendments to the Staff Regulations in order to improve the way in which disciplinary proceedings are conducted. By virtue of the Commission Decision of 19 February 2002, the permanent Disciplinary Board must be chaired by a former member of one of the other Union institutions or a former official; the current chair is a former President of the Court of First Instance. The Commission has adopted on 24 July 2003 a consultative document containing detailed Draft Guidelines on the application of Article 22 of the Staff Regulations concerning remedies in the case of financial irresponsibility or negligence and leading to recovery or reparation for ‘damages suffered by the Communities’.

The recast Financial Regulation (FR) adopted on 25 June 2002 set out the responsibilities of financial actors, described in the detailed implementing rules adopted in December 2002. Article 66(4) FR, created the legal base and the obligation for each institution to set up a specialised financial irregularities panel functioning independently, whose main task is, without prejudice to the power of the European Anti-Fraud Office (OLAF), to provide the Appointing Authority (AA) with an expertise on potential financial irregularities. The Commission has approved on 9 July 2003 the creation of an internal Financial Irregularities Panel (FIP), which will assess potential breaches of the Financial Regulation.

The Commission Reform requires the delegated authorising officers, that is the Directors General and the Heads of Service, to submit annual activity reports and statements of assurance, accompanied by observations and reserves, if appropriate, for their areas of competence. The Commission prepares a Synthesis Report on these, and sends both the Synthesis and the Annual Activity Reports to the European Parliament and the Court of Auditors. The first set of reports were submitted in July 2002 for the 2001 year.

| 3. | Questions of implementation of the recommendations of audit reports were the subject of an in-depth exchange during the Parliament's Committee on Budgetary Control (Cocobu) meetings on 17 June 2003 and 30 June 2003.
  The present procedures seek to assure an improved follow-up. All reports by the Internal Audit Service are addressed to the Audit Progress Committee (APC), which normally hears the audited service, in particular concerning the follow-up which this service proposes to give to the audit findings and recommendations. The APC can also advise the College on follow-up measures to be taken.
  Since 2002, all Directors-General and Heads of Service must include a section in their annual activity report concerning the activities of their Internal Audit Capabilities, and a section on the follow-up given to the findings of the Internal Audit Capability, the Internal Audit Service and the Court of Auditors.
  In accordance with Article 86 FR, the IAS also submits each year an internal audit report to the College indicating the number and type of internal audits carried out, the recommendations made and the action taken on the recommendations.
  On the occasion of the submission of the 2002 annual activity reports, the Commission decided on 9 July 2003 on a series of actions to continue the modernisation of the Commission's management systems. Directors-General are required to discuss with their Commissioner at least twice a year the state of internal control and internal audits in their service. Directors-General must inform their Commissioners on any elements that are sent by their Directorate to OLAF.
  In order to improve the co-operation between OLAF and the Commission, and to allow the Commission to take early decisive action whenever necessary, a draft code of conduct on information flows between OLAF and the Commission was adopted by the College on 23 July 2003. This draft code of conduct, which already applies provisionally, is to be finalised taking account of the OLAF Supervisory Committee's forthcoming opinion and the review by the Parliament and other Community institutions. |
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3.

Questions of implementation of the recommendations of audit reports were the subject of an in-depth exchange during the Parliament's Committee on Budgetary Control (Cocobu) meetings on 17 June 2003 and 30 June 2003.

The present procedures seek to assure an improved follow-up. All reports by the Internal Audit Service are addressed to the Audit Progress Committee (APC), which normally hears the audited service, in particular concerning the follow-up which this service proposes to give to the audit findings and recommendations. The APC can also advise the College on follow-up measures to be taken.

Since 2002, all Directors-General and Heads of Service must include a section in their annual activity report concerning the activities of their Internal Audit Capabilities, and a section on the follow-up given to the findings of the Internal Audit Capability, the Internal Audit Service and the Court of Auditors.

In accordance with Article 86 FR, the IAS also submits each year an internal audit report to the College indicating the number and type of internal audits carried out, the recommendations made and the action taken on the recommendations.

On the occasion of the submission of the 2002 annual activity reports, the Commission decided on 9 July 2003 on a series of actions to continue the modernisation of the Commission's management systems. Directors-General are required to discuss with their Commissioner at least twice a year the state of internal control and internal audits in their service. Directors-General must inform their Commissioners on any elements that are sent by their Directorate to OLAF.

In order to improve the co-operation between OLAF and the Commission, and to allow the Commission to take early decisive action whenever necessary, a draft code of conduct on information flows between OLAF and the Commission was adopted by the College on 23 July 2003. This draft code of conduct, which already applies provisionally, is to be finalised taking account of the OLAF Supervisory Committee's forthcoming opinion and the review by the Parliament and other Community institutions.

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(1)  Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, OJ L 248, 16.9.2002.

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