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DECISION OF THE EUROPEAN PARLIAMENT

of 18 April 1986

granting a discharge to the Commission in respect of the implementation of Sections I (Parliament), II (Council), III (Commission), IV (Court of Justice) and V (Court of Auditors) of the budget of the European Communities for the financial year 1986

(86/201/EEC, Euratom, ECSC)

THE EUROPEAN PARLIAMENT,

- having regard to the Treaty establishing the European Coal and Steel Community, and in particular Article 78g thereof,

- having regard to the Treaty establishing the European Economic Community and in particular Article 206b thereof,

- having regard to the Treaty establishing the European Atomic Energy Community and in particular Article 180b thereof,

- having regard to the budget and the supplementary and amending budget for the financial year 1984,

- having regard to the revenue and expenditure account and balance sheet for the financial year 1984 (1),

- having regard to the report of the Court of Auditors concerning the financial year 1984 and the replies of the institutions (2),

- having regard to the recommendation from the Council concerning the discharge granted to the Commission (Doc. C 2-2/86),

- having regard to the motion for a resolution tabled by Mr Fich and others, on behalf of the Socialist Group, on the Commission's decision to grant aid to Turkey from the Third Financial Protocol in the 1984 budgetary year (Doc. B 2-895/85),

- having regard to the report of the Committee on Budgetary Control, the opinions of the Political Affairs Committee; the Committee on Energy, Research and Technology; the Committee on Social Affairs and Employment; the Committee on Regional Policy and Regional Planning and the Committee on Development and Cooperation and the accompanying working documents relating to the various sectors of Community policy (Doc. A 2-15/86 and Doc. A 2-15/86/Ann.),

- whereas the budgetary authority authorized the following amounts for the financial year 1984 (budget and supplementary and amending budget 1/84):

Revenue 27 252 925 135 ECU

Appropriations for commitment 30 277 996 915 ECU

Appropriations for payment 27 270 667 028 ECU

1. Grants a discharge to the Commission in respect of the implementation of the budget for 1984 on the basis of the following figures:

A. Revenue and expenditure for the financial year 1984

1.2 // // (ECU) // 1. Resources // // Revenue for the financial year 1984 // 26 052 434 892 // Lapsed carry-overs from 1983 // 287 394 594 // Exchange differences // 25 016 688 // Appropriations from carry-overs from 1983 // 17 741 893 // Total // 26 382 588 067 // 2. Expenditure // // Payments for the year // 26 119 177 060 // Appropriations carried forward to 1985 // 1 090 095 454 // Earmarked revenue to be repaid // 652 970 // Total // 27 209 925 484 // 3. Balance (1 - 2) (Deficit) // - 827 337 417

B. Balance sheet at 31 December 1984

1.2 // Assets // // Fixed assets // 11 612 581 117 // Inventories // 99 055 332 // Current assets // 2 002 866 692 // Cash accounts // 1 376 738 335 // Pre-paid expenses // 221 348 765 // Total // 15 312 590 241 // Liabilities // // Fixed capital // 12 043 778 676 // Current liabilities // 2 995 530 417 // Accrued expenses // 273 281 148 // Total // 15 312 590 241

2. Records its comments in the resolution which forms an integral part of this Decision;

3. Instructs its President to forward this Decision and the resolution embodying its comments to the Commission, the Council, the Court of Justice, the Court of Auditors and the European Investment Bank, and to arrange for them to be published in the Official Journal of the European Communities (L series).

1.2 // The Secretary-General // The President // Enrico VINCI // Pierre PFLIMLIN

(1) COM(85) 185 to 189 final.

(2) OJ No C 326, 16. 12. 1985, p. 1.

RESOLUTION

embodying the comments which form an integral part of the Decision granting a discharge in respect of the implementing of the budget of the European Communities for the financial year 1984

THE EUROPEAN PARLIAMENT,

- having regard to Article 85 of the Financial Regulation of 21 December 1977 (1), which enjoins each of the institutions of the Community to take all appropriate steps to act on the comments appearing in the discharge Decisions,

- whereas under that same Article the institutions are also required, at the request of the European Parliament, to report on the measures taken in the light of Parliament's comments and, in particular, on the instructions given to those of their departments which are responsible for the implementation of the budget,

- having regard to the motion for a resolution by Mr Fich and others on behalf of the Socialist Group, on the Commission's decision to grant aid to Turkey under the Third Financial Protocol in the 1984 financial year (Doc. B 2-895/85),

- having regard to the report of the Committee on Budgetary Control and the other documents mentioned in the discharge decision (Doc. A 2-15/86),

I. General comments on budgetary policy

1. Points out that the financial year 1984 was a crucial one in that it saw the exhaustion of own resources;

2. Notes that, because the 1 % VAT ceiling had been reached, the Community was obliged, in adopting supplementary budget No 1/84, to acknowledge the existence of a deficit, which it planned to cover by using up the balance for the financial year (266 million ECU) and by resorting to repayable advances from the Member States (1 003 million ECU);

3. Notes that out of the proposed amount of repayable advances only 593 million ECU was made over by the Member States in the course of the financial year, and that the deficit for the year finally stood at 827 million ECU; stresses the danger which such solutions represent for the financial independence of the Community;

4. Points out that the size of the deficit is attributable both to the depletion of resources and to the lack of accuracy in the forecasting of revenue (overestimated) and expenditure (underestimated);

5. Takes the view that the implementation of the 1984 budget does not adequately meet the objectives laid down; points out that responsibility for this situation is shared by the Commission (errors of management, cumbersome administrative procedures, inaccurate forecasts and underbudgeting of expenditure), the Council (interference in management, failure to adopt legislation and financing), the national administrations (unsuitable procedures) and the budgetary authority (entry of appropriations in the budget without any real prospect of implementation);

6. Points out the Commission's specific responsibilities as regards non-transparent management of the structural funds; warns the Commission against the risks of such practices and calls on it to rectify the situation which has arisen as soon as possible;

7. Considers that any Community decision which will result in new expenditure should be accompanied by measures making specific provision for that expenditure to be covered;

8. Points out that the value of any Community policy lies in its ability to improve efficiency and bring savings by comparison with the same policy pursued at national level;

9. Proposes the creation of a think-tank which, acting on the basis of information supplied by the Commission on budgetary management and budgetary estimates, would seek solutions to the problems of budgetary imbalance;

10. Disapproves of the Community's practice - which is at variance with the Treaties - of compensating for an 'unacceptable situation' by means of refunds on revenue; takes the view that this practice, which does not take economic advantages into account, represents a major source of disintegration in the Community;

11. Points out that the accumulated total of unpaid commitments entered for this and previous financial years has reached alarming proportions and criticizes the Council for not having tackled the problem of the inadequate provision of payment appropriations;

12. Considers it essential for a balanced relationship to be established between amounts of commitment appropriations and payment appropriations;

13. Asks the Commission to make a systematic appraisal, in the course of the budgetary procedure, of the real potential for implementing appropriations which the budgetary authority intends to enter in the budget;

14. Calls on the Commission to make more extensive use of its scope for implementing appropriations solely on the basis of budget entries, especially in the case of studies, pilot projects and preparatory measures where implementation is impeded by failure to act on the part of the Council;

15. Calls on the Commission to inform Parliament, and in particular its Committee on Budgetary Control, systematically and immediately of any difficulties in the implementation of appropriations entered by way of amendment;

16. Regrets the failure of the Commission to adhere to the requirements of paragraph 3c of Section IV of the Joint Declaration in which the Commission is required to present alternative proposals where appropriations have not been used; regrets the lack of a broad interpretation of the Joint Declaration in which only specific new Community instruments need a legal base and the lack of presentation of programmes for which the legal base existed in any case; calls on the Commission to look into the various ways of solving this problem and submit practical proposals;

17. Notes that the implementation of the structural funds has not achieved the desired objective, that the principle of additionality has rarely been applied and that the money available has not always been well spent;

18. Proposes that structural policy objectives on the one hand and Community objectives on the other should be better defined and that each type of objective should be consolidated:

(a) by significantly reorganizing the management of the funds with a view to avoiding the current problems of delays and ineffectiveness and ensuring that commitments entered into are honoured;

(b) by carrying through genuine transnational Community measures involving at least two Member States;

19. Calls on the Commission to make regular assessments of all Community measures and to report to Parliament and the Council on the matter;

20. Calls on the Commission to submit periodically to the budgetary authority information on transfers of appropriations within chapters;

21. Draws to the attention of the Council that even though it participates in the discharge procedure as an institution delivering an opinion, it must adopt an overall view on the financing of the Communities and a detailed view on the comments of the Court of Auditors (in particular the reluctance of the Member States to investigate frauds and irregularities and notify them to the Commission);

22. Points out that this attitude on the part of the Council is due to the over-frequent use of the unanimous vote, which in this case greatly reduces the effectiveness of the decisions;

II. Comments on the management of specific sectors

Own resources

23. Draws attention to the support it gave in its resolution of 15 November 1985 (1) to the Commission's preference for the returns method with regard to the calculation of resources;

24. Calls on the Commission to press ahead with the work carried out by its statistical office, which compares estimates of the VAT base calculated from national accounts with the VAT base declared by the Member States in their annual returns - without calling into question the nature of such revenue as own resources;

EAGGF - Guarantee Section

25. Supports the Commission's efforts to speed up the procedures for clearing the accounts in line with its comments accompanying the decision granting a discharge for 1983; calls on the Commission to ensure that the delays are not eliminated at the expense of effective controls; calls on the Commission to revise the advance payments' system so that the payment of excessively large advances triggers financial co-responsibility on the part of the Member States that receive them;

26. Calls on the Commission to reorganize its services for the purpose of minimizing the risk of future underestimates of agricultural expenditure by making the budgetary aspects of the EAGGF funds the exclusive responsibility of the Directorate-General for Budgets, and by making the clearance of EAGGF accounts and the control of fraud and irregularities the responsibility of the Directorate-General for Financial Control;

27. Takes the view that the existence of large stocks of various agricultural products highlights the deficiencies of the common agricultural policy; considers it essential that a programme for releasing the main products from storage should be submitted within the next six months, accompanied by specific proposals which will eliminate the structural problem of surplus production;

28. Notes that public storage in the beef and veal sector is reaching alarming proportions, a phenomenon aggravated by the imbalances in the geographical distribution of intervention stocks;

29. Requests the Commission and the Member States to cut back as much as possible on the withdrawal of fruit from the market by encouraging sales to processing industries, improving structures of commercialization;

30. Considers that the Commission did not react quickly enough to the accumulation of large stocks of butter, thereby being placed in a position where it had to dispose of these stocks at any price; calls upon it to introduce a strategy for marketing and donating such stocks;

31. Asks the Commission to apply the Community rules on dairy quotas;

EAGGF - Guidance Section

32. Requests the Commission to define clearly the aims of its measures under the EAGGF Guidance Section; calls on it to avoid measures involving contradictory effects within the EAGGF Guidance Section or between EAGGF guidance operations and EAGGF guarantee operations;

Regional Fund

33. Regrets the passivity of the Commission in the use of appropriations in the non-quota section in the ERDF; considers that the Commission should launch and stimulate the presentation of projects of Community interest on behalf of the Member States;

Social field

34. Deplores the fact that in 1984 it proved impossible to make use of the appropriations allocated by Parliament to that part of the budget covering the social sector, with the result that cancellations occured despite the reforms made to the Social Fund; some of the losses could have been avoided if the administration had not held back some 40 to 60 million ECU as a 'cushion' against currency fluctuations - which proved unnecessary;

Management of research and development programmes

35. Calls on the Commission to streamline its administrative procedures for the recruitment of officials and the payment of contract staff;

Commission staff, administrative expenditure and premises

36. Calls on the Commission to ensure that major contracts are awarded solely after invitation to tender save in rare cases of exceptional urgency;

Development aid

37. Draws attention to the continuing very low rate of utilization of appropriations for cooperation with Asian and Latin American developing countries (Chapter 93) and with the ACP countries under the special programme to combat hunger in the world (Article 958);

38. Notes the Commission's inability to achieve a satisfactory rate of utilization of payment appropriations intended for development aid schemes carried out by NGOs; takes note of the Commission's explanations for this phenomenon, but demands urgent action by the Commission services to rectify these problems by the allocation of more staff, the relaxation of project selection criteria to take account of the frequently expressed concerns of the NGOs, and increased use of block grants for certain NGOs;

39. Calls on the budgetary authority to take this situation into account;

40. Calls on the Commission to improve the efficiency of its departments, and to speed up the procedures for processing project files and paying beneficiaries, particularly where modest sums are involed;

41. Stresses the continued need to review decision-making procedures for food aid to increase efficiency and speed of delivery, and calls attention to the Parliament's proposals in this regard;

42. Notes that in 1984 food aid implementation showed a considerable improvement over previous years, but considers that much more can be done to improve the situation, and regrets that to date Commission reviews of food aid procedures have not been made available to the Parliament;

43. Supports the Commission's efforts to integrate food aid into food self-sufficiency policies which take account of local conditions; feels obliged to point out that these efforts have so far only been applied in a limited number of countries;

44. Asks the Commission to take an early and unequivocal decision on the Community's assuming responsibility for the transport of aid;

45. Calls on the Commission to take steps to bring about a substantial increase in EEC representation in the Latin American countries in order to secure more effective coordination of aid projects and resolve the organizational problems to which the Court of Auditors has drawn attention;

46. Invites the Commission to make further improvements in the supervision of 'counterpart funds' deriving from the sale of food aid products;

47. Welcomes the stepping-up of checks on the quality of aid; will look into the problems posed by such checks and in particular by the use of private firms to carry them out; The case of Turkey

48. Disapproves of the Commission's decision to make payments under the Third Financial Protocol with Turkey going beyond the level of appropriations entered by the budgetary authority for this purpose; points out that the Council's ambiguous attitude and its failure to take a political decision only served to aggravate the Commission's problems; stresses that the Commission's difficulties in this matter were due to inaccurate forecasting;

The Community's borrowing and lending activities

49. Calls once again on the Commission to ensure that the European Investment Bank's commission for NCI, Euratom and development aid operations does not exceed its administrative costs;

Fraud and irregularities

50. Calls on the Council to adopt as soon as possible the proposals for regulations strengthening the power to investigate irregularities and institute proceedings, particularly in the revenue sector;

51. Calls on the Commission to coordinate the various checks carried out by its departments on the basis of existing regulations and to extend such checks and investigations in the Member States in cooperation with the national administrations;

52. Insists that:

(a) strong measures should be devised to recover the outstanding sums identified as having been fraudulently converted in recent years - presently standing at a minimum figure of 100 million ECU according to the report of the Court of Auditors (paragraph 4.25);

(b) publicity of successful actions against fraud and irregularities is the best public sanction to help reduce its incidence.

(1) OJ No L 356, 31. 12. 1977, p. 21.

(1) OJ No C 345, 31. 12. 1985, p. 402.