EUROPEAN PARLIAMENT DECISION of 5 April 1995 giving discharge to the Commission in respect of the implementation of the general budget of the European Communities for the 1992 financial year as regards Sections I - Parliament, II - Council, III - Commission, IV - Court of Justice and V - Court of Auditors (95/220/EC, Euratom, ECSC)

THE EUROPEAN PARLIAMENT,

- having regard to the ECSC Treaty and in particular Article 78g thereof,

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

- having regard to the EAEC Treaty and in particular Article 180b thereof,

- having regard to the budget for the 1992 financial year,

- having regard to the revenue and expenditure accounts and the financial statement of the European Communities for the 1992 financial year (SEC(93) 0385-0388),

- having regard to the report of the Court of Auditors for the 1992 financial year and the replies of the institutions (1),

- having regard to the Council recommendation of 21 March 1994 (C3-0147/94), noting however the incomplete nature thereof,

- having regard to its resolution of 21 April 1994 to inform the Commission of the reasons why the discharge cannot at present be given in respect of the implementation of the general budget of the European Communities for the 1992 financial year (2),

- having regard to the report of the Committee on Budgetary Control, and the opinions of the Committees on Research, Technological Development and Energy, on External Economic Relations, on Social Affairs and Employment, on Regional Policy, on Culture, Youth, Education and the Media, on Development and Cooperation, on Women's Rights and on the Environment, Public Health and Consumer Protection (A4-0056/95),

1. Notes that the authorized revenue and expenditure for the 1992 financial year amounted to:

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2. Gives the Commission discharge in respect of the implementation of the following amounts:

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3. Accepts that final checks still have to be made of EAGGF expenditure reported by the Member States and that corrections to the figures may yet have to be made;

4. Reserves therefore the right to re-examine the amounts above in so far as they relate to expenditure in the EAGGF Guarantee section in the light of the clearance of accounts Decision for the 1992 financial year, which shall be forwarded to the European Parliament for a Decision complementary to this discharge Decision;

5. Notes that the Commission has now complied with the requests contained in its abovementioned resolution of 21 April 1994, concerning the recovery of funds under the milk quota regime, the appointment of staff to UCLAF and the provision of information on internal tobacco fraud, to the extent that discharge may be given;

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

7. Instructs its President to forward this Decision and the resolution containing its comments to the Commission, the Council, the Court of Justice, the Court of Auditors and the European Investment Bank and to have them published in the Official Journal of the European Communities (L Series).

The Secretary-General

Enrico VINCI

The President

Klaus HÄNSCH

(1) OJ No C 309, 16. 11. 1993.

(2) OJ No C 128, 9. 5. 1994, p. 322.

RESOLUTION containing the comments which form part of the Decision giving discharge to the Commission in respect of the implementation of the general budget of the European Communities for the 1992 financial year

THE EUROPEAN PARLIAMENT

- having regard to Article 206 of the Treaty establishing the European Community,

- having regard to Article 89 of the Financial Regulation of 13 March 1990 (1) under which each Community institution is required to take all appropriate steps to take action on the comments appearing in the Decisions giving discharge,

- whereas, under the same Article, the institutions are also required to report, at Parliament's request, on the measures taken in the light of these 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 Council recommendation of 21 March 1994 (C3-0147/94), noting however its incomplete nature, in so far as it reserves the position of Council on the very point presenting the greatest obstacle to discharge,

- having regard to the report of the Committee on Budgetary Control (A4-0056/95),

Whereas the Commission bears the sole legal responsibility for the implementation of the budget pursuant to Article 205 of the Treaty establishing the European Community;

Matters pertaining to the earlier postponement of discharge

1. Welcomes the fact that, in line with Parliament's demand, the Commission has decided to reverse its earlier Decision to apply new milk quotas retroactively for Italy in 1989, and Italy, Spain and Greece in 1990 and 1991, resulting in the recovery of about ECU 1 600 million as requested by Parliament;

2. Notes the Council's failure to make a clear recommendation in respect of the Commission's management of the milk quota system in the context of discharge;

3. Learns however that the original 1989 clearance of accounts Decision included a Decision retroactively to apply new milk quotas in Spain and that this Decision remains in force; believes that the principle of this case is identical to those corrected by the Commission and that the loss to the taxpayer caused by this omission amounts to about ECU 170 million;

4. Observes and deplores the fact that the Commission has operated a milk production buy-back scheme in Italy and Spain without a legal basis; notes that this scheme had the effect of reducing the production figures for the Member States concerned and therefore the level of the financial corrections imposed on them; notes that the cumulative loss to the taxpayer of this illegal act amounts to about ECU 170 million;

5. Notes that, although the Commission has respected the formal terms of Parliament's resolution of 21 April 1994 to inform the Commission of the reasons why the discharge cannot at present be given in respect of the implementation of the general budget of the European Communities for the 1992 financial year (2) and will receive discharge, it has failed to apply its underlying principles in a consistent manner, with the effect that the Community taxpayer continues to suffer a loss of about ECU 340 million; demands therefore that the Commission recover this amount from the Member States concerned;

6. Instructs the Commission not to operate any milk production buy-back scheme until such time as a legal basis allowing for such a scheme has been approved according to the normal legislative procedures of the European Community;

7. Awaits a decision on the proposed legal basis for the retroactive application of milk quotas for the 1992 and 1993 financial years; undertakes to examine this proposal closely with a view to the legality of such legislation;

8. Instructs the Commission to publish its recent decisions regarding the 1989 and 1990 clearance of accounts in the Official Journal of the European Communities without further delay;

9. Believes that the Commission's decision to overrule its own financial controller's objection to the retroactive application of milk quotas in the first amendment of the 1989 clearance of accounts Decision, and the Financial Controller's Decision not to oppose an analogous procedure in the 1990 clearance of accounts, illustrates the importance of the Community instituting a system where individuals can be held to account for their actions involving the spending of public funds; asks the institutions to incorporate this concept in the 1996 revision of the Treaties;

10. Reaffirms the principle that disregard for Community legislation by Member States cannot be tolerated and that, when this occurs, the Commission is under an obligation to impose the appropriate sanctions and make the necessary corrections; notes that the Commission did not initially fulfil this obligation in the case of the milk quotas system and has yet fully to do so;

11. Reminds the Commission that Parliament must be kept fully informed as to the developments in the investigations into tobacco fraud in the Member States;

12. Notes that the information provided by the Commission to the Committee on Budgetary Control concerning the conclusions of the internal enquiries into suspected fraud in its tobacco division amounts to an acknowledgement that the matter was not dealt with as swiftly and decisively as it should have been;

13. Calls on the Commission to ensure that all cases of suspected internal fraud in the Commission are referred immediately to UCLAF, which shall have full and independent powers and means to conduct enquiries into such cases, and which shall have discretion to call in outside authorities as appropriate, with due regard to protection for the rights of individuals; calls on the Commission to transmit to Parliament the text of the appropriate new internal rules by 30 June 1995;

14. Notes with satisfaction the Commission's confirmation that 50 new posts have been allocated to UCLAF during 1994;

Political issues

15. Considers that the main reasons lying behind many of the problems highlighted in this resolution lie in a perceived conflict of interests between the Council and the Commission, reflecting the fact that Member States' national interests are frequently seen by them as not coinciding with the effective implementation of the Community budget, the realization of Community policy and the protection of the Community's financial interests;

16. Notes that on many occasions the Council has impeded the passage of legislation proposed by the Commission which would have enhanced the protection of the interests of the Community taxpayer as expressed through the Community budget;

17. Considers that the real responsibility for the implementation of the Community budget, and for the numerous defects in the implementation, is shared between the Commission and the Member States; notes that the Council and the Member States tend to evade the consequences of this responsibility;

18. Regrets that the objectives of many Community policies, in particular the most expensive, are ill-defined and/or vague; believes that lack of clarity is a prime factor behind public doubts concerning Community expenditure; calls on the Commission therefore to establish verifiable, concrete short and medium term policy objectives in all policy areas and to specify subsequently on the basis of clear criteria whether objectives have been met;

EAGGF Expenditure

19. Deplores, particularly in cases where the irregularities concerned have cost the Community budget substantial amounts, the fact that some Member States neither assisted the Court of Auditors in its inquiries in the tobacco sector, nor implemented Community regulations when the Court reminded them of their obligations; urges the Commission to use all powers entrusted to it by the Treaties to ensure prompt recovery of unduly paid sums and full respect of Community legislation;

20. Asks the Commission to take all necessary steps to ensure that Member States benefiting from EAGGF-Guarantee subsidies possess the necessary infrastructure for all products (comprehensive land register, credible statistical data, efficient control systems, etc.), thus permitting sound financial management of Community appropriations;

Structural Funds

21. Calls on the Commission to include in future annual reports on implementation of the reform of the funds statistics on the irregularities encountered, amounts unduly paid and recoveries effected and/or sought;

22. Notes the Commission's assessment of the importance of the impact of the funds on supply and demand but calls on the Commission to continue its assessment of the real structural effects of fund projects, i.e. of the supply trend in the medium to long term, and to publish its findings;

23. Notes the persistence of problems relating to deductions made by certain managing authorities when aid payments are made and reminds the Commission of the undertaking it gave at the 1991 discharge to consider the matter and calls, therefore, for determined action to stamp out these irregular practices;

Internal policies

24. Notes that the Court of Auditors' assessment of the three research framework programmes so far approved leads to the conclusion that many shortcomings may jeopardize the achievement of the objectives assigned to research by Article 130f of the Treaty (strengthening the scientific and technological bases of Community industry and encouraging it to become more competitive at international level); considers that these shortcomings should be resolved by:

- reducing delays which have hitherto affected the approval and implementation of research programmes, with regard to decision making procedures and administrative management,

- promoting coordination with the governments and Member States, public and private research bodies and businesses so as to establish synergy and thereby increase the proportionately minor impact of Community financial intervention,

- focusing evaluation on checking the objectives set by the Treaty and establishing criteria which take account, not only of technical and scientific factors relating to the suitability of financial planning instruments;

25. Calls on the Court of Auditors to include in its multiannual programme consideration of the constraints which commitology entails for the implementation of research projects and monitoring of the new selection system and new administrative structures which the Commission has set up to remedy the administrative shortcomings reported by a group of independent experts;

26. Calls on the Commission, given the frequently inordinate time-lags between adoption of a specific programme under the third framework programme and commitment of the first appropriations, to ensure that the interval of time between the above two stages does not, under any circumstances, exceed nine months when programmes are implemented under the fourth framework programme;

External relations

27. Calls on the Commission and the European Investment Bank (EIB) carefully to monitor the reimbursement of loans made to the countries of central and eastern Europe and the republics of the former Soviet Union, and to keep Parliament fully informed of all defaults whether or not they result in a formal call on budgetary resources under the Community budgetary guarantee for such loans;

28. Calls on the Commission to set up, jointly with other donors, an information network on available food supplies and delivery conditions in the developing countries, with a view to increasing the efficiency of triangular operations;

Financial management

29. Is disturbed at the Court's observations concerning the role of the Council's financial controller; endorses the Court's recommendation that the financial controller take a more active and conspicuous part in the process of internal control, and that Council remove any ambiguity as far as the financial controller's duties are concerned;

30. Notes that the handling by the Commission's financial controller of ex post referrals for approval, while still giving cause for concern in 1993, appears to be improving; nevertheless insists again that the Commission henceforward respect the division of responsibilities laid down in the Financial Regulation whereby the financial controller withholds approval from any operation which does not comply with the Financial Regulation, while the institution's superior authority overrules such refusals where it deems fit;

31. Reiterates its request to the Court of Auditors that it provide Parliament each year with a table relating to withholdings of approval and overrules in each institution, preferably as part of its annual report;

32. Notes that since June 1994 the post of financial controller at the Commission has been filled on a provisional basis; calls on the Commission to proceed without delay to a definitive appointment compatible with independent performance of the duties of financial controller;

Fraud

33. Is not yet convinced that national controls are targeted on the areas presenting the highest risk of fraud; calls on the Commission to step up its pressure on Member States to apply proper risk analysis techniques;

34. Calls again upon the Commission, with a view to stepping up the fight against fraud, to submit by 30 June 1995;

(a) proposals aimed at making payment of EU monies to Member States conditional upon satisfactory implementation of their control obligations;

(b) proposals aimed at imposing penalties on Member States for failure to notify cases of fraud and irregularity;

(c) a report on the problems involved in recovery of sums unduly paid out or evaded;

Other

35. Asks the Commission to confirm that it will submit an implementation report on subsidies to outside organizations from the budget to Parliament by mid-May each year, these reports to outline how and to what extent the Commission has respected the criteria for the award of such subsidies laid down by the budget authority in the relevant remarks;

36. Asks the Commission again to present proposals by 30 June 1995 to enable it to suspend payments to Member States in any area of the budget where they fail to fulfil their control obligations to the Commission's satisfaction.

(1) OJ No L 70, 16. 3. 1990, p. 1.

(2) OJ No C 128, 9. 5. 1994, p. 322.