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 Union for the 1994 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 18 September 1995 ((OJ L 240, 7.10.1995, p. 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 11 March 1996 (C4-0200/96),

- having regard to the report of the Committee on Budgetary Control and the other documents mentioned in the discharge decision (A4-0098/96),

GENERAL ISSUES

1. Welcomes the spirit of constructive cooperation between the Commission and the Court of Auditors displayed in the 1994 Annual Report ((OJ C 303, 14.11.1995.)), within the framework of their respective roles and responsibilities, as defined by the Treaties, which can only be beneficial to the way the Union budget is implemented;

2. Notes the Commission's efforts to install a system of sound and efficient financial management (SEM 2000), aiming at making more efficient the way the European taxpayers' monies are disbursed; states that the success of that initiative will only be judged by its practical results in the forthcoming financial years;

3. Notes again, however, that in practice 80% of the Union budget is managed by Member States and that consequently no meaningful and durable improvement of the budget implementation is conceivable without strenuous efforts undertaken in parallel at national, regional and local level; deplores the fact that the Council's recommendation on the 1994 discharge does not take this fact into account and that no constructive measures to improve budgetary management are put forward in the recommendation;

4. Welcomes the occasional remarks by Council with regard to non- or inadequate compliance by the Member States with Community provisions, such as for example on environment and public works contracts within the framework of the Structural Funds, because it is the Member States who bear full responsibility for violating existing rules, but is disappointed at the lack of an effective strategy by Council to address this problem;

5. Calls on the Commission to fulfil the duties entrusted to it by the Treaties by seeing to it that Union expenditure is managed in a way ensuring full compliance with Union law; regrets in this respect the lukewarm attitude taken by the Commission towards Member States which ignore their legal obligations; insists that the Commission make full use of the means at its disposal to guarantee that appropriations spent represent good value for money and that the Union's financial interests are fully protected;

The Statement of Assurance (DAS)

6. Takes the view that the Statement of Assurance (DAS), issued under the Maastricht Treaty, will enhance sound financial management and improve implementation of the budget by the Commission;

7. Notes that while management of commitment appropriations caused no major problems in 1994, handling of payment appropriations gave rise to a great number of formal and substantial errors which the discharge authority cannot ignore;

8. Asks the Commission henceforth to include in the accounts of the European Union an account under the heading 'specified amounts subject to recovery proceedings¨, specifying individual cases and sub-totals, on the basis of the substantial errors reported by the Court of Auditors; asks furthermore the Commission to inform the budgetary authority of action taken on each of those cases;

9. Calls on the Court of Auditors to give serious consideration, taking into account the resources available, to the possibility of drawing up statements of assurance based on specific sectors of policy or on expenditure in individual Member States;

Own resources

10. Believes that the Commission and the Member States must step up their checks on the acceptance and customs status of goods at the Union's external frontiers and calls upon the Commission to draw up a report on these matters;

11. Calls on the Commission to submit an annual report on the forcible recovery by Member States of all amounts owed to the Community budget;

12. Reserves its position on the transit system pending the conclusions of its Committee of Inquiry into the Transit System;

Agricultural spending

13. Notes that, in spite of measures introduced in the context of the reform of the common agricultural policy, farm spending's share of the 1994 budget increased by 1.3% compared to the previous year;

14. Deplores yet again the large gap between budget estimates and actual spending in the agricultural sector; takes the view that these differences cannot be explained solely by unexpected factors (weather conditions, diseases, etc); urges therefore the Commission to tighten management measures, in particular in the chapters showing a repeated overspend, and to work closely with Member States for the improvement of forecasts used as a basis for the budget;

15. Calls on the Commission, pending the final decision on the amount of the penalty to be imposed for malpractices which occurred in the Irish beef processing industry, to ensure that the Irish authorities fully implement Regulation (EEC) 2456/93, aimed at guaranteeing the proper functioning of the beef market;

16. Calls on the Commission to ensure that the French authorities fully implement in Haute-Corse the regulations on the special aid for hill and mountain areas and on the suckler cow premium and calls on the Commission to find a satisfactory solution regarding the restitution of unduly paid premiums; states that Parliament will pay full attention to this in the clearance of accounts procedure;

17. Deplores the fall in the rate of utilization of the appropriations for cofinancing the monitoring of EAGGF Guarantee expenditure and calls on the Council to adopt as soon as possible the regulation proposed by the Commission on the implementation of Member States' action programmes on control of EAGGF expenditure so that it can still take effect in 1996;

Common Organization of the Market for fruit and vegetables

18. Deplores the particularly high rates of withdrawal of certain fruits and vegetables from the market (up to almost 60% at a total cost of almost 400 mECU in 1994); notes that the level of these rates reflects not only a waste of economic resources but also problems of an ecological nature, serving to tarnish the image of the European Union, even though the common organization of the market (COM) in fruit and vegetables scarcely absorbs 4.5% of total EAGGF Guarantee expenditure;

19. Deplores the large number of errors noted by the Court of Auditors and committed systematically in many Member States in the implementation of Community rules in the COM of fruit and vegetables, resulting in overpayment of aid;

20. Calls on the Commission to check on the cases raised by the Court of Auditors as part of the clearance of accounts and to take the appropriate financial action, if necessary against the Member States concerned;

21. Calls on the Member States to apply in full the provisions of the future COM and calls on the Commission to reduce the monthly advances paid under the EAGGF Guarantee to Member States which do not comply with the COM rules;

22. Calls on the Commission to increase the material resources allocated to monitoring the implementation of the COM, to draw up a systematic monitoring programme and to consider a broader framework for cooperation between Community inspectors and those of the Member States;

23. Calls on the Court of Auditors to monitor the implementation of the future COM and to submit a special report on the conditions for implementation and the effects of the reforms carried out, within three years from their entry into force;

Fisheries policy

24. Asks the Commission to analyse existing legal provisions to bring Community rules into line with real market situations and the specific features of the Community tuna sector;

25. Calls upon the Commission, in cooperation with the authorities in the Member States, to carry out the checks referred to in the Court of Auditors' report in the 1996 financial year and to report to Parliament on the results;

26. Invites the Commission to carry out an analysis of the current customs policy on tuna, in order to bring it into line with the sector's real needs, by taking equal account of producers' and processors' interests;

Structural Funds

27. Notes that, in addition to familiar problems, the 1994 financial year was also marked by a worrying development which could lead to serious administrative, budgetary and political problems in structural policy in the years ahead;

28. Considers that the Commission must adopt, with the necessary changes to the Regulation, an integrated approach containing the following elements;

- enhancing the role of the monitoring committees so that they genuinely monitor compliance with Community provisions and monitor the progress and management of the projects; recalls, in this respect, its views on this matter expressed already in its resolution on the 1989 discharge;

- drawing up selection criteria and other procedures so that compliance with Community provisions - particularly in the field of the environment and public works contracts - and the progress and management of projects can be monitored more effectively;

- using Article 24 (possibly in an amended form) of Regulation 2082/93 in such a way that failure to comply with the rules will genuinely and directly result in a reduction in or suspension or cancellation of the assistance;

29. Believes that internal procedures operated by the Commission which either formally or in practice may weaken Community provisions or management should be reviewed;

30. Takes the view that existing lacunae in the rules, such as those with regard to interest revenue and the powers and obligations of intermediary bodies, must be remedied;

31. Considers that global subsidies should not be used to provide loans;

32. Takes the view that the various funds should be assigned more clearly defined and distinct priorities and that more attention should be devoted to the project-approval stage, for example by studying existing or possible alternatives or arranging for them to be studied and taking greater account of the recommendations of the Directorates-General directly concerned;

33. Asks the Commission to honour its undertaking to forward to Parliament regular reports on the utilisation of the Structural Funds by Fund, Objective and Community Support Framework, showing in all cases the relative performance of each Member State;

34. Calls on the Commission, and on the Member States in particular, to improve the rate at which projects and programmes are submitted so as to avoid a build-up of commitments in the last few months of each financial year, which leads to serious risk that decisions will be taken in undue haste and hence that errors will arise;

35. Urges the Commission to implement the Interreg initiative much more strictly and points out that the aim of this initiative is to promote cross-border cooperation and not merely the economic development of the areas in question, which could be achieved by other operations under the Community Support Frameworks;

European Social Fund

36. Calls for greater efforts to improve transparency of communication and decision- making processes in order to deny individual Member States the opportunity of hiding behind 'Europe' as a means of distracting attention from their own failures in implementing Community Support Frameworks;

37. Reaffirms that it will continue to monitor the implementation of the ESF so as to avoid any negative impact of current problems on the adequate preparation of post-1999 structural fund reform;

38. Calls on the Commission to take action to prevent the frequent delays before ESF funds are disbursed to final recipients, these delays being due to the fact that intermediate bodies wish to accumulate disproportionately high interest income;

39. Calls once again on the Commission to continue to monitor the application of the additionality principle and, to this end, to exert its influence on the Member States to ensure that all information necessary to ensure transparency is made available;

Internal policies

40. Points out that the implementation of the commitment appropriations for the budget policies included in heading 3 of the Financial Perspective has not posed major problems, with the exception of the budget line on combating fraud in the sector of research (B6-480), which UCLAF is formally requested to utilize in forthcoming financial years;

41. Reiterates its request that the Court of Auditors incorporate in its annual report a chapter covering the Union's internal policies as a whole and also dealing with issues that are common to the various activities financed by heading 3 of the Financial Perspective;

42. Points out that an initial appraisal of the incidents that have had legal repercussions in the tourism sector, and the selection and management mechanisms analysed by the Court of Auditors in the sections on the LIFE programme and the third framework programme for research, casts serious doubts on the transparency of procedures in the area of direct financing and subsidies;

43. Notes in particular that the responsibility exercised by the Commission in the selection of projects to be financed or the choice of those who are to benefit from subsidies is not governed by detailed provisions guaranteeing:

- the publication of financing initiatives;

- the definition of selection criteria and parameters (quantified where possible);

- the establishment of rankings of applicants;

- the harmonization of contracts;

44. Expresses the fear that such regulatory shortcomings will lead to confusion and abuses in selection activities, restrict the scope of internal controls and prevent those applying for funding from bringing procedures before the Court of Justice in order to uphold their legitimate interests;

45. Decides therefore to take an initiative aimed at radically reforming direct funding and subsidies at all levels (sectoral and financial legislation and administrative organization) to ensure transparency of procedures and the protection of the legitimate interests of applicants, while respecting the Community nature of the policies financed;

46. Calls accordingly on the Court of Auditors to report to it on the soundness of the selection and management procedures in the area of direct financing and subsidies; insists, in this respect, that the views of UCLAF and the Commission's DG XX (Financial Control) are fully reflected in the Commission's reply to the Court;

47. Reserves the right, in the light of the aforementioned reports and any other relevant information obtained, to consider the possibility of setting up a committee of inquiry in this area;

48. Affirms that it will closely scrutinize any regulations in this area in the context of current and future legislative procedures in order to ensure that the rules are as detailed as possible;

49. Calls on the Commission to act on the remarks made by the Court of Auditors relating to the sectors of environment and research and in particular the remarks contained in paragraphs 6.12 to 6.17 and 9.10 to 9.15 of the annual report;

50. Calls on the Commission to submit a legal basis for subsidies to consumer organizations and to conduct its own examination as to whether the subsidies to be granted provide value for money;

51. Calls on the Commission's Public Health Directorate in DG V and the Directorate-General for Consumer Policy to produce annual overviews similar to those produced by the Directorate-General for the Environment, Nuclear Safety and Civil Protection;

52. Calls on the Commission to ensure a fuller rate of utilization of payment appropriations in policy areas such as transport safety (Article B2-702) and combined transport (Article B2-706), to which Parliament has always attached high priority;

Lending and borrowing

53. Calls on its Committee on Budgetary Control and the European Investment Bank jointly to establish an informal liaison committee, comprising a small number of representatives of each, to provide a forum for the exchange of views and information within the context of the Parliament's competences in the field of budgetary control;

54. Reiterates its demand that the Court of Auditors have full audit access to the operations of the European Investment Fund in order that it can report to the budget authority on matters relating to the Community budget; calls however on the Commission, the EIB and the Court of Auditors to negotiate an agreement with the European Parliament on the treatment of the information thus obtained to ensure that the interests of EIF investors and borrowers are protected;

55. Notes that the Guarantee Fund is insufficiently resourced to meet the potential level of demand made upon it and that the mechanism by which it is funded in practice places an excessively low limit on the amount of external lending the Community is able to undertake; supports therefore the following measures:

- an increase in the budgetary resources available to finance the Guarantee Fund and the revision of the Financial Perspective necessary to achieve this,

- the establishment of the target level for the Guarantee Fund on the basis of an ongoing risk analysis of loans outstanding at any given time, together with an appropriately flexible funding system,

- the reduction of the amount of the guarantee granted to the EIB for loans in the countries of Central and Eastern Europe and the Mediterranean basin from 100% to 75%;

56. Regrets the fact that the Court of Auditors continues to comment adversely on the management of the finance provided for earthquake reconstruction work in Italy since 1980; asks the Commission to review its decision to re- allocate unused funds intended for earthquake reconstruction to another project completed ten years previously, and arrange with the Italian authorities for the reallocation of the sum to an eligible ongoing project;

Fight against fraud

57. Regrets the low utilisation of appropriations of some key headings in the fight against fraud such as B1-360 and B2-5190 (in the agricultural sector) B6-480 (research) etc; asks the Commission to ensure full utilisation of all anti-fraud headings, and to consider, where appropriate in cooperation with Member States, necessary measures to increase the utilisation capacity of the latter;

58. Instructs Parliament's external offices to inform, on a regular basis, its Committee on Budgetary Control of fraud cases involving Community appropriations mentioned in the media of each Member State and to transmit the relevant material (press-cuttings, video tapes, etc) as appropriate;

Cooperation with the Mediterranean countries, the developing countries and other third countries

59. Urges the Commission to remove the unnecessary constraints and conditions on the use of the funds granted to support structural adjustment in the countries of the Southern and Eastern Mediterranean, inter alia by considering the possibility of abandoning import programmes, provided the foreign trade of the beneficiary countries is sufficiently liberalized and the currencies are freely convertible and transferable, and replacing such programmes with straightforward balance-of-payments support;

60. Calls on the Commission to ensure that its supervision and control procedures are improved and better targeted, and to increase the staff resources allocated to the structural adjustment support programmes by means of internal redeployment, making additional staff available who have the necessary skills and experience to perform the budgetary and financial analyses required for each beneficiary country and ensure that the budgetary strategies of those countries are compatible with the economic reform programmes;

Common Foreign and Security Policy (CFSP)

61. Notes that, by virtue of financial decisions on joint actions under the Common Foreign and Security Policy (CFSP), the Council has restricted the Commission's right to implement the budget under its own responsibility and has thus also restricted Parliament's right to hold the Commission fully accountable for the implementation of the budget; points out that this has produced a loophole in the discharge procedure, for which the Council is solely responsible;

62. Points out, in particular, that the procedure adopted by the Council for the allocation of resources in tranches in the joint action on Mostar led to unnecessary delays and complicated administrative processes out of keeping with the usual procedure, with a consequent lack of clarity and difficulties of control;

63. Calls on the Council, when taking decisions in connection with the CFSP in future, to respect fully the financial provisions in the Treaty and the Community budget; deplores the fact that the Council recommendation on the 1994 discharge does not even comment on the financing of the CFSP during that year;

64. Calls on the Commission to submit a report by 1 September 1996 on all the financial and associated institutional aspects of the CFSP, including, in the interests of complete transparency, the role and significance of the contributions made by the Member States towards its funding;

65. Reiterates the request made to the Court of Auditors in its resolution of 15 November 1994 ((OJ C 341, 5.12.1994, p. 37.)) for an opinion on the conditions governing the implementation of expenditure under the CFSP; expects this aspect of the CFSP to be fully covered in the report that the Court is currently preparing on the CFSP; stresses the need for this report to be submitted in time for it to be taken into account in the deliberations of the Intergovernmental Conference;

Phare Programme

66. Asks the Commission to provide:

- explicit job definitions and responsibilities for all elements in the Phare management structure (especially delegations),

- full and technically qualified staffing for delegations, to be achieved through the creation of a 'diplomatic service¨, ensuring genuine staff mobility, in the Commission,

- clear regulations on the conditions and competences for local staff in delegations,

- financial autonomy (local budgets and spending limits) and project approval by delegates, with due regard to the location of the delegation, the seniority and experience of the delegate, etc.,

- clear and explicit delineation of administrative responsibilities of statutory staff, temporary staff and outside consultants,

- rationalisation of PMUs on the basis of an analysis of genuine management need;

67. Calls on the Commission to produce, by 30 September 1996, a strategy paper defining the role of the Phare Programme in the preparation of the countries of Central and Eastern Europe for accession to the EU;

68. Calls for a more pro-active approach to project definition and approval by the Commission, including the stipulation of conditions designed to ensure concrete results, dissemination of technical know-how and medium term sustainability of effect for Phare projects in all sectors;

Tacis Programme

69. Asks the Commission to specify unambiguously which tasks involved in the management of Tacis:

- should be the exclusive responsibility of public authorities and only carried out by public officials,

- can be carried out by non-officials employed by the Commission and overseen by officials,

- can be contracted out under supervision;

asks the Commission furthermore to state what staff resources are required for each category of work;

70. Calls on the Commission to open permanent delegations with clear-cut competences in all countries benefiting from Tacis assistance, and to ensure that they are fully staffed with appropriately qualified officials; to this end believes that the relevant directorate-general of the Commission should recruit officials on the basis of compulsory mobility; asks the Commission to report to Parliament on the action it intends to take to meet these requirements by 31 July 1996;

71. Asks the Commission to pay more attention to the medium-term sustainability of projects when approving them, in particular by making greater demands on beneficiaries in terms of performance, follow-up and the dissemination of results and by linking projects to other forms of support and assistance such as EIB/EBRD loans, finance from local credit institutions, equity participations, etc.;

72. Asks the Commission to produce a global strategic evaluation of the achievements of Tacis so far in political, social and economic (sectoral and macro-economic) terms and to propose strategic targets for the next five years of Tacis; asks that this evaluation be available to the European Parliament before it adopts its opinion on the new Tacis Regulation;

73. Expresses its concern as to the threat posed by fraud, especially that committed by organised crime, to the Tacis Programme; stresses the importance of checking the credentials of applicants for Tacis contracts and of monitoring the use to which money is put in the course of the contract; asks moreover that the Commission take a firm line in dealing with allegations of fraud involving its own officials;

Administrative expenditure

74. Asks the Commission to report to Parliament in time for the first reading of the 1997 budget on the whole series of measures taken to ensure proper financial and administrative management of the Commission's a) external delegations and b) assets (excluding research);

75. Asks the Court of Auditors to draw up a report on language courses organised in Luxembourg for European Union officials, with particular reference to the 1994 call for tender and to provide an assessment of the effects of the present system;

76. Requests the Interinstitutional Committee on Data-processing to carry out a comparative study on Union Institutions' information available on EU data bases with a view to eliminating areas where there is overlap and/or duplication of effort.