EUROPEAN COMMISSION Brussels, 22.2.2017 SWD(2017) 105 final COMMISSION STAFF WORKING DOCUMENT Opinion of the Republic of Austria concerning the preliminary report on the findings of the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016) Accompanying the document Report from the Commission on the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016) {COM(2017) 94 final}



The preliminary findings of the investigation into the manipulation of statistics carried out in Austria in accordance with Regulation (EU) No 1173/2011 have been passed on to the Republic of Austria in accordance with Article 6 of the Commission Delegated Decision 2012/678/EU on 20.12.2016 for a written opinion. The Commission asked the Republic of Austria to send the written opinion on the preliminary findings of the investigation by 19 January 2017. The Republic of Austria provided the following written opinion on 25 January 2017:



Opinion pursuant to Article 8 of Regulation (EU) No 1173/2011 on the preliminary report on the findings of the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016) Thank you for sending the preliminary report. The Republic of Austria wishes to express the following opinion on the preliminary report: It should first of all be noted that Eurostat does not at present have any reservations regarding Austria's data under Regulation (EC) No 479/2009. The reason for this investigation is the perpetration of criminal actions by individuals who are facing court action. The Land Salzburg reacted quickly and appropriately to the problems addressed in the report as soon as they were discovered. The Court of Audit has investigated the transactions in detail and the data concerning public debt for 2012 were revised on the basis of its report. Budget policy assessment of public debt for 2012 in the proceeding pending since 2009 regarding an excessive deficit for Austria would not have been different, even in view of the subsequent revision of the data. The public deficit for 2012 was actually revised slightly downwards (by 7 million euros) following the audit. As at the end of 2013, public debt was restored by Land Salzburg to the level it would have been at if the relevant transactions had not taken place. This also meant that the operation of the economic and monetary union was not placed at risk. Regarding the facts set out in the preliminary report, it should be noted that legal analysis and judicial follow-up of the transactions in question in Austria have not yet been completed. Certain statements in the preliminary report should therefore be regarded as provisional.

In particular, examination by the Austrian criminal courts is still pending, despite its importance for determining the extent to which the misrepresentation of data under Article 8 of Regulation (EU) No 1173/2011 occurred by intent or as a result of gross negligence. The corresponding EU legislation cannot actually be interpreted to mean that the Member State in question is also obliged to exclude criminal behaviour. It should also be noted regarding the seriousness of the infringement of Regulation (EU) No 1173/2011 that the additional public debts were offset by corresponding financial assets acquired as a result of the debts. This means that the debt of Land Salzburg, which amounted to 3.528 billion euros as at the end of 2012 according to current data and ESA 2010 was reduced to 2.208 billion euros by the end of 2013 by liquidating financial assets. It has since fallen further. (See: http://www.statistik.at/web_de/statistiken/wirtschaft/oeffentliche_finanzen_und_steuern/maastricht-indikatoren/oeffentlicher_schuldenstand/index.html ) This 1.320 billion euro reduction in the public debt of Land Salzburg from the end of 2012 to the end of 2013 exceeds the 1.192 billion euro underreporting of debts found by Statistik Austria for the end of 2012. The public deficit of Land Salzburg for 2012 was revised downwards by 7 million euros. This means that not only was the incompleteness of the DP data rectified, but also that the public debt of Land Salzburg was, within a year, returned to the level it would have been at if the transactions described in the preliminary report had not occurred. This opinion comprises: a)a summary of the most important points on which there is disagreement with the statements in the preliminary report, b)notes and proposed revisions of individual sections of the preliminary report (Annex I) and c)opinions from the Salzburg State Office [Amt der Salzburger Landesregierung], the Court of Audit [Rechnungshof] (RH), the Austrian Federal Statistics Institute [Bundesanstalt Statistik Österreich] (Statistik Austria, STAT), the Austrian Central Bank Oesterreichische Nationalbank (OeNB) and the Austrian Federal Financing Agency [Österreichische Bundesfinanzierungsagentur] (OeBFA) in the text (Annex II).



1.Reply to the criticisms contained in the preliminary report The following points are discussed individually in reply to the criticisms contained in the preliminary report: adequate and timely information supplied to Eurostat no encouragement of transactions by OeBFA

extent and significance of data revisions with regard to public deficit and public debt for 2012 no infringement of reporting or auditing obligations by OeNB/Eurostat misinterpretation of statements failure by the supervisory bodies to expose the faults defined as negligent behaviour no failure on the part of RH to reveal data discrepancies no gross negligence on the part of the Land Court of Audit or the Salzburg State Office 1.Adequate and timely information supplied to Eurostat Eurostat's allegation, in the report, that information is not provided on time is rejected by the Austrian authorities. The documentation of Statistik Austria shows that shortly after December 2012, namely on 31 January 2013, there was an exchange of information with Eurostat concerning the entry of financial derivatives, which was triggered by the transactions in Salzburg. Both authorities (Statistik Austria and Eurostat) therefore held approximately the same information following the exposure of the Salzburg financial scandal in December 2012. They subsequently exchanged information, as far as verifiable facts were concerned, up to the notification in April 2014. The preliminary report explains in detail that the revision of data concerning the public debts of Land Salzburg took up a considerable amount of time and resources. As the report states, Statistik Austria uses the data recorded by the Court of Audit for the public debt of Land Salzburg for 2012. The Court of Audit published its report on 9 October 2013. Statistik Austria immediately informed Eurostat of the problems, but also pointed out that the concept of debt used by the Court of Audit does not necessarily also have to match the definition under Regulation (EC) No 479/2009 and that this still needed to be verified. Statistik Austria verified the results of the Court of Audit in the light of the relevant statistical requirements and reported the data at the next data notification meeting on 31 March 2014 under Article 6 of Regulation (EC) No 479/2009. Paragraph one of that Article states that: "1. Member States shall inform the Commission, as soon as it becomes available, of any major revision in their actual and planned government deficit and debt figures already reported". The preliminary report states that the final revision of data in 2014 was as reported by Land Salzburg as early as 27 March 2013 and therefore suggests that a larger debt could have been submitted in the spring notification for 2013. It should not be forgotten, however, that according to Article 6(2) of Regulation (EC) No 479/2009 referred to above, major revisions of data already reported need to be properly documented: ''2. Major revisions in the actual deficit and debt figures already reported shall be properly documented.“ Proper documentation by Statistik Austria was not possible at this time, since the report from the Court of Audit was not available and there was no proper documentation from other sources. According to paragraph 1 of Court of Audit report Bund 2013/9 Land Salzburg – Finanzielle Lage [Federal 2013/9 Land Salzburg - Financial Position], there were problems with documentation in December 2012, as the relevant documents were not always available following confiscation during criminal prosecution by the Austrian authorities. Nor were financial statements available for 2012 for Land Salzburg at the time when the notification was published, in autumn 2013. According to the STAT list of methodologies for the national accounts (as at March 2016, e.g. pages 48, 175, 193), these financial statements are used as a basis for the national accounts. Eurostat never found fault with this. The practice of including certified figures in the statistics, moreover, complies with and results from Council Directive 2011/85/EU on requirements for budgetary frameworks of the Member States, under Article 3 of which such national systems of public accounting must be subject to internal control and independent audits. This means that if certified figures are available, they should be used. 2.No encouragement of transactions by OeBFA Page 37(3) of the preliminary report states that in the absence of monitoring mechanisms, the framework agreement between the OeBFA and the Laender would have had the effect of encouraging evasion of the clause prohibiting speculation in the case of Salzburg. The response to such a claim might be that agreements are in principle concluded to comply with this clause. Both the OeBFA and Land Salzburg were subject to independent external monitoring. It was not economically appropriate or legally necessary to also give the OeBFA a right of inspection. Even if the use of the OeBFA funds had been monitored by OeBFA, this would have been irrelevant for the purposes of the alleged encouragement of data manipulation, since under Finanz-Verfassungsgesetz [Financial Constitutional Law] 1948 - F-VG 1948) Original text: BGBl. [Federal Law Gazette] No 45/1948 as amended in BGBl. I No194/1999 (DFB), the Laender are obliged to deal with borrowing themselves and finance themselves on the market (§ 14. Land legislation governs the raising of loans by the Laender, local authority associations and municipalities.), nor is there any federal liability for the debts of the Laender. This means that each federal Land is responsible for its own debt, and so the points raised by the Commission are not essential conditions for preventing data manipulation.

There was therefore own borrowing by Land Salzburg amounting to about 1.7 billion euros, since the revised debt as at the end of 2012 totalled 3.509 billion euros, whereas the debts of Land Salzburg to the OeBFA only amounted to 1.83 billion euros as at the end of 2012 according to the Court of Audit report of October 2013 (page 145). The framework agreement certainly had a positive effect on the representation of public debt during the period in question, since part at least of the (hidden) public debt of Land Salzburg was recorded correctly by the statistical authorities. 1.3Extent and significance of data revisions with regard to government deficit and government debt for 2012 Page 40(1) of the preliminary report contains the following wording: Thereby those entities facilitated the fact that (…) leading to the misrepresentation in 2012 and 2013 of Austria’s deficit and debt data regarding 2008-2012 to Eurostat, i.e. after the entry into force of Regulation (EU) 1173/2011 (NB: it should be called ‘the Regulation’). However it happened that the reporting by Land Salzburg complied neither with federal nor with EU regulations, this did not cause public deficits and debts to be understated in initial national reporting for 2012 and 2013. The following data concerning public debt were reported to Eurostat: Table 1: Government debt under ESA 95 in notifications to Eurostat under Regulation (EC) No 479/2009 in million euros Notification of 30.03.2012 28.09.2012 29.03.2013 30.09.2013 09.04.2014 In 2012 235.000* 230.192 227.431 227.173 228.422 In 2013 - - 234.987 235.000 233.303 * In the course of clarification with Eurostat, the value prior to publication by Eurostat was revised to 230.000, which was still well above the final value.

Remark: From the autumn 2014 notification onwards, the data were to be reported in accordance with ESA 2010 and so were not compatible. Table 1 shows that for the whole of 2012, Austria reported higher public debt for that year than was actually necessary after correction of the statistical problems through the 2014 March-DP-Notification. Austria also reported higher public debt figures for 2013 in 2013 than were finally actually necessary. The misrepresentation described in the preliminary report therefore applies solely to 2012 in 2013 for the purposes of the sanctions threatened in Article 8 of Regulation (EU) No 1173/2011. Furthermore, Statistik Austria reduced the public deficit for 2012 by 7 million euros after having verified the data of Land Salzburg.

Table 2: Government deficit under ESA 95 in notifications to Eurostat under Regulation (EC) No 479/2009 in million euros Notification of 29.03.2013 30.09.2013 09.04.2014 In 2012 9.228 9.625 7.684 7.818 7.866 In 2013 - - 7.447 7.221 4.776 It should also be noted that the reports based on Article 3 of Regulation (EC) No 479/2009 are obligatory for four reporting years. Any amendments/revisions of data in relation to previous notifications must be made for the entire reporting period (2010 to 2012 were affected in the 2014 March-DP-Notification). 1.4No infringement of reporting or auditing obligations by OeNB/Eurostat misinterpretation of statements On page 37(4), OeNB is accused of having failed to report to the Commission (Eurostat). In actual fact, OeNB has no obligation to report to Eurostat for ESA purposes either under EU or national law. Prior to publication in December 2012, OeNB had no knowledge of investments by Land Salzburg in financial derivatives, nor was it responsible for auditing the financial statements of the Laender. Nor can reporting securities worth 300 million euros be described as ‘exposure’, since the securities were recorded by OeNB on a routine basis, reported to STAT and included in the calculation of public debt by STAT. The finding by Eurostat that a number of statements by OeNB to representatives during the inspection were incorrect is itself incorrect and is based on misinterpretation of statements (see Annex II - Opinion of OeNB). 1.4Failure by the supervisory bodies to expose the faults defined as negligence On page 26, the failure by Land Salzburg to make the entries proposed by STAT and the fact that “such a misuse of the accounts was not unveiled by any of the monitoring entities demonstrates more generally a negligent behaviour” were generally described as “negligent behaviour”. This contradicts the results of the preliminary report (e.g. on p. 24), according to which the Court of Audit was obviously incorrectly or incompletely informed in its (horizontal) audit in 2012. On page 37(2), the Court of Audit is accused of having failed to investigate data discrepancies in 2012. This is not actually the case, since the events in 2012 resulted in the much more extensive audit by the Court of Audit. It should also be noted that differences between administrative data and data in accordance with ESA/EDP are not confined to a certain Land or municipality and do not indicate ‘manipulation’ or ‘misreporting’. Regulation (EC) No 479/2009 permits the statistical authorities and Eurostat to revise administrative data without negligence being assumed as a result. The revisions are made as explained on pages 25 to 27 of the preliminary report. Differences between administrative data and data in accordance with ESA/EDP had been routinely reported to Eurostat since 2010 as far as the public deficit of individual Laender was concerned. Eurostat had therefore also been aware since September 2010 that there were differences between administrative data and data in accordance with ESA/EDP for Land Salzburg.

Last but not least, according to Regulation (EC) No 479/2009, liabilities arising from financial derivatives are expressly not part of public debt. The misrepresentation of financial derivatives does not necessarily lead to the conclusion that the public debt also needs to be revised. It should therefore be concluded that the supervisory bodies are not guilty of ‘negligence’. 1.6 No gross negligence on the part of the Land Court of Audit (LRH) or the Office of the Salzburg State Office The preliminary report does not take due account of the fact that criminal law was broken and certain findings are based on incomplete information. The Internal Audit Department was not responsible for monitoring financial management and accounts for the entire Salzburg State Office. The ‘four-eye’ principle was actually applied in the Salzburg State Office, but it was not always acted upon, sometimes unlawfully. The fact that the principle existed finally led to the exposure of the corruption. There was an advisory board to monitor financial transactions, but it was unlawfully provided with incorrect information. There were external audits, but these, too, were unlawfully blocked. Last but not least, Land Salzburg did not actually derive any benefit from the incorrect reporting of data, but a huge financial loss. The scale of the hidden transactions then caused delays in correcting the data. Annexes I and II contain an extensive opinion and detailed remarks by the Salzburg State Office on the preliminary report. Overall, it can be said with regard to the report that some assertions were made without being backed up with evidence or corresponding documents (... apparently greater liabilities ... allegedly not informed ... it appears that ... these misrepresentations have possibly ...). These assertions should either be backed up with conclusive evidence or omitted from the report. 0.Legislation passed as a result of the Salzburg financial scandal As long ago as February 2013, political agreement was reached on a general prohibition on speculation with public funds which entails criminal penalties and the remaining implementation steps are to be completed by the end of 2017. Land Salzburg gave its prohibition on speculation Land constitutional status as long ago as July 2013. BGBL. II No 313/2015 greatly improved the regulation of estimates and financial statements of the Laender and municipalities, following the recommendations of the Court of Audit in particular. The reform included an integrated accounting system comprising financial statements, balance sheets and profit and loss accounts based on IPSAS and following the model of the budgetary law reform and implementation of the principle of accrual-based accounting. The rules comply with Article 3 of Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States. The public accounts of sub-national authorities are regulated in a way that is consistent with federal accounts. There was also agreement on binding upper limits on liability on the basis of harmonised data. The Austrian rules are therefore more comprehensive and promote budgetary discipline more stringently than the rules of the European Union. The federal procedure for lending to the Laender was restructured more rigorously and relaunched after the speculation by Land Salzburg became known, as a result of these cases. Additional corresponding information is now, as a result, obtained from the Laender (e.g. concerning the use of funds by the Laender) and if the provisions of agreements are infringed, it is possible to call in the loans granted to the Laender. 0.Summary of the disagreements with the preliminary report With regard to the misrepresentation of data, the preliminary report does not take account of the fact that the legal processing of apparently criminal actions in Austria has not yet been completed. The question of understatement of the public debt of Austria for 2008 and 2009 is irrelevant as far as any penalty is concerned, nor has it been specifically proven and in case of doubt it is covered by EU law (ESA revision policy). As explained above, not only had the misrepresentation of data come to an end by the end of 2013, the debt of Land Salzburg had been brought down to a level it would have been at if the misrepresentation had never occurred. The public deficit for 2012 was revised downwards.

It is incorrect to claim that Eurostat was not informed until 10 months after the appearance of a suspicion. It is incorrect to claim that inconsistencies in the data from various sources could logically lead to the conclusion that data have been misrepresented or even that such data or information were known to the statistical authorities. It is correct to claim that since September 2010, Eurostat was aware of differences between administrative data and data in accordance with Regulation (EC) No 479/2009 for Land Salzburg. It is incorrect to claim that the Court of Audit failed to investigate discrepancies in the data. It is, however, correct that it immediately launched wide-ranging audit measures and significantly contributed to showing the actual asset and debt management. ANNEX I Remarks and proposed revisions of individual sections of the preliminary report ANNEX II Opinions from a) the Salzburg State Office (Amt der Landesregierung), b) the Court of Audit (Rechnungshof), c) the Austrian Federal Statistics Institute (Bundesanstalt Statistik Österreich), d) the Austrian Central Bank (Oesterreichische Nationalbank) E) the Austrian Federal Financing Agency (Österreichische Bundesfinanzierungsagentur) in full.



Opinion OF THE REPUBLIC OF AUSTRIA under Article 8 of Regulation (EU) No 1173/2011 on the preliminary report on the findings of the investigation related to the manipulation of statistics in Austria as referred to in Regulation (EU) No 1173/2011 of the European Parliament and of the Council on the effective enforcement of budgetary surveillance in the euro area (Commission Decision of 3 May 2016)

ANNEX I Remarks and proposed amendments to individual sections of the preliminary report The following remarks and amendments are taken from the following documents: -Opinion of Salzburg State Office (SBG, 18. 1. 2017 (see Annex II) including additional information from 19. 1. 2017) -Opinion of the Court of Audit (RH, 18. 1. 2017 (see Annex II) -Opinion of the Austrian Federal Statistics Institute (STAT, 16. 1. 2017 (see Annex II) -Opinion of the Austrian Central Bank (OeNB, 11. 1. 2017 (see Annex II) including additional information from 17. 1. 2017) -Opinion of the Austrian Federal Financing Agency (OeBFA, 12. 1. 2017 (see Annex II) -Information from the Federal Ministry of Finance (BMF, 17. 1. 2017) Preliminary remark: In the case of translation questions, the remarks and amendments refer to the German version. SBG 1 The Internal Audit

SBG 1.1 Text according to preliminary report (p 3): The report establishes that, from the year 2002, the executive and legislative powers in Land Salzburg respectively acted and legislated in a way that granted unlimited powers to the Financial Management Department of Land Salzburg, to enter and conclude high-risk financial transactions with credit institutions, for unlimited time and unlimited amounts, while at the same time exempting that Department from being monitored by the Internal Audit Department of Land Salzburg. Proposed amendment: The report establishes that, from the year 2002, the executive and legislative powers in Land Salzburg respectively acted and legislated in a way that granted unlimited powers to the Financial Management Department of Land Salzburg, to enter and conclude high-risk financial transactions with credit institutions, for unlimited time and unlimited amounts. By decree, the Internal Audit Staff Unit of the Directorate of the Land Government Office (Landesamtsdirektion) has no responsibility for monitoring financial management and accounts, as this is already the responsibility of the federal and Land courts of auditors. SBG 1.2 Text according to preliminary report (p 16): Furthermore, the State Government appoints, subject to the approval of the Federal Government, the Landesamtsdirektor, who is the head of the State Office of Land Salzburg. The State Office of Land Salzburg is the administrative support of Land Salzburg and is divided into several departments, inter alia the Internal Audit (Interne Revision) and the Abteilung 8: Finanz– und Vermögensverwaltung (hereinafter, the Financial Department). Proposed amendment: Furthermore, the State Government appoints, subject to the approval of the Federal Government, the Landesamtsdirektor, who is the head of the State Office of Land Salzburg. The State Office of Land Salzburg is the administrative support of Land Salzburg and is divided into several departments, inter alia the Directorate of the Land Government Office (Landesamtsdirektion) and the Abteilung 8: Finanz– und Vermögensverwaltung (hereinafter, the Financial Department). Internal Audit was a Staff Unit of the Landesamtsdirektion. SBG 1.3 Text according to preliminary report (p 20):

Moreover the Commission ascertains that the entire State Office of Land Salzburg, among which the Financial Department, was exempted from being monitored by the Internal Audit from 1999 onwards. Proposed amendment: Moreover, the Commission finds that by decree the Internal Audit Staff Unit of the Landesamtsdirektion had no responsibility for monitoring financial management and accounts for the entire State Office, as this is already the responsibility of the federal Court of Audit and the Land Court of Audit. SBG 1.4 Text according to preliminary report (p 21): If the Internal Audit had not been barred from monitoring the Financial Department in 1999, it is likely that it would have been able to point out these failures of the internal control procedures.

Proposed amendment: Omit this sentence (the Internal Audit was not barred from anything, but by decree was not responsible for auditing financial management and the accounts for the entire office). SBG 1.5 Text according to preliminary report (p 35): During the same period of time, the Internal Audit and the Accounting Unit in the State Office of Land Salzburg were barred from analysing the transactions of the Budget Unit and from analysing the recording of those transactions in the financial statements. Proposed amendment: During the same period of time, the Accounting Unit in the State Office of Land Salzburg was barred from analysing the transactions of the Budget Unit and from analysing the recording of those transactions in the financial statements and the Internal Audit was not responsible for this. SBG 1.6 Text according to preliminary report (p 36): The role of the State Government, and more specifically that of the Finanzreferenten, consisted partly in granting powers of attorney to three employees of the Financial Department to engage in high-risk investments from 2002 onwards and partly in exempting the activities of the Budget Unit from being audited by the Internal Audit and the Accounting Unit of Land Salzburg. Proposed amendment: The role of the State Government, and more specifically that of the Finanzreferenten, consisted partly in granting powers of attorney to three employees of the Financial Department to engage in high-risk investments from 2002 onwards and partly in exempting parts of the financial management activities of the Budget Unit from being audited by the Accounting Unit of Land Salzburg. By decree, the Internal Audit was not responsible for auditing financial management for the entire office. At other points, too, (e.g. P 38), incorrect designations such as Direktion Interne Revision (Internal Audit Department) should be corrected, since as pointed out, this is only a staff unit within the Landesamtsdirektion. See also proposed rewording for SBG 9.

SBG 2 The four-eye principle and the accusation of gross negligence Text according to preliminary report (p 22): Hence, the Commission concludes that since, at least, 2002, Land Salzburg did not comply with the four-eye principle in the context of the financial management of Land Salzburg, in several occasions. This principle is paramount in ensuring sound financial management. The Commission considers that Land Salzburg's failure to comply with this principle constitutes serious negligence. Proposed amendment (addition): It should, however, be noted that there certainly is a four-eye principle laid down in the financial management guidelines. The Court of Audit makes the following statement in its report ‘Land Salzburg - Financial Position’ from 2013: “ Certain elements of an ICS, such as observance of a four-eye principle or a division of functions between trading (front office) and processing (back office) in financial transactions were contained in the financial management guidelines for Land Salzburg, but were not always implemented in practice ...”. It should not be forgotten that it was in fact the four-eye principle that finally led to exposure of the financial scandal. The Commission concludes that since 2002 at least, Land Salzburg did not comply with the four-eye principle in the context of the financial management of Land Salzburg, on several occasions. This principle is paramount in ensuring sound financial management, however. SBG 3 Debt of the Land Text according to preliminary report (p 14): ..., the effective amount of underreporting and/or misreporting of debt in that year by Land Salzburg was de facto 0.9% of GDP in that year. Proposed amendment (addition): ..., the effective amount of underreporting and/or misreporting of debt in that year by Land Salzburg was de facto 0.9% of GDP in that year. If the debts assignable to the institutions not covered by the budget but assigned to Salzburg at Land level are added, Land Salzburg would also be more indebted for each of the years 2010 to 2012 in spite of the misreporting, which would bring about a corresponding reduction in the difference in relation to the value subsequently determined (2012) or estimated by Statistik Austria (2010 and 2011), which also includes entities already assignable to the Land but not included in the budget. SBG 4 Accusation of concealing bank accounts Text according to preliminary report (p 23):

Based on the statements of the State Office of Land Salzburg, the Commission concludes that the Financial Department of the State Office of Land Salzburg started to conceal bank accounts under the voranschlagsunwirksame from 2003 onwards. Proposed amendment: Based on the statements of the State Office of Land Salzburg, the Commission concludes that the former unit head of the budget unit, who must be considered to be criminally liable for this, started to conceal bank accounts under the voranschlagsunwirksame Gebarung (extra-budgetary accounts) from 2003 onwards. SBG 5

Accusation of failing to observe unspecified ‘recommendations’ of the Court of Audit SBG 5.1 Text according to preliminary report (p 28): Notwithstanding this, the Commission is not aware of efforts from any of the institutions in Salzburg (Landtag, LRH, State Government, and State Office) to closely follow-up on the recommendations of the RH and it has also concluded in this report that in fact the voranschlagsunwirksamen Gebarung were not effectively followed. Proposed amendment: Notwithstanding this, the Commission concluded that the extra-budgetary accounts (voranschlagsunwirksame Gebarung) were not effectively followed. SBG 5.2 Text according to preliminary report (p 35): This report shows that severe irregularities took place in the compilation, control and reporting of financial, as well as non-financial, transactions in Land Salzburg over a significant period of time. Public accounting rules were not complied with, control was lacking, the four-eye principle was not respected, financial and non-financial transactions were not appropriately reported, recommendations from the RH were ignored, documentation was falsified, signatures were forged and misleading information was sent to the national statistical authorities as well as to the RH, leading to the misreporting of the financial accounts, and hence to the misreporting of the debt data for Austria at least from 2008. Proposed amendment: This report shows that severe irregularities took place in the compilation, control and reporting of financial, as well as non-financial, transactions in Land Salzburg over a significant period of time. Public accounting rules were not complied with, control was lacking, the four-eye principle was not respected, financial and non-financial transactions were not appropriately reported, documentation was falsified, signatures were forged and misleading information was sent to the national statistical authorities as well as to the RH, leading to the misreporting of the financial accounts, and hence to the misreporting of the debt data for Austria at least from 2008. SBG 5.3 Text according to preliminary report (p 36): Furthermore, the Landtag did not demonstrate any clear interest in the recommendations regarding high-risk financial transactions made in 2009 by the RH, nor did it encourage the LRH to undertake in-depth audits of the accounts of Land Salzburg.

Proposed amendment: Furthermore, the Landtag did not encourage the LRH to undertake in-depth audits of the accounts of Land Salzburg with regard to the ‘high-volume and high-risk derivatives transactions’ mentioned by the RH. See also two proposed wordings SBG 9. SBG 6 Explanation of an apparent contradiction Text according to preliminary report (p 29): According to the RH report published on 9 October 2013, the Director of the Finance Department informed the head of the Staff Department in May 2012 that the Head of the Budget Unit had acted against the State Office’s policy and service instructions. However, it should be noted that during the meeting on the 28 September 2016, this statement in the RH report was contradicted by the State Office claiming, on their side, that this event occurred in July 2012, rather than in May 2012. Proposed amendment: According to the RH report published on 9 October 2013, the Director of the Finance Department informed the head of the Staff Department in May 2012 that the Head of the Budget Unit had acted against the State Office’s policy and service instructions, and was punished (warning). The matter therefore seemed to be closed and there was not at first any further suspicion. Not until 2012, when the then Head of the Budget Unit had once again attempted to act against the State Office's policy and service instructions, did an “idea that something had gone wrong” manifest itself.kk. SBG 7

Suspicion of incomplete coverage of financial transactions in monitoring Text according to preliminary report (p 30): ….. In October 2012, the Director of the Financial Department informed some employees of the Financial Department that the portfolio analysed by them was in fact just a part of the total portfolio, i.e. that a part of the portfolio had been concealed. In the second half of October 2012, the Finanzreferent and the Director of the Financial Department jointly decided on the termination of foreign currency transactions and other transactions. The new employee hired on 1 September 2012 was mandated to undertaken such early cancellation of transactions and positions. Among others, financial derivative positions with the Deutsche Bank were cancelled, resulting in a loss of EUR 56 million for Land Salzburg. On 23 October 2012, the Director of the Financial Department reported to the Financial Advisory Board the existence of additional financial transactions that had not hitherto been mentioned in the portfolio report addressed to that board. Proposed amendment: [Remark: omission of the second paragraph on page 30, because it concerns the same event as is mentioned in the fourth paragraph, with the following text:]

….. In the second half of October 2012, the Finanzreferent and the Director of the Financial Department jointly decided on the termination of foreign currency transactions and other transactions. The new employee hired on 1 September 2012 was mandated to undertake such early cancellation of transactions and positions. Among other things, financial derivative positions with the Deutsche Bank were cancelled, resulting in a loss of EUR 56 million for Land Salzburg. On 23 October 2012, the Director of the Financial Department reported to the Financial Advisory Board the existence of financial transactions that had not hitherto been mentioned in the portfolio report addressed to that board. SBG 8 Accusation of withholding information SBG 8.1 Text according to preliminary report (p 31): It appears therefore that, from May to December 2012, during more than 6 months, the State Government of Land Salzburg, which at that stage was at least partly informed of the facts, concealed relevant information that it was obliged to provide at least to the RH, the statistical authorities and possibly to other bodies. Instead, from the second half of October about 300 financial investments were terminated early by the administration and government of Land Salzburg, at the discretion of one member of the staff. It was only on 22 January 2013 that the State Office of Land Salzburg officially informed STAT on the issue of the existence of unrecorded liabilities. The Commission concludes that the concealment of relevant information by the officials of the financial management area and the government of Land Salzburg to the RH was also the cause for the incorrect and incomplete conclusions of RH 2012 follow-up report, which were ultimately published on 6 December 2012. Proposed amendment: After the Head of the Budget Unit had been punished for a first misdemeanour in May 2012, the existence of actual serious deficiencies was not discovered until the end of October 2012, when it was found that there were numerous financial transactions that had not been mentioned in the portfolio report. The consequences of this finding have not yet been analysed. Even in November 2012, the then Head of the Budget Unit continued to deny having participated in risky transactions entered into for Land Salzburg. Not until 26 November 2012 did she admit having concealed a loss of approximately 340 million euros. This led to further intensive investigations, in the course of which numerous forgeries of Financial Advisory Board (Finanzbeirat) minutes and signatures were revealed, resulting in dismissal without notice a few days later and the matter being brought to the attention of the public. That is why the RH, the statistics authorities and any other entities were not informed earlier. From the second half of October onwards, about 300 financial investments were closed prematurely, on the basis of the knowledge of a financial expert who had been hired. It was only on 22 January 2013 that the State Office of Land Salzburg officially informed STAT on the issue of the existence of unrecorded liabilities. RH not being informed until 6 December 2012 resulted in incorrect and incomplete conclusions in the follow-up report of RH 2012 published on the same date. SBG 8.2 Text according to preliminary report (p 35): This report also shows that the facts could have been unveiled earlier, had relevant information been made fully available by the State Office of Land Salzburg to the monitoring, judicial and statistical authorities. Proposed amendment:

This report also shows that the analysis of the consequences of the suspicion of the existence of serious deficiencies and the further intensive investigations made it impossible for the relevant information to be made fully available to the monitoring, judicial and statistical authorities at an earlier date. SBG 8.3 Text according to preliminary report (p 36): Nevertheless, those entities did not inform the RH, which at the time was concluding its follow-up on an audit report to Land Salzburg, or the judicial or the statistical authorities about these events and findings. Proposed amendment: Nevertheless, those entities did not inform the RH, which at the time was concluding its follow-up on an audit report to Land Salzburg, or the judicial or the statistical authorities about these events and findings, because analysis of the consequences of the suspicion of the existence of serious deficiencies and the further intensive investigations made it impossible for the relevant information to be made fully available to these authorities at an earlier date. SBG 9 Attribution of behaviour, statements, etc to ‘Land Salzburg’, ‘Amt der Landesregierung’ (State Office), ‘Budgetreferat’ (Budget Unit), etc Remark: For the sake of completeness and to avoid any misunderstanding, when the Investigation Committee refers in this report to ‘Land Salzburg’, ‘Amt der Salzburger Landesregierung’, ‘Budgetreferat’, etc, and it is (expressly or implicitly) stated that something has been replied, answered, explained, done, etc by ‘Land Salzburg’, ‘Amt der Salzburger Landesregierung’, ‘Budgetreferat’, it should be noted that according to our understanding, various State officials have stated something (as witnesses), (unlawfully) done something, etc. As we understand the legal position, such statements, behaviour, etc cannot be automatically attributed to ‘Land Salzburg’, ‘Amt der Landesregierung’, ‘Budgetreferat’, etc. For example: SBG 9.1 Text according to preliminary report (p 2): By serious negligence, public accounting rules were not followed, control was lacking, financial and non-financial transactions were not appropriately reported, and recommendations from the Austrian Court of Audit were ignored. In addition documentation was intentionally falsified and misleading information was intentionally sent to the national statistical authorities as well as to the National Court of Audit (RH). Proposed amendment: By serious negligence, public accounting rules were not followed by the then Head of the Budget Unit, control was lacking and financial and non-financial transactions were not appropriately reported by the then Head of the Budget Unit. In addition documentation was intentionally falsified and misleading information was intentionally sent to the federal statistical authorities as well as to the National Court of Audit (RH) by her. and:

SBG 9.2 Text according to preliminary report (p 26): Furthermore, the fact the State Office of Land Salzburg did not take over the suggestion provided by STAT since, at least, 2010, on the correct recording practices and ... Proposed amendment: Furthermore, the fact that the then Head of the Budget Unit did not take over the suggestion provided by STAT since, at least, 2010, on the correct recording practices and ... and: SBG 9.3 Text according to preliminary report (p 26): Even if STAT included these amounts in the Austrian Maastricht Debt in accordance with their consolidations practices, the absence of these amounts in the balance sheet of the State Office of Land Salzburg amounts to a case of false statement from the State Office of Land Salzburg to the Austrian statistical and monitoring entities. Proposed amendment: Even if STAT included these amounts in the Austrian Maastricht Debt in accordance with their consolidations practices, the absence of these amounts in the balance sheet of the State Office of Land Salzburg amounts to a case of false statement from the then Head of the Budget Unit to the Austrian statistical and monitoring entities. and: SBG 9.4 Text according to preliminary report (p 38): The State Office of Land Salzburg, which has under its responsibility, among others, the Internal Audit Department, the Accounting Unit and the Financial Department (notably the Budget Unit), should be considered as the main responsible for the fact that financial and non-financial accounts were misreported since, at least, 2008.

On one side, the Internal Audit of the State Office of Land Salzburg failed to check the internal control procedures and the risk management of the Financial Department. On the other side, the Accounting Unit failed to control the bookkeeping records, both for the budgetary accounts and for the non-budgetary accounts. The findings of the report demonstrate that the Financial Department, and notably the Budget Unit: … Proposed amendment: The then Head of the Budget Unit carried out unlawful actions that resulted in accounts for financial and non-financial transactions being misreported since at least 2008. On one hand, the Internal Audit of the State Office of Land Salzburg did not check the internal control procedures and the risk management of the Financial Department. On the other hand, the Accounting Unit did not control the bookkeeping records, both for the budgetary accounts and for the non-budgetary accounts. The findings of the report demonstrate that the then Head of the Budget Unit: … Then: Deletion of the first sub-point (Ignoring recommendations of the RH), since it is not evident what exactly they might be) and: SBG 9.5 Text according to preliminary report (p 40): Thereby those entities facilitated the fact that in the Budget Unit of the State Office of Land Salzburg could, intentionally, misrepresent and conceal financial transactions, leading to the misrepresentation in 2012 and 2013 of Austria’s deficit and debt data regarding 2008-2012 to Eurostat, i.e. after the entry into force of Regulation (EU) 1173/2011. Proposed amendment: Thereby those entities facilitated the fact that the then Head of the Budget Unit of the State Office of Land Salzburg could, intentionally, misrepresent and conceal financial transactions, leading to the misrepresentation in 2012 and 2013 of Austria’s deficit and debt data regarding 2008-2012 to Eurostat, i.e. after the entry into force of Regulation (EU) 1173/2011. and: in general, especially in the final notes: SBG 9.6 Text according to preliminary report:

“The State Office of Land Salzburg declared: ...” “Furthermore, ... the State Office of Land Salzburg replied ...” “When asked ... the State Office of Land Salzburg replied ...” etc Proposed amendment: “The witness declared: ...” “Furthermore, ... the witness replied ...” “When asked ... the witness replied ...” etc SBG 10 Verschuldensvorwurf gegen Landesrechnungshof und Amt der Sbg Landesregierung: SBG 10.1 Text according to preliminary report (p 2): On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH and State Office and State Government of Land Salzburg, i.e. entities within the general government sector of the Republic of Austria, were seriously negligent in not ensuring appropriate compilation controls and reporting procedures. Proposed amendment: On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH and State Office and State Government of Land Salzburg, i.e. entities within the general government sector of the Republic of Austria, did not ensure appropriate compilation controls and reporting procedures. It should also be noted, however, that the financial scandal was exposed not by an external entity but within the State Office itself and that until it was exposed, no-one had noticed anything serious, especially as information was withheld or misinformation was supplied (cf forgery of minutes) by the then Head of the Budget Unit. SBG 10.2 Text according to preliminary report (p 40): On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH and State Office and State Government of Land Salzburg, i.e. entities within the general government sector of the Republic of Austria, were seriously negligent in not ensuring appropriate compilation controls and reporting procedures. …

Proposed amendment: On the basis of all the facts and reasoning described in this report, it can be concluded that the LRH and State Office of Land Salzburg, i.e. entities within the general government sector of the Republic of Austria, did not ensure appropriate compilation controls and reporting procedures. It should also be noted, however, that the financial scandal was exposed not by an external entity but within the State Office itself and that until it was exposed, no-one had noticed anything serious, especially as information was withheld or misinformation was supplied (cf forgery of minutes) by the then Head of the Budget Unit. … RH 1 Text according to preliminary report (point 2.3.4, p 27): “Furthermore, on 10 October 2012, after receiving a table from STAT that showed the debt of Land Salzburg from 2011 onwards, as compiled by STAT (see Table 1, row 3), the RH requested further information on the EUR 1,050 million of debt of the 'funds', asking more specifically what funds STAT was referring to. STAT has explained to the RH that the EUR 1,050 million of debt referred to the loans from OeBFA on-lent to the Landeswohnbaufonds. Whereas, as explained above, these loans should be recorded in the balance sheet of Land Salzburg as the debt of Land Salzburg, the Commission has not received information on further correspondence exchanged between the two entities on this issue, i.e. the Commission is not aware that the RH, in face of this misuse of the accounts of Land Salzburg, further raised the issue either with STAT or the State Office of Land Salzburg. Remark of RH concerning point 2.3.4, p 27: The EC report places the enquiry by RH of 12 October 2012 to Statistik Austria in the wrong context. The enquiry was solely for clarification of the report by Statistik Austria concerning the annual budget results under Article 11 of the 2011 Austrian Stability Pact . These data are the basis for fulfilment of the function of assessor assigned to RH in the Stability Pact. It is incorrect to claim that “the RH, in face of this misuse of the accounts of Land Salzburg" failed to mention this to Statistik Austria and the Salzburg State Office. The enquiry by RH was not in connection with an audit. RH was not then aware of the deficiencies in the internal monitoring system and accounts of the Land described in its later report on the financial position of Land Salzburg, certainly not to their full extent. There was therefore not at that time any reason to assume that the accounts or the figures from Statistik Austria were incorrect. This paragraph of the preliminary report should be deleted without being replaced. RH 2 Text according to preliminary report (point 2.3.5, pp 27 and 28): “When enquired by the RH on the differences between the debt reported by Land Salzburg (Finanzschulden) and the table produced by STAT depicting the debt of each of the Länder, STAT explained, to the RH that , among others the difference included EUR 300 million regarding securities "that we found nowhere in the Rechnungsabschluss". During the second half of 2012, the RH discussed the finding of its 2011 follow-up report of the financial management of Land Salzburg with the State Office of Land Salzburg. Ultimately this led to the publishing of a RH’s report on 6 December 2012. However the extremely important issue concerning the misreporting of EUR 300 million of Maastricht relevant liabilities was not included in the RH report.” Remark of RH concerning point 2.3.5, pp 27 and 28:

The e-mail from RH of 29 August 2012 explaining a difference of 300 million euros between the Land's accounts and the data from Statistik Austria has been placed in completely the wrong context by the EC. The enquiry by e-mail from RH did not concern, as incorrectly stated, the follow-up check on the financing instruments of the Land, but the audit of ‘Consolidation measures of the Laender of Upper Austria, Salzburg and Styria’. This audit finally culminated in the more extensive ‘Land Salzburg - Financial Position’ audit. The explanation of the difference of 300 million euros raised by RH could therefore not be included in the report on the follow-up audit of the financing instruments of the Land published on 6 December 2012. This paragraph of the preliminary report should be deleted without being replaced. RH 3 Text according to preliminary report (point 3, p 35, paras 6 and 7): “Similarly, between 2002 and 2012, neither the LRH nor the RH conducted any effective in-depth audit of the financial accounts of Land Salzburg. In particular, they did not audit the voranschlagsunwirksame Gebarung which, as showed in Table 2, in section 2.3.3., reached more than EUR 26 billion of inflows and outflows in 2011 and included de facto all the unreported transactions and stocks, while in principle they should have included only extra-budgetary flows and not Maastricht-relevant liabilities. The main actors involved in the events described in this report are the State Office, the State Government, the Landtag and the LRH of Land Salzburg, the RH, OeBFA, OeNB and STAT. “ Remark of RH concerning point 3, p 35, paras 6 and 7: RH carried out the following audits at Salzburg State Office during the period in question: Financing instruments of the subnational authorities (Salzburg 2009/3) Audit On-site audit 2008; Date of publication: 15 July 2009. The horizontal audit covered the federal level, the Laender of Salzburg, Burgenland, Carinthia and Tyrol and the cities of Villach, Dornbirn and Wels. Objectives and subject matter Even at this stage, RH indicated a recorded value at risk of 178.20 million euros (End 2007). This value at risk amounted to 41% of financial debt, corresponding to just under 10% of the income of the budget (Landesvoranschlag) of Land Salzburg. Land Salzburg (Land Salzburg) therefore showed by far the highest value at risk of all the verified entities (including eight times the comparable value at risk at federal level). Comment

In view of this particularly high value at risk and potential loss, RH chose Land Salzburg for a follow-up audit. Follow-up-audit of financing instruments (Salzburg 2012/9) Audit On-site audit 2011; Submission of audit results for an opinion End May 2012: Date of publication: 6 December 2012 Objectives and subject matter Salzburg expressed an opinion on them in August 2012 without informing RH that the financial manager responsible had admitted to having concealed book losses for many years. As became clear from the subsequent ‘Land Salzburg - Financial Position’ audit, minutes used extensively by RH in the follow-up audit had been forged or were entirely missing, which meant that its recommendations were based on items that had been manipulated. Consolidation measures of the Laender of Upper Austria, Salzburg and Styria (Salzburg 2014/3) Audit The audit commenced in July 2012 and was interrupted owing to performance of the ‘Land Salzburg - Financial Position’ audit from November 2012 to March 2013. The Consolidation Measures audit in the three Laender was subsequently continued from April to June 2013 and published in June 2014. In summer 2012, there was no-one for RH to contact in Salzburg. The audit team was informed that the financial manager had been on sick leave for a long time. Objectives and subject matter The audit was based on a cross-section of all the Laender. The objective was to determine the financial position and reveal any need for consolidation on the basis of medium-term financial planning. Comment During the investigations for the audit, Statistik Austria was requested to explain a difference of 300 million euros that was initially detected (see above). This

sum was, however, only one aspect of the matters that came to the attention of the audit team in the accounts of the Land. The audit team encountered more and more unexplained accounting differences, including in connection with extra-budgetary accounts (voranschlagsunwirksame Gebarung). RH therefore interrupted the audit at the beginning of December 2012 in order to audit Land Salzburg in much greater depth (‘Financial Position - Land Salzburg’). Land Salzburg – Financial Position (Salzburg 2013/7) Audit On-site audit from December 2012 to March 2013; Submission of audit results Beginning of April 2013; Date of publication: 9 October 2013 Objectives and subject matter The audit included assessment of financial transactions and the associated impact on the financial position of the Land, the Internal Monitoring System in relation to the statement of financial transactions, commercial relationships with credit institutions and the Republic of Austria, in particular with regard to derivative transactions, booking of financial transactions, risks arising from liabilities assumed and financial relationships with affiliates and the representation of risks in medium-term planning and accounts of the Land, especially with regard to the economic reality, transparency and completeness of accounts. Comment This means that in this audit, RH not only continued to investigate the difference of 300 million euros addressed in the Consolidation Measures audit in August 2013, but also took much more extensive audit measures. The report includes the total debt of the Land and detailed breakdowns of stocks and flows in extra-budgetary accounts [voranschlagsunwirksamen Gebarung]. In its risk-oriented audit approach, RH accordingly repeatedly audited the financial management of Land Salzburg during the period in question. If the EC is now including RH among “the main actors involved in the events described in this report”, this runs counter to the facts and can in no way be concluded from the findings of the report. In view of the extensive audit activities of RH, which made a substantial contribution to clarifying the financial position of the Land, this statement is incorrect and is most emphatically rejected. This paragraph of the preliminary report should be deleted without being replaced.

RH 4 Text according to preliminary report (point 3, p 37): “During the year 2012, the RH failed to effectively follow up on the discrepancies it had found in the accounts of Land Salzburg as pointed out by STAT, namely concerning the mismatch of the lending from OeBFA to Land Salzburg and the EUR 300 million in securities that were not reported in the balance sheets of Land Salzburg.” Remark of RH concerning point 3, p 37: The statement in the EC report, that RH had failed to investigate “the mismatch of the lending from OeBFA to Land Salzburg and the EUR 300 million in securities that were not reported in the balance sheets of Land Salzburg” runs counter to the facts. RH was not questioned or asked to supply documentation with regard to this matter. This would have resulted in objective determination of the facts of this case. The attempt to obtain an explanation for a sum of 300 million euros from Statistik Austria through the enquiry by email on 29 August 2012 was only one of the matters that came to the attention of the audit team in the Salzburg accounts during the audit of ‘Consolidation measures of the Laender of Upper Austria, Salzburg and Styria’. Because the audit team was encountering more and more unexplainable accounting differences and there were no competent contact persons on site , RH interrupted this audit at the beginning of December 2012 in order to conduct a much more extensive audit of Land Salzburg (see also the comments by RH concerning point 3 , p 35, paras 6 and 7): The report on the ‘Land Salzburg - Financial Position’ audit included a statement of borrowings, assets and liabilities in the extra-budgetary accounts (voranschlagsunwirksamen Gebarung) and securities transactions. The audit results were handed to the Head of Government (Landeshauptfrau) of Land Salzburg by the Chief Auditor in person. The audit activities by RH actually went far beyond the 300 million euros referred to by the EC and led to a general statement of all securities transactions and borrowings. RH therefore did in no way fail to expose discrepancies, but made a significant contribution to clarifying and revealing the actual asset and debt management in the Land through its audit activities. This paragraph of the preliminary report should be deleted without being replaced.



STAT 1

Text according to preliminary report (p 2): The report contains a detailed description of the main reasons for the 1.2 billion euro revision in the government debt of Austria in 2014, relating to the years 2010-2012, ...

Proposed amendment: The report contains a detailed description of the main reasons for the 1.2 billion euro, 0.9 billion euro and 0.5 billion euro revisions in the government debt of Austria in 2014, relating to the years 2012, 2011 and 2010 respectively, ... STAT 2

Text according to preliminary report (p 3): The misrepresentation of the government debt of Austria was, as of 2012, of EUR 1.2 billion.

Proposed amendment: The misrepresentation of the government debt of Austria as at the end of 2012 was EUR 1.2 billion. STAT 3

Text according to preliminary report (p 3): Even if in the April 2014 EDP notification Maastricht Debt was revised for years 2010-2012, it appears that the misreporting of debt, as well as possibly deficit, may have started at least from 2008 onwards, and that the level of Maastricht debt presented by the Austrian statistical authorities for the years 2008 and 2009 is still underestimated.

Remark: The Member States are obliged under the EDP Regulation to report data for the years n-4. Only data for the years 2010 to 2014 were therefore notifiable in the report of April 2014. Reporting changes in data for previous years is only obligatory under other EU regulations .

Proposal 1 for amended wording: … and that the level of quarterly public debt presented by the Austrian statistical authorities for the years 2008 and 2009 is still underestimated. Proposal 2: Assertions that cannot be supported by the submission of documents (“... it appears that ...”) and that relate to reporting years that are not relevant to the matter under investigation (such as the 2008 reporting year) should be eliminated from the report.

STAT 4 Text according to preliminary report (p 3): Finally, the report concludes that whereas the Commission (Eurostat) was only informed of this case on the 10 October 2013, the Austrian statistical authorities were aware of the possibility of misrepresentation of the accounts of Land Salzburg since, at least, the 6th of December 2012.

Remark: The “representation in the books” of a Land or municipality must be carried out in accordance with the Regulation on Budget and Closed Accounts of State and Local Governments (Voranschlags- und Rechnungsabschlussverordnung) (VRV) of the Federal Minister for Finance. STAT checks the suitability of the data sent by the Laender for the calculation of ESA and/or EDP data, not whether they are VRV-compliant in a particular case. The possibility of misrepresentation in the books of Land Salzburg might therefore not be known to STAT. On the other hand, problems with data were reported to the Commission (Eurostat) as early as the end of January 2013 and again at the time of the EDP notification in April 2013. STAT 5

Text according to preliminary report (p 3): Also, the report concludes that both Statistics Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the data reported by Land Salzburg, before the so called 'financial scandal' became public at the end of 2012.

Remark: Although the data sent under the Public Statistics Regulation (GebStat-VO) are the most important, they are not the sole basis for the calculation of ESA or EDP data. There is therefore a sometimes a significant difference between ‘Debts according to VRV’ and ‘EDP-Maastricht debt in all the Laender’. As far as STAT is aware, as at 30. 9. 2013, this difference amounted to 1.3 billion euros for Land Salzburg and 8.9 billion euros for all the Laender. Differences between VRV and ESA/EDP data are therefore not confined to a single Land.

Proposal for amended wording: The report also contains the conclusion that Statistik Austria had already been aware of the need to supplement the data reported by Land Salzburg for the calculation of ESA and/or EDP data, before the so-called financial scandal became public knowledge at the end of 2012. STAT 6

Text according to preliminary report (p 3): ... serious deficiencies in the organisation of the data flows between public entities and the statistical authorities.

Remark: STAT cannot understand this view of the Commission. The “data flows between public entities and STAT” are clearly regulated in the Public Finance Statistics Regulation. STAT 7

Text according to preliminary report (p 3): ... the central verification of accounting data by Member States at all levels of general government, and robust and effective supervisory and control systems at national level.

Remark: Data transferred by the Laender under GebStat-VO should be VRV-compliant in principle. The task of STAT is to check the suitability of the data for the calculation of ESA and/or EDP data, not whether they are VRV-compliant in a particular case. STAT 8

Text according to preliminary report (p 8): On 10 March 2014, STAT provided the Commission (Eurostat) with the results of its internal analysis of the statistical implications of the RH findings and announced that, after the incorporation of the new Land Salzburg data, the general government debt of the years 2010, 2011 and 2012 would be revised upwards (+0.3pp of GDP in 2010, +0.3pp in 2011, +0.4pp in 2012).

Proposed amendment: On 10 March 2014, STAT provided the Commission (Eurostat) ... (+0.2 pp of GDP in 2010, +0.3 pp in 2011, +0.4 pp in 2012). STAT 9

Text according to preliminary report (p 8): After an examination of the facts by the Commission (Eurostat), it became clear that the case of unreported debt in the Land Salzburg was serious. The elements that led to this conclusion include, amongst other, the fact that the Court of Auditors had published findings indicating the existence of several and severe irregularities in the financial management of Land Salzburg, that as a result of these irregularities there was an incorrect reporting of debt figures for non-negligible amounts, on which the national statistical authorities were allegedly not informed during many years and finally, that the regional government in Land Salzburg, in exercising its legal powers, seemed to have facilitated the incorrect reporting of transactions.

Consequently the Commission (Eurostat) assessed that a more thorough analysis of the facts occurred in Land Salzburg was needed.

Remark: This entire paragraph refers to the assessment by the Commission (Eurostat) before the more detailed analysis. STAT therefore proposes that this should be pointed out immediately in the first sentence, e.g. “After an examination of the facts, the Commission (Eurostat) judged that ...” STAT 10

Text according to preliminary report (p 9, footnote 7): OeBFA provides data and metadata to the statistical authorities to be used for the calculation of the interest accrual adjustment, data on federal government receipts and on the federal government debt.

Proposed amendment: OeBFA provides data and metadata to the statistical authorities to be used for the calculation of the interest accrual adjustment, data on federal receipts and on the federal debt. STAT 11

Text according to preliminary report (p 11): The first row of the table reflects the financial debts (Finanzschulden) of Land Salzburg as reported in the balance sheets compiled by the State Office of Land Salzburg for the years 2002-2012. According to information from STAT, these 'Finanzschulden' should include both loans and government bonds, and are in this sense the relevant liabilities to be taken into account for the compilation of Maastricht Debt.

Remark: On 11 October 2013, i.e. two days prior to publication of the report by the Court of Audit on the financial position of Land Salzburg, STAT informed Eurostat that the terms Finanzschulden (financial debts) and Gesamtschulden (total debts) are not identical with the term Maastricht-Schuldenstand (Maastricht debt) . This would make it clear that the sum of 3.507 billion euros specified in the report by the Court of Audit could not be used to calculate the Maastricht debt without detailed research. STAT 12

Text according to preliminary report (p 12): For example, the estimation by STAT took into account a considerable part of the Voranschlagsunwirksame Erläge, i.e. cash transited through the accounts of Land Salzburg that is owed to a third entity,

Remark: It has been noted that the extra-budgetary accounts (voranschlagsunwirksame Gebarung) (transfers) were not reported to Statistik Austria by any of the Laender. The additional sources of data were the balances of the Wohnbaufonds (residential construction fund) and other balances sheets of outsourced entities (Landesfonds (Land fund) and Landeskammern (Land chambers) and information from OeBFA and OeNB, which was used for validation and cross-checks. STAT 13

Text according to preliminary report (p 13): Furthermore, and after receiving information from the OeNB, STAT concluded that Land Salzburg had financed itself, in 2010, through the issuing of government securities amounting to EUR 300 million. Even if such an amount was nowhere visible in the balance sheets of Land Salzburg, STAT took the decision to follow the direct data source of the OeNB and to include these amounts in the debt of Land Salzburg.

Remark: This is an example of the general approach of STAT to calculating ESA and EDP data, according to which the data sent in accordance with the Public Finance Statistics Regulation form the most important but not the only basis for data . It is also noted that the information regarding the existence of a loan was checked using the ISIN number (securities number) in the portal of the Viennese Stock Exchange (Wiener Börse). Because the loan appeared on the Viennese Stock Exchange and the Thumbstone showing that it had been placed on the stock exchange was found on the Internet, the information from OeNB securities statistics had been confirmed by an independent third institution (Viennese Stock Exchange) and was used to calculate the debt.

STAT 14

Text according to preliminary report (p 13): Even if STAT has the possibility to change the figures from the data sources when compiling national accounts, it does not have the power to oblige entities to amend the data reported

Remark: Data transferred by the Laender under GebStat-VO should be VRV-compliant in principle. The task of STAT is to check the suitability of the data for the calculation of ESA and/or EDP data, not whether they are VRV-compliant in a particular case. STAT 15

Text according to preliminary report (p 14): It can be observed that data for the years prior to 2010 were not revised by the statistical authorities. In a letter sent by STAT to Eurostat on 28 March 2014 it was stated: "As one outcome of our bilateral meeting with officials from Land Salzburg it can be taken for sure that no additional resources will be dedicated to further clarify earlier years. That means that our estimates will remain unchanged". Notwithstanding this statement by STAT ...

Remarks:

a) In the period from October 2013 to March 2014, STAT only received information for a revision of the data for 2012 from the Salzburg State Office. The ESA data for 2010 and 2011 were revised on the basis of various estimates. Because only data concerning the years 2010 to 2014 needed to be sent to the Commission (Eurostat) in connection with the EDP notification prior to 1 April 2014, no further data was processed for the years prior to 2010.

b) The statement quoted from the letter of 28 March 2014 only concerned the years 2010 and 2011 . STAT 16

Text according to preliminary report (p 14): Finally, row (6a) reflects the difference between the calculation of Land Salzburg's debt taking into account all data sources available in March 2014 (row (4)) and the debt effectively reported by Land Salzburg (row (1a)) for those years, under the Finanzschulden. This means that even if the reported impact of the revisions to the Austrian Maastricht debt amounted to only 0.4% of GDP in 2012, the effective amount of underreporting and/or misreporting of debt in that year by Land Salzburg was de facto 0.9% of GDP in that year.

Remark: The investigation in question concerns the Austrian EDP report, not ‘factual’ results of financial management in Land Salzburg. The finding that the incorrect reporting of figures concerning the debts of Land Salzburg actually amounted to 0.9% each year should therefore be omitted. STAT 17

Text according to preliminary report (p 25): Firstly, it is the understanding of the Commission that the interest payable should have been revised by STAT at least also for years 2010 and 2011, along with the revisions undertaken to the debt (see Table 1).

Remark: In the period from October 2013 to March 2014, STAT only received information for a revision of the data for 2012 from the Salzburg State Office. This meant that only the year 2012 could be audited. Neither an audit (Prüfung) nor monitoring (Kontrolle) could be carried out for 2010 and 2011. STAT revised the data concerning public debt for 2010 and 2011 on the basis of various estimates (in particular retropolation of the data for 2012). Because the interest expenses relating to the deficit turned out to be lower after the audit of the data for 2012 than before it and in the absence of additional information for 2010 and 2011, there was no “Estimation of interest expenses on the basis of an estimate of public debt”. STAT 18

Text according to preliminary report (p 25): Furthermore, it is the understanding of the Commission that, following the fact that it was ascertained that debt is underestimated for years prior to 2010, consequently interest payable is also underestimated, and therefore the Austrian government deficit for those years.

Remark: Interest flows based on swap agreements and forward rate agreements were also included in the calculation of the public deficit . The interest flows are difference between expenditure and income and can therefore raise or lower the public deficit. In the audit of the data for 2012, it was found that some redemptions (not relevant to the deficit) also contained settlements on the basis of swap agreements, which needed to be recorded as deficit-reducing income. According to Table 2 (on page 24 of the preliminary report, penultimate line), this audit resulted in a reduction of 7 million euros in the public deficit for 2012. It is therefore not possible to automatically draw a conclusion regarding the impact on the Austrian government deficit. The assertion that the debts for 2010 were demonstrably underestimated must be proven by the Commission (Eurostat) or deleted if this is not possible. STAT 19

Text according to preliminary report (p 25): In a meeting held on 8 September 2010 between STAT and the Budget Unit of the State Office of Land Salzburg, STAT explained that all the funds lent by OeBFA should be reported under the Finanzschulden (as they are, de facto, debt of Land Salzburg in relation to OeBFA).

Remark: The term ‘Finanzschulden’ (financial debts) is not identifical with the term ‘Maastricht-Schuldenstand’ (Maastricht debt). Attention was drawn to the representation in the ESA at the meeting on 8 September 2010 .

Proposal for amended wording: ... All the funds lent by OeBFA in the ESA and EDP statistics should be reported as loans by the federal government and borrowings by the Land. STAT 20

Text according to preliminary report (p 26, footnote 33): “This follows from the email exchange of 27 September 2010 ...”

To be corrected (see footnote 13 on page 13): “This follows from the email exchange of 27 September 2012 ...” STAT 21 Text according to preliminary report (p 26): Furthermore, it should be stated that consolidation practices do not only involve using the most reliable data when realizing that a considerable discrepancy exists, as was done by STAT during these years. The best consolidation practices should also concern informing the relevant authorities of the existence of such discrepancies, given that misreporting in one item may imply misreporting in other items. Remark: As already pointed out more than once, the persons responsible for supplying data were continuously informed of consolidation processes and transfers to ESA. Discrepancies do not in any way imply misreporting. A general suspicion is therefore impermissible. A correction therefore needs to be made in the text of the report.

STAT 22

Text according to preliminary report (p 29): Finally, it is important to mention that, for the years under analysis, no flows or stocks of financial derivatives were reported in national accounts for the whole S.1312 sector (state government sector ). The Commission is aware that sizeable cross-currency swaps existed at least between Land Salzburg and OeBFA.

Remark: The Commission was aware since the end of January 2013 at the latest that financial derivatives had been concluded in Land Salzburg that were not included in the Austrian ESA statistics. That is obtained from an internal record of a telephone conversation with the then Eurostat Desk Officer (MW) on 31 January 2013. . Furthermore, STAT informed the Commission (Eurostat) in connection with the usual enquiries regarding the EDP notification (“Request for clarification” in April 2013 of the initial researches regarding the topic of financial derivatives and that information from Salzburg would not be available before the end of September 2013 “due to the well-known reasons” . In this information, it was also pointed out that STAT and OeNB had proposed including a separate representation of financial derivatives in the VRV to the Federal Ministry of Finance. It should therefore be added to the report that the Commission (Eurostat) had been informed about these circumstances since the end of January 2013.

Proposed amendment: “…in the national accounts for the entire sector S.1312 (Laender subsector )…” STAT 23

Text according to preliminary report (p 31): It was only on 22 January 2013 that the State Office of Land Salzburg officially informed STAT on the issue of the existence of unrecorded liabilities.

Remarks:

a) The comments from STAT do not make it clear what additional information was made available by the Salzburg State Office on 22 January 2013 that had not already been known since the press conference on 6 December 2012. As long ago as 6 December 2012, the Salzburger Nachrichten contained the following words: The Deputy Head of the Land Financial Department is alleged to have speculated with public money and hidden the losses in the budget.” (see also footnote 48 on page 31 of the preliminary report).

b) The comments by STAT concerning the contacts with the Salzburg State Office on 22 January 2013 show:

ba) Telecon with Mr (CM) at about 8.30 on 22 January 2013: He introduced himself as the new contact person for data transfers to STAT and wished to know whether there was a backlog of notifications to STAT.

bb) Detailed information to Mr (CM) concerning requirements with regard to content and technical details of notifications. STAT was not informed on 22 January 2013 of the existence of unrecorded liabilities. A correction therefore needs to be made in the text of the report. STAT 24

Text according to preliminary report (p 32): On 22 January 2013, the State Office of Land Salzburg and STAT exchanged some emails. In one of these emails, STAT states: "For our part, we are very interested in the interim reports on the finances of Land Salzburg in order to get a picture of the changes/revisions that have come to us, or to what misreporting and manipulations we have been exposed."

Remark: The actual wording of the e-mail is as follows: “For our part, we would be very interested in the interim reports on the finances of Land Salzburg in order to get a picture of the changes/revisions that have come to us, or to what misreporting and manipulations we have been exposed.” This implies that on 22 January 2013, STAT was not in possession of any information that went further than what had been known since the press conference on 6 December 2012. A correction therefore needs to be made in the text of the report. Proposed amendment: In one of these emails, STAT states: “For our part, we would be very interested in the interim reports STAT 25

Text according to preliminary report (p 32): On 5 March 2013, there was a bilateral meeting between STAT and the State Office of Land Salzburg in Vienna;

Remark: This meeting on 5 March 2013 in Vienna was attended by two representatives of the Salzburg State Office and a number of representatives of STAT. The participants from Salzburg were announced by Mr (CM). Proposed amendment: On 5 March 2013, there was a bilateral meeting between STAT and the State Office of Land Salzburg in Vienna; STAT 26

Text according to preliminary report (p 32): On 27 March 2013, the State Office of Land Salzburg informed STAT that, following a report by an external independent private auditor, it had been ascertained that the consolidated liabilities of Land Salzburg amounted to EUR 3,507 million, although no breakdown of this amount could be provided. The Commission is not aware of any specific follow-up having taken place in order to ascertain the nature of such liabilities;

Remarks:

a) Since on 27 March 2013 there was no breakdown of the sum of 3.507 billion euros, which related to only one reporting year, namely 2012, it could therefore not be excluded that liabilities from financial derivatives were also included in this sum. As early as 19 March 2013, STAT asked Land Salzburg for detailed information about financial derivatives. This was disclosed to the Commission (Eurostat) on 16 April 2013 . A correction therefore needs to be made in the text of the report.

b) The claim that “The Commission is not aware of any specific follow-up having taken place in order to ascertain the nature of such liabilities;” is incomprehensible. On 19 March and 7 May 2013, there were discussions between Land Salzburg and Statistik Austria, preceded and followed by numerous contacts by e-mail. The discussions were held solely in order to make the representatives of Land Salzburg more aware of the data requirements and contents of the notifications. STAT does not produce statistics on the basis of a number in a Pdf document that not even the sender can explain exactly. STAT 27

Text according to preliminary report (p 32): On 7 May 2013 a meeting took place between STAT and the State Office of Land Salzburg. In this meeting, STAT recognized that there might be problems with the recording of derivatives and debt in Land Salzburgtt. ( the quotation according to footnote tt is actually (see p 49 of the preliminary report): "We read the press on 6 December 2012. In this context, we had a first meeting with representatives of the Land Salzburg in May 2013. From this we recognized that there might have been issues with the reporting of derivatives and EDP debt (reporting of loans).”

Proposed amendment: In this meeting, STAT realised that there might be problems with the recording of derivatives and debt in Land Salzburg. STAT 28

Text according to preliminary report (p 33): In July 2013, still in the absence of annual data, STAT compiled the accounts of Land Salzburg on the basis of the quarterly data providedvv; ( the quotation according to footnote vv is actually (see p 49 of the preliminary report): During the meeting with STAT on 26 September 2016, the RH representative, who in July 2013 was an employee of STAT, stated: “As final annual data on the closed accounts of the Land Salzburg for the year 2012 were not available for the calculation of ESA National Accounts, STAT used quarterly data to compile the National Accounts (…)."

Remarks:

a) STAT does not prepare any accounts for Land Salzburg, but ESA and EDP statistics.

b) The following passage is to be found on page 6 of the minutes of the meeting of the Commission with STAT on 26. 9. 2016: Before October 2013, Land Salzburg had not officially informed STAT and we did not receive updated data (corrections) from them. They provided only the quarterly debt data according to the existing reporting obligations without any further comments.

The wording must therefore be corrected. Proposed amendment: In September 2013, still in the absence of annual data, STAT prepared the ESA and EDP statistics taking account of the quarterly data submitted by the Land Salzburg.

STAT 29

Text according to preliminary report (p 33): On 10 October 2013, the issue is brought to the attention of Eurostat for the first time, i.e. ten months after the issue had been brought to the attention of STAT;

Remark: The press conference in Salzburg on 6 December 2012 not only elicited a strong response from all German-language media inside and outside Austria, but was also reported internationally within and even outside of Europe. It is difficult to believe that the Commission (Eurostat) was unaware of it. The Commission (Eurostat) was obviously “made aware of these matters” by reporting in the media, as can be concluded by an enquiry on 31 January 2013 from the Eurostat Desk Officer (MW), who at that time was responsible for this area. It was aware since the end of January 2013 at the latest that financial derivatives had been concluded in Land Salzburg that were not included in the Austrian ESA statistics. The wording must therefore be corrected. Proposed amendment: On 11 October, STAT sent initial comments on the RH report ‘Land Salzburg - Financial Position’ to Eurostat . STAT 30

Text according to preliminary report (p 33): On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The level of Land Salzburg's contribution to Maastricht debt, for 2011, was revised upwards by EUR 3,507 million, i.e., exactly the amount which had been signalled by the State Office of Land Salzburg to STAT on the 27 March 2013;

Remark: As can be seen from Table 1 of the preliminary report (p 15), the EDP notification of 31 March 2014 included a contribution from Land Salzburg including Wohnbaufonds amounting to 3.172 billion euros for 2011, while the EDP notification of 30 September 2013 included a sum of 2.293 billion euros. The revision therefore amounted to 879 million euros. The wording must therefore be corrected. Proposed amendment:

Variant A: On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The level of Land Salzburg's contribution to Maastricht debt for 2011 was revised upwards by 879 million euros.

If 2012 was meant, variant B should be included:

Variant B: On 31 March 2014, STAT reported the April 2014 EDP Notification to Eurostat. The level of Land Salzburg's contribution to Maastricht debt for 2012 was revised upwards by 1.191 billion euros. STAT 31

Text according to preliminary report (p 33): STAT informed the Commission (Eurostat) about the misreporting in Land Salzburg only on the 10 October 2013. Nevertheless, it has been ascertained that STAT was gradually informed about these facts from 6 December 2012 onwards. Notably, it was clear to STAT, at least since the 22 January 2013, that "misreporting and manipulations" had occurred in Land Salzburg.

Remarks:

a) On 29 January 2013, STAT informed all the federal Laender of the extent to which they had not yet met the requirements for the public finance statistics in connection with notifications to STAT and requested them to improve the quality of the notifications as quickly and fully as possible. The Federal Ministry of Finance was also informed of this situation on 29 January and requested “to help us with the improvement of the quality of the budget data sent to us”. The Federal Ministry of Finance immediately replied that “an improvement in the quality of data at sub-national level is also very important to us”. b) Falschberichterstattung (Misreporting), at least in the area of Finanzderivate (financial derivatives) was obvious to Eurostat by 31 January 2013 at the latest. On the basis of this communication on 31 January 2013, STAT requested Land Salzburg to provide information about financial derivatives on 19 March 2013; the results of this investigation were reported to Eurostat on 16 April 2013. At the same time, Eurostat was also informed that final data for 2012 could not be expected from Land Salzburg before the end of 2013 “due to the well-known reasons”. c) On 9 October 2013 the RH published its report "Land Salzburg - Financial Position". Following a telephone conversation between STAT and the then Eurostat Desk Officer (MW) on 10 October 2013 concerning this report, STAT sent Eurostat its initial comments concerning this report on 11 October. STAT 32 Text according to preliminary report (p 34): Moreover, on the basis of information provided by the State Office of Land Salzburg concerning the results of an independent external audit, it should have been clear to STAT, at least since 27 March 2013, that the level of debt of Land Salzburg was in fact considerably larger than what had previously been estimated by STAT. Given that STAT would, four days later, report data to Eurostat in the context of the April 2013 EDP Notification, it is the opinion of the Commission that an immediate and urgent practical follow-up should have been undertaken by STAT after receiving this information from Land Salzburg. This appears not to have been the case. Furthermore, even if in such a short delay it would not be possible to give the issue a comprehensive follow-up, it is the opinion of the Commission that, under the principle of due diligence, STAT should have informed Eurostat immediately after 27 March 2013.

Remark: Liabilities from financial derivatives are not part of public debt. It is the function of STAT to calculate public debt as defined in the EDP Regulation and report it in the EDP notifications for the years n-4 to n (namely the years 2009 to 2013 in the EDP notification of 31 March 2013). For the ‘Result of the independent external audit’ of 27 March 2013, which related to the end of 2012, it was not known to what extent liabilities from financial derivatives might be included, nor was there information concerning other years. A ‘clear revision’ of only one year without a secure basis of data for the EDP notifications is not normally accepted by Eurostat.

STAT 33

Text according to preliminary report (p 35): These irregular practices were made public in 2012, following a press conference held on 6 December 2012 by the Finanzreferent, the Director of the Financial Department and the Head of the LRH of Land Salzburg. Furthermore, this report also demonstrates that the Commission (Eurostat) could and should have been informed by STAT several months earlier about these facts.

Remark: The existence of irregular practices must have already been known to the Commission (Eurostat) owing to the widespread reporting in the media following the press conference on 6 December 2012. There was communication between STAT and Eurostat concerning the availability of data concerning financial derivatives in Land Salzburg on 31 January and 16 April 2013. The wording must therefore be corrected. STAT 34

Text according to preliminary report (p 37): Even if STAT correctly implemented in the context of the EDP notifications the necessary changes to the data provided by the State Office of Land Salzburg, it is the opinion of the Commission that other relevant Austrian entities, notably the BMF and the RH, should have been informed.

Remark: There are no Austrian legal standards that oblige STAT to take such action. It should rather be assumed that these institutions were fully informed about these events, if only by the wide reporting in the media.



STAT 35

Text according to preliminary report (p 38): Secondly, even if STAT was fully informed, at least since 22 January 2013, that misreporting and manipulation had occurred in the accounts of Land Salzburg, it failed to immediately inform the Commission (Eurostat) of these facts.

Remarks:

a) On 22 January 2013, STAT had no knowledge of the extent of the revisions to be expected. STAT therefore immediately asked Land Salzburg for information and agreed on a meeting for the extensive exchange of information in early March 2013.

b) It can be assumed that on 22 January 2013, Eurostat had the same information about irregular practices in Land Salzburg as STAT itself owing to the media reporting following the press conference on 6 December 2012. The wording of the report should therefore be amended accordingly. STAT 36

Text according to preliminary report (p 40): Finally, the report concludes that whereas the Commission (Eurostat) was only informed of this case on the 10 October 2013, the Austrian statistical authorities were aware of the possibility of misrepresentation of the accounts of Land Salzburg since, at least, the 6th of December 2012.

Remark: Misreporting (Falschberichterstattung) - at least in the area of financial derivatives (Finanzderivate) became obvious to the Commission (Eurostat) on 31 January 2013 at the latest (see in particular remarks B.26 and B.28 above). The existence of a data problem associated with Land Salzburg also became obvious to the Commission (Eurostat) through the EDP notification in April 2013. The wording of the report should therefore be amended accordingly.

STAT 37

Text according to preliminary report (p 40): Also, the report concludes that both Statistics Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the data reported by Land Salzburg, before the so-called 'financial scandal' became public at the end of 2012.

Remark: Since this sentence is an exact repetition of the sentence on page 3 of the preliminary report, remark STAT 5 above also applies to it: Remark: Although the data sent under the Public Statistics Regulation (GebStat-VO) are the most important, they are not the sole basis for the calculation of ESA or EDP data. There is therefore a sometimes a significant difference between ‘Debts according to VRV’ and ‘EDP-Maastricht debt in all the Laender’. As far as STAT is aware, as at 30. 9. 2013, this difference amounted to 1.3 billion euros for Land Salzburg and 8.9 billion euros for all the Laender. Differences between VRV and ESA/EDP data are therefore not confined to a single Land.

Proposal for amended wording: The report also contains the conclusion that Statistik Austria had already been aware of the need to supplement the data reported by Land Salzburg for the calculation of ESA and/or EDP data, before the so-called financial scandal became public knowledge at the end of 2012. STAT 38

Text according to preliminary report (p 40): As a result, the data sent by Austria to Eurostat in the context of the EDP 2013 Notifications exercises ... Proposed amendment (translation error): As a result, the data sent by Austria to Eurostat in the context of the EDP Notifications exercises in 2013 ... STAT 39

Text according to preliminary report (p 40): Based on the findings in this report regarding the behaviour of the authorities of the Member State in the period from 13 December 2011 until the launch of the investigation on 5 May 2016, the Commission may decide to adopt a recommendation to the Council to impose a fine on the Republic of Austria, as foreseen in Regulation (EU) No 1173/2011.

Proposed amendment: …3. May 2016 ... STAT 40

Text according to preliminary report (p 49, end note vv): During the meeting with STAT on 26 September 2016, the RH representative, who in July 2013 was an employee of STAT, stated: “As final annual data on the closed accounts of the Land Salzburg for the year 2012 were not available for the calculation of ESA National Accounts, STAT used quarterly data to compile the National Accounts (…)."

To be corrected, translation error: the expression für die Europäische Finanzaufsichtsbehörde (for the European Financial Supervisory Authority) in the German version can be deleted, since it is already covered by VGR (national accounts).

OeNB 1

Accusation: “The OeNB, although recognising that it was aware of the investments by Land Salzburg in financial derivatives, failed to report these to the Commission (Eurostat), in the transmission of the Austrian financial accounts.” (page 37 of the report): Under EU and Austrian law, OeNB does not have any obligation to report to the Commission (Eurostat) arising from the ESA transmission programme (Regulation (EU) No 549/2013). The accusation of having failed to report transactions is therefore meaningless. OeNB has not infringed any obligation. Furthermore, the statement by OeNB at the meeting with Eurostat on 26 September 2016 that it was aware of financial derivatives (Meeting Report, rely to Question 8) only concerned the fact that we were made aware of possible derivative transactions of Land Salzburg by the corresponding press reports in December 2012. OeNB was not in possession of any data concerning this at that time (or previously). OeNB 2 Accusation: “Furthermore, its consolidation practices regarding the financial accounts were ineffective.” (page 37 of the report): The consolidation practices corresponded to the agreement concluded between OeNB and Statistik Austria. Furthermore, it is not the task of a statistical authority to check the accuracy of accounts of subnational authorities (this is the function of auditors or courts of audit), still less so if such an authority only has the status of service provider, as in the case of OeNB. During the meeting on 26 September 2016, it was also repeatedly emphasised that it had not been and was not the task of OeNB to audit accounts (cf Meeting Report, 5 f). OeNB 3 Accusation: “Moreover, the Commission concludes that some declarations of the OeNB officials during the meeting between the OeNB and the Commission on 26 September 2016 were not correct. OeNB stated that it had found nothing unusual in the accounts of Land Salzburg for the period between 2002 and 2012, but the Commission has proof that, in fact, the EUR 300 million in securities not reported in the accounts of Land Salzburg had been unveiled by OeNB in 2010. [...] both Statistics Austria and the Austrian Central Bank were aware of sizeable inconsistencies in the data reported by Land Salzburg, before the so called 'financial scandal' became public at the end of 2012.” (p 40 of the report):

First of all, the representatives of OeNB did not say at this meeting that OeNB had not found anything unusual in the accounts of Land Salzburg, especially as auditing or monitoring such accounts was not the task of OeNB. The further conclusions of Eurostat that some of the statements of the OEN