A4-0404/98

Resolution on the repercussions of the affair of the MED programmes

The European Parliament,

- having regard to Article 206(1) of the EC Treaty,

- having regard to Rule 148 of its Rules of Procedure,

- having regard to its resolution of 17 July 1997 on Court of Auditors' Special Report No 1/96 on the MED programmes (submitted pursuant to Article 188c(4) second subparagraph of the EC Treaty), together with the Commission's replies (C4-0512/96) ((OJ C 286, 22.9.1997, p. 263.)), and its resolution of 31 March 1998 informing the Commission of the reasons for the postponement of the discharge in respect of the implementation of the general budget of the European Union for the 1996 financial year ((OJ C 138, 4.5.1998, p. 43.)),

- having regard to the report of the Committee on Budgetary Control (A4-0404/98),

A. having regard to the provisional final report on the auditing of the programmes for decentralised cooperation with the Mediterranean countries (MED programmes) which was completed in August 1998 and for which 233 of the total of 496 Community-supported projects were audited,

B. whereas the auditors came to the conclusion that some ECU 4 million should be recovered out of the total Community funding of ECU 36.6 million for the projects audited,

C. whereas the auditors also came to the conclusion that it is not yet clear whether more than one third of the expenditure reported by the projects and amounting to some ECU 60 million can be recognised, and whereas this in turn may lead to the recovery of an additional sum amounting to several million,

D. whereas the excess Community subsidies and the expenditure where there is some doubt as to whether it can be allowed are not spread evenly over all the projects, but whereas there are certain projects where particularly large sums are in doubt or need to be recovered, accounting for far in excess of 50% of the subsidies paid,

E. whereas there is at least the germ of a suspicion of serious irregularities in these cases,

F. whereas a number of the audit reports drawn up by the auditors following on-site inspections also suggest serious irregularities,

G. whereas in a total of 26 cases the Commission's auditors were refused information or refused permission to inspect project files, or the project partners could not be found,

H. whereas the auditors came to the conclusion that the Agency for the Trans-Mediterranean Networks (ARTM) entrusted by the Commission with the financial management did not, broadly speaking, have adequate control of the financial management of the projects subsidised, that requests from the projects were not answered in some cases, that the correspondence with the projects was not kept or filed properly, and that it is not possible to determine whether the database specifically developed by ARTM for project management was actually used,

I. whereas ARTM was established by external consultants, at the Commission's instigation, as an international non-profit-making association under Belgian law and extensive powers were transferred to it for this purpose by the Commission, even though - according to the Court of Auditors ((OJ C 240, 19.8.1996, p. 1.)) - there was no clear legal basis for this, there had not even been a decision in principle on this by the Commission, nor did the competent Directorate-General wait to receive an opinion from the legal service of the Commission or inform financial control before the first contract was signed with ARTM,

J. whereas, according to the findings of the Commission's financial control, a total of 16 technical assistance contracts were awarded, in ten instances without any invitation to tender, and whereas with the other six contracts awarded after an invitation to tender there were infringements of the rules to the advantage of the technical assistance agencies which had already been awarded contracts in the procedure without an invitation to tender,

K. whereas by April 1995 two of the four board members of ARTM were also managers of the two technical assistance agencies linked through capital investments which had received via ARTM the lion's share of the technical assistance contracts under the MED programmes, and whereas this therefore constituted an obvious confusion of interests over a number of years,

L. whereas ARTM awarded contracts to these technical assistance agencies on the basis of mutual agreements and whereas the two firms favoured with the contracts mentioned above took part in the meetings of the Commitment Committees which approved them,

M. whereas in the context of implementation of the MED-Invest programme the same technical assistance agencies were awarded contracts for two projects worth ECU 270 000 and ECU 450 000 without any invitation to tender or any selection procedure having taken place,

N. whereas the two board members of ARTM referred to above were not prepared to resign from the board of ARTM until the conditions they had laid down were fulfilled and their firms had been awarded new contracts for technical assistance,

O. whereas an inquiry by Financial Control into the awarding of these contracts clearly showed that the selection procedures could have been manipulated to make sure that the contracts went to the firms of the two board members,

P. whereas, therefore, Commission officials contributed to the creation and operation of a system which made proper management of Community funds impossible, which led to additional costs and significant anomalies and consequently discredited and paralysed a major area of Community Mediterranean policy over a number of years,

Q. whereas the Commission has subsequently demanded repayment from ARTM and the technical assistance agencies of overpayments totalling almost ECU 2.2 million, and whereas only part of this sum has so far been repaid,

R. whereas the Commission has forwarded only part of the documents to the Italian justice authorities, in cases where Financial Control believe there is evidence of fraud on the part of one of the firms concerned, but has failed to comply with Parliament's repeated request ((See paragraph 3 of the abovementioned resolution of 17 July 1997 and paragraphs 3 and 4 of the abovementioned resolution of 31 March 1998.)) to forward all of the details of the case to the Italian justice authorities so that they themselves may decide on the question of their competence and consider any legal implications,

S. whereas, in view of this failing on the part of the Commission, the nature of the confusion of interests, which may have been criminal in nature, and which lasted a number of years in this instance, and the conditions which led to this state of affairs have not been clarified, and whereas there is a suspicion that the Commission has wanted to cover up events which may have given rise to criminal proceedings because its own officials were involved,

T. whereas this suspicion is also fuelled by the way in which the administrative inquiry was conducted:

a) the administrative inquiry was announced to Parliament as the preliminary to possible disciplinary proceedings, but then recast as a substitute for disciplinary proceedings; the change in the remit of the administrative inquiry was ordered by the Secretary-General of the Commission with the prior agreement of the member of the Commission responsible for personnel and administration;

b) the Directors-General charged with the inquiry came to the conclusion that they were unable to find any evidence to suggest that the officials in question had been guilty of fraud or unjustified enrichment; in doing so the Directors-General assumed powers to which they had no entitlement: establishing whether a crime has been committed is a matter for the judicial authorities; it is not something to be decided by officials of the Commission;

c) the Directors-General charged with the inquiry also came to the conclusion that the unsatisfactory state of affairs was due to poor management; they were of the opinion that the incidents were not sufficiently serious to justify any disciplinary action on the grounds that there had been no intentional infringement of financial or other rules; in reaching this conclusion they violated both the spirit and the letter of the Staff Regulations, Article 86 of which explicitly states that disciplinary proceedings may be taken against officials in the event of negligence,

U. whereas the Commission noted, with approval, this outcome of the administrative inquiry,

V. whereas, in a letter dated 7 July 1998 to the President of Parliament, the President of the Commission refused to make available the minutes of the question and answer sessions during the administrative inquiry,

W. whereas it is therefore impossible to check the nature and extent of the administrative inquiry or to verify to what extent the conclusions actually reflect the responses to the questions,

X. whereas this in turn feeds the suspicion that the Commission has something to hide,

Y. whereas the European Court of Justice has explicitly referred in its decisions to the Commission's obligation to cooperate loyally with the national judicial authorities, and whereas in the case in question this is a particular obligation in that there is clear evidence of infringements of European directives on public works contracts,

1. Reasserts its view that in cases such as this the national judicial authorities must have discretion to determine whether they are competent and, where applicable, to institute criminal proceedings;

2. Calls on the Commission for the third and last time to forward the entire file, including new additional evidence of serious irregularities, on the MED affair to the judicial authorities in Belgium, France and Italy and not, as has been the case hitherto, only parts of the file;

3. Gives the Commission until 1 December 1998 to do so;

4. Will examine the possibility of forwarding to the judicial authorities everything in the file at the disposal of Parliament and, in the framework of the discharge procedure for 1996, of bringing proceedings against the Commission, pursuant to Article 175 of the Treaty, for failure to act should the Commission fail once again to respond to this request;

5. Expects the Commission to assume full responsibility for having damaged its own credibility in disciplinary proceedings thanks to its approval of the administrative inquiry that was carried out in an incorrect manner; also expects the Commission to take the necessary steps to restore its credibility;

6. Expects the Commission, in future, to limit the scope and nature of administrative enquiries strictly to the establishment of facts and not make them a substitute for disciplinary action;

7. Calls on the Commission to make accessible to Parliament's competent committee the minutes of the administrative inquiry; recalls in this connection that in accordance with Article 206 of the EC Treaty the Commission must submit to Parliament any necessary information during the discharge procedure;

8. Reaffirms paragraph 18 of its abovementioned resolution of 31 March 1998 and calls on the Commission once again to exclude from involvement in the new programmes any operators who in the past signed a co-financing obligation and failed to honour it; calls on the Commission to collect in full all sums classified as recoverable in the context of the current audit and to employ strict criteria in so doing; calls on the Commission to report no later than 1 December 1998 on the action it has taken following the audit;

9. Recalls that the MED affair was one of the reasons leading to postponement in respect of granting discharge for 1996;

10. Instructs its President to forward this resolution to the Commission and Council and the European Court of Auditors.