Resolution

of the European Parliament containing the comments accompanying the decision granting discharge to the Commission in respect of the decisions on clearance of accounts of the Guarantee Section of the EAGGF for the 1993, 1994 and 1995 financial years

THE EUROPEAN PARLIAMENT,

Having regard to the revenue and expenditure accounts and the financial statement for the 1993, 1994 and 1995 financial years (C4-0128/1998 - C4-0372/1998 - C5-0167/2000),

Having regard to the summary reports on the results of inspections concerning the clearance of the EAGGF Guarantee Section accounts for 1993, 1994 and 1995,

Having regard to the Annual Report of the Court of Auditors concerning the 1997 financial year(1), and the Annual Report concerning 1998(2),

Having regard to the special reports of the Court of Auditors for the 1993 financial year(3) and on the management of Community cereals trade involving export refunds, special import arrangements and regional aid schemes(4),

Haaving regard to the EC Treaty and, in particular, to Article 276 thereof,

Having regard to Rule 93 of and to Annex V to the Rules of Procedure,

Having regard to the report of the Committee on Budgetary Control (A5-0095/2000),

Whereas:

A. The clearance of accounts must ensure that the Community is not charged for any amounts paid without a legal basis.

B. The European Court of Justice has repeatedly ruled that the Commission may refuse to implement expenditure for the EAGGF account if the scale of amounts wrongly paid cannot be determined and that the burden of proof for the level of losses actually incurred rests with Member States.

C. Respect for Community legislation must be ensured and must on no account be encouraged or bought with financial concessions charged to the Community budget.

D. The Court of Auditors has not been able to give a positive DAS for the 1998 financial year and has noted that the rate of substantive and formal errors in the EAGGF sector was again too high, although lower than the rate for the overall budget, with half of the substantive errors concerning final beneficiaries.

E. Irregularities can best be prevented by adjusting the underlying legislation.

F. The Commission has failed to ensure that Member States set up suitably robust control systems, including those for cotton, tobacco and olive oil and for controls at customs posts for export refunds.

G. Export refunds have constituted an area of control left neglected for some time, although it has proved particularly prone to significant irregularities.

H. It has been noted that the Commission has taken steps with a view to following up the recommendations made by the Court of Auditors and by Parliament in its resolution of 20 February 1998(5) regarding the management of the Community cereals trade involving export refunds.

I. Again, in 1993, 1994 and 1995, the findings on Corsica were among the most serious ever encountered, illustrating an almost total breakdown of control at every level, with subsequent commonplace abuses leading to the application of a 25 % financial correction.

J. For the fourth year in succession, the Commission failed to carry out its threat to apply a correction above 10 % for olive oil in Greece, thereby showing an inability or unwillingness to act on repeated irregularities or illustrating that repeated irregularities cannot be addressed satisfactorily under the present rules.

K. The integrated administration and control system is operational in most Member States but is still not fully operational in some Member States.

L. The Commission has taken steps to follow up the recommendations made by the Court of Auditors in its Special Report No 2/98 on the clearance of accounts for 1993(6) to draw up overall work plans and to include particular Member States in periodic on-the-spot controls or smaller measures.

M. Expenditure on rural development measures will increase in coming years.

N. The level of staffing in the clearance of accounts unit remains a cause for concern.

O. On occasion, Member States have prolonged and distorted the clearance procedure by not handing over information to the Commission from the outset.

P. Member States have not always taken sufficient steps to attract and retain suitably qualified and experienced staff for exercising the important functions of payment and control, including the strengthening of customs controls for export refunds, and whereas the use and the effectiveness of the 10 to 25 % retained for collecting own resources by Member States is unclear.

Q. The added-value and effectiveness of the Conciliation Body has yet to be confirmed, as a significant number of its cases are passed to the European Court of Justice.

R. The recovery of funds by Member States and of debts by the Anti-fraud Office (OLAF) and the Commission(7) should be improved in terms of coverage, timeliness, transparency and procedural rigour, thereby ensuring equality of treatment and hence competition.

S. The information supplied to Parliament on the action taken on cases referred to OLAF is inadequate.

T. Judgement is reserved until the Court of Auditors reports on what is known as the Fléchard case and the Anti-fraud Office reports on the action taken by the Spanish prosecutor on alleged mismanagement or fraud in the aid regime for flax(8).

General

1. Is concerned at the consistently high levels of financial corrections - EUR 755 million for 1993, EUR 308 million for 1994 and EUR 595 million in 1995 - and sees in these annual figures confirmation that major problems within national payment and control systems have not been addressed with sufficient urgency, rigour and determination by Member States.

2. Welcomes efforts made by the Commission to propose fraud-proof legislation and, while urging the Commission to continue along this path, calls on Council together with Parliament to assume proper responsibility for preventing irregularities through fraud-proof legislation.

Declaration of assurance per sector

3. Calls on the Court of Auditors to work with the Commission, Member State certifying bodies and paying agencies to explore the feasibility of drawing up a separate DAS for the EAGGF and its respective sectors, and to report back to Parliament as soon as possible.

Integrated administration and control system (IACS)

4. Calls for the integrated administration and control system to be fully operational in all Member States before April 2002, after which date the Commission should revert to maximum financial corrections if controls are breached.

Extension of clearance of accounts to the Guidance Section of the EAGGF

5. Calls for the clearance of accounts system to be extended to include the Guidance Section of the EAGGF, as the clearance of accounts could prove a useful instrument for monitoring and preventing irregularities in other areas of expenditure such as the Structural Funds.

Responsibility of the Commission in implementing the budget

6. Welcomes the introduction of a central work plan based on risk analysis and, noting that export refunds are included in each work programme, calls on the Commission and Court of Auditors to put increased emphasis on the control of rural development measures.

7. Calls on the Commission to take all the necessary steps to comply fully, with no further delays, with its obligations under Article 274, namely by creating a common database on all final beneficiaries as the Court of Auditors has repeatedly demanded.

8. Calls on the Commission to investigate the legal possibility of penalties being applied, should infringements be recurrent or structural, as, under current legislation, only the Court of Justice has the power to sanction a Member State, and to report to Parliament as soon as possible.

9. Reminds the Commission that under the new guidelines improvements made subsequent to the period in question cannot be used as an argument for decreasing the correction.

10. Welcomes the creation of an additional 15 posts in the clearance of accounts unit, but is dismayed that nine administrator posts remain vacant and calls on the Commission to address the underlying causes of a relatively high turnover. Calls on the Commission to attract, motivate and retain suitably qualified and experienced staff in the clearance of accounts unit and to alert Parliament if the level of staffing proves to be inadequate.

11. Calls on the Commission to report on the action it takes on the recommendations made by the Court of Auditors.

Responsibility of Member States

12. Calls on the Member States to place suitable importance on attracting and retaining staff for agencies involved in administering payments and exercising controls.

13. Calls on the Member States to supply the Commission with all necessary information from the outset in order to prevent the clearance procedure from being prolonged and distorted.

14. Calls on the Member States to improve coordination between administrations operating within a country, to strengthen the prevention, detection and prosecution of fraud or irregularities and to cooperate fully and unconditionally with OLAF.

15. Calls on the Commission to inform Parliament of the use and possible role of the 10 to 25 % retained nationally for collecting own resources with a view to strengthening customs and export refund controls.

Conciliation Body

16. Welcomes the Commission's evaluation of the Conciliation Body, looks forward to receiving a comprehensive appraisal from the Court of Auditors and will address this as part of the discharge procedure for the clearance of accounts for the 1996 financial year.

Recovery of funds and action taken by the Anti-fraud Office

17. Is alarmed that statistics relating to amounts to be recovered following cases of fraud and other irregularities show that, out of a total of EUR 7559 million in irregularities notified by Member States between 1972 and 1998, EUR 1747 million has yet to be recovered, with paying agencies in Italy, Germany and Spain accounting for 84 % of this total.

18. Urges the Commission and OLAF to take a clearance of accounts decision to charge either the Member State concerned if it has not met all its obligations or the EAGGF if recovery proves impossible. Concerned that information on cases referred to OLAF is not properly notified to Parliament, calls on OLAF and the Commission to provide Parliament with regular information on the progress of cases under investigation, to inform Parliament when the EUR 1747 million has been recovered and to come forward with proposals to improve recovery.

19. Calls on the Commission's legal services to consider the possibility of forcing Member States to pay penalties if delays in the recovery of debts are excessive.

Exclusion of Flax and Fléchard cases

20. Expects the Court of Auditors to submit as soon as possible its findings concerning the allegations made in December 1998 that Commission officials and members of Commissioners' private offices had arbitrarily reduced the penalty from EUR 17,6 million to EUR 3 million in what is known as the Fléchard case.

21. Looks forward to receiving a full report from the Anti-fraud Office, following the latter's request of 7 June 1999 to the Spanish judicial authorities for an inquiry into the possible abuse of the flax aid regime, in the light of a 500-fold increase in production between 1993 and 1998.

22. Asks the Commission to present full reports on the export refund system and the flax and hemp mechanism explaining why the abovementioned failures took place as well as on the measures already taken and planned to ensure that they will not be repeated.

23. Instructs its President to forward this resolution to the Commission, the Council, the Court of Justice, the Court of Auditors and the European Investment Bank.

(1) OJ C 349, 17.11.1998.

(2) OJ C 349, 3.12.1999.

(3) OJ C 52, 21.2.1997 and OJ C 121, 20.4.1998.

(4) OJ C 159 26.5.1997.

(5) OJ C 80, 16.3.1998, p. 299.

(6) OJ C 121, 20.4.1998.

(7) See Council Regulation (EEC) No 595/91 (OJ L 67, 14.3.1991, p. 11).

(8) See Council Regulation (EEC) No 1308/70 (OJ L 146, 4.7.1970, p. 1), and Council Regulation (EEC) No 619/71 (OJ L 72, 26.3.1971, p. 2), amended by Regulation (EC) No 154/97 (OJ L 27, 30.1.1997, p. 1).