WRITTEN QUESTION E-0507/99

by Klaus Lukas (NI) to the Commission

(8 March 1999)

Subject: Embezzlement in Bulgaria

1. Is there any truth in press reports that 20 members of the board of the foundation set up by the Commission to promote civil society primarily helped themselves to EU resources for the development of democracy?

2. Is there any truth in the claims that they diverted over ECU 200 000 of Phare resources to associations in which they themselves had a financial interest or on whose payroll they were? What stage have the inquiries reached?

3. Why has Parliament not yet been informed?

4. In what other applicant countries have there been similar cases of self-enrichment?

5. Why has the Commission once again failed in its duty to oversee moneys entrusted to it?

6. Who in disciplinary and hierarchical terms is responsible for this failure?

7. What steps have been taken against the guilty members of the foundation's board?

8. Has the Commission at least claimed reimbursement?

9. Will criminal charges be brought against those responsible?

Answer given by Mr van den Broek on behalf of the Commission

(7 May 1999)

1. and 2. The Commission is not aware of any press reports regarding the diverting of Phare funds by the board of directors of the Bulgarian civil society development foundation (CSDF).

Three evaluation reports have been produced on the two Phare projects (of 1994 and 1996 respectively) implemented in the field of civil society and social issues in Bulgaria, which involved a total amount of [fmxeuro] 2,7 million granted to the CSDF. These include a report by the Court of auditors (of October 1998), a report by OMAS (the external monitoring and assessment service for the Phare programme) of November 1998, and a report by Charities aid foundation (of November 1998). None of these reports on the Commission's monitoring and evaluation of projects relating to this assistance has pointed to any kind of irregularity or misuse of funds.

It should be noted that programmes relating to assistance in the field of civil society and social issues are implemented through CSDFs in a number of candidate countries. This is due to the fact that these provide an appropriate mechanism for managing assistance to non-governmental organisations (NGOs) and that they have provided a suitable umbrella organisation covering NGOs representing a large variety of political positions.

This being said, the general pattern has been that CSDFs in the applicant countries, including the Bulgarian CSDF, have had running-in difficulties in establishing organisational and implementation procedures. Thus, even though the above-mentioned reports on the Bulgarian Phare projects are generally positive, they raise the issue of methodology concerning the appointment of the board of directors as well as the need to refine the provisions and procedures to prevent conflicts of interest in cases where board members and experts evaluating grant applications have links with NGOs applying for grants.

This issue was addressed by the Commission already in early 1997, when it acted upon the need to improve the provisions and procedures aimed at preventing conflicts of interest. The statute and regulation of the CSDF were amended and the rule was introduced that each person involved in the decision making process had to declare a possible conflict of interest and would be excluded from the decision-making process in such cases.

Moreover, the Commission has also taken into consideration the detailed comments and recommendations included in the above-mentioned reports, which were issued in late 1998, i.e. after the 1998 Phare project in this field was programmed, and has redesigned the 1998 projects accordingly.

3. to 6. In view of the above reply that no misuse or diversion of Phare funds has occurred in the context of these Phare programmes, and given the generally positive assessment of the relevant Bulgarian projects by the Court of auditors, OMAS and Charities aid foundation, the Commission has not deemed it necessary to inform the Parliament.

In terms of responsibility for the correct implementation of the projects, the Commission took action to strengthen the prevention of possible conflicts of interest already before the above reports were issued in late 1998, and the recommendations made have fully been taken into consideration in the context of the 1998 programming exercise.

As to the other applicant countries, no cases of self-enrichment have been reported.

7. to 9. Again, in the light of the above given replies, no action has been taken against individual members of the board of directors of the CSDF, and no criminal charges have been brought against them. Neither has it been necessary for the Commission to claim any reimbursement of funds.