WRITTEN QUESTION E-1407/00

by Jeffrey Titford (EDD) to the Commission

(5 May 2000)

Subject: Fraud and corruption within the European Union

Will the Commission please indicate what actions have been taken to prevent a recurrence of fraud and corruption like that revealed in the Leonardo Programme, supervised by former Commissioner Edith Cresson?

Answer given by Mr Kinnock on behalf of the Commission

(13 July 2000)

The Anti-Fraud Office of the European Communities (OLAF) undertook an investigation into the internal management of the Technical Assistance Bureau (BAT) responsible for the implementation of the Leonardo programme and, as a consequence, identified facts about the case which could result in criminal charges relating to possible fraud. Those facts were then transmitted to the relevant judicial authorities. The OLAF investigation did not detect evidence of wrongdoing in the management of the programme as such.

In addition to the OLAF investigation, an administrative enquiry into the management of the programme was undertaken and has recently been concluded. Like the OLAF investigation, the report of that enquiry did not show evidence of serious error in the management of the programme warranting the opening of disciplinary proceedings.

As part of the efforts to further reinforce security against attempted fraud, corruption or serious mismanagement, the Commission's Reform programme contains several provisions for action which inter alia respond to the concerns registered, and the recommendations made, in the first report of the Committee of Independent Experts.

Those provisions include the strengthening of responsibility and accountability of Directorates General which will be directly responsible for financial management, and will include an account of that management in their Annual Report; the implementation of new audit capabilities in Directorates General; and the establishment of an independent internal Audit Service led, and mainly staffed by, qualified specialists in financial audit. In addition, the Commission's resources dedicated to audit will be increased by the external recruitment of specialists and through internal training.

To illustrate the effect of the changes it can be reasonably anticipated that audit units of Directorates General will undertake, or have undertaken, auditing of TAOs (or comparable organisations). Moreover, if and when an audit report has not been issued within a satisfactory period of time the internal Audit Service will be alerted and will make the appropriate investigations on which it will report to the Commission.

As the Honourable Member will have noted in the White Paper on Reform, published and presented to Parliament on 1 March, some Reform provisions relating to modernisation of financial management and control will require changes in the existing Financial Regulations legislation before they can enter into force. Meanwhile, the Commission is implementing and will implement all changes that do not require legislative amendment. Resulting from that, the new Internal Audit Service became operational on 21 June, the Commission will decide on the provisions for the decentralisation of ex-ante visa controls on 12 July, all DGs are undertaking an extensive assessment of their financial systems to be completed by September 2000, and all staff engaged in financial matters will be receiving extensive training from September.