WRITTEN QUESTION P-0559/99

by Karl Habsburg-Lothringen (PPE) to the Commission

(3 March 1999)

Subject: Possible misappropriation of EU funds (World Vision)

There have been recurrent reports, particularly in the Austrian media, in connection with a scandal concerning donations to World Vision, of the misappropriation of EU funds and intervention by Members of the European Parliament. Has the Austrian World Vision organisation misappropriated EU funds, or were the funds used properly? Was there really intervention by Members of the European Parliament, and if so, who were they?

Joint answer

to Written Questions P-0223/99, E-0313/99 and P-0559/99 given by Mrs Bonino on behalf of the Commission

(20 April 1999)

Upon learning of the legal proceedings against World Vision Austria (WVA) at the end of November 1998, the Commission contacted the Austrian judicial authorities offering to cooperate on the aspects involving Community funds. It also asked to be kept informed of the findings on these aspects, in line with the provisions of national law.

With the permission of the Austrian judicial authorities, a financial control visit took place in January 1999 to the field headquarters of WVA's implementing partner in Sarajevo (World Vision International BiH) where financial documentation for the Community funded aid projects is kept. The audit was limited to the control and testing of Commission (ECHO) financed operations. No irregularity was found in respect of the use of ECHO funds by this non-governmental organisation.

As far as humanitarian projects are concerned, contacts between the Commission and WVA, before, during and after the implementation, were mainly managed between World Vision's offices in Bosnia-Herzegovina and the Commission's (ECHO) office in Sarajevo, and were of a purely operational nature. No contacts of the sort mentioned were used to secure humanitarian funding of WVA backed projects in Bosnia. Its proposals were judged on their own merits and assessed in conformity with the relevant criteria. Control of the implementation of these projects was carried out by the Commission's (ECHO) office in Sarajevo with technical assistance from the International management group (IMG) there.

In respect of two of the three contracts with WVA, the Commission made final payments to WVA in September and October 1998 of euro 38 900 and euro 30 383 respectively. This was shortly before news of the legal proceedings reached the Commission. The Austrian authorities subsequently blocked the bank accounts of WVA. As an additional control, the Commission wrote to the legal adviser of WVA to ask about the status of these payments and whether he was aware of any irregularities that might affect Community funds. As a precaution a final payment under the third contract with WVA for approximately euro 100 000 has been suspended. This payment will remain suspended until the legal adviser replies with clarification.

In addition to projects in the area of humanitarian aid, WVA has received contracts under the Obnova, Phare and Tacis programmes in Bosnia, Romania and Mongolia as follows:

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The project under the Obnova programme aims to promote the return of refugees and displaced people (418 Bosniaks, 266 ethnic Serbs and 91 ethnic Croats) to their municipalities by the rehabilitation of housing infrastructure and the revitalisation of the socio-economic environment. This contract is managed by the Commission representation in Sarajevo. Regular monitoring of the project showed that, at a technical level, project implementation was progressing smoothly and that the financial aspects of the project seemed to be in order. An advance payment of euro 1 695 890 to World Vision Austria was made by the Commission on 6 May 1998. No further payments have been made. The current project was due to expire on 1 April 1999 but, even though the Commission has not received evidence of fraud related to this project, it decided to suspend it and to carry out a full appraisal of its implementation.

As to the Phare projects, the first was completed in June 1998 and a monitoring visit in May 1998 by independent consultants indicated that the results were positive. A final payment of euro 8 622 is outstanding. WVA was not the lead partner in this contract. The second Phare project has been completed and the assessment of its impact, again by independent consultants in a monitoring visit in December 1998, is broadly positive. However the final payment of euro 17 772 has been withheld pending an audit of the project costs. The last of the Phare projects was cancelled as soon as the Commission became aware of the arrest of the (former) WVA staff and the first (and only) payment of euro 61 000 has been recovered.

The Tacis contract was stopped in November 1998 following the notification by World Vision, office of the international president, that WVA would be dissociated from the international network. No payment was made under the contract.