WRITTEN QUESTION P-3742/02

by Gabriele Stauner (PPE-DE) to the Commission

(12 December 2002)

Subject: Conflicts of interest

Can the Commission confirm that ASBL Eurocost, a company based in Luxembourg, has committed serious irregularities (massaging the accounts, double and triple financing of projects, theft of computer equipment) which have resulted in a loss to the Community budget of over EUR 1 million? Can the Commission confirm that those irregularities had already been unearthed early in the year 2000 during an inspection by officials of the Commission's Audit Directorate-General but that the Luxembourg legal authorities were not called in until the summer of 2002?

Can the Commission say exactly when the relevant report by the Audit DG was submitted to the Commissioner responsible for financial control and what action she took in response? Can the Commission forward a copy of the report by the Audit DG to Parliament?

Can the Commission confirm that the Director-General of Eurostat was a founding member and sometime chairman of ASBL Eurocost and saw to it that Eurocost received subsidies from the Community's budget over a period of more than ten years?

Can the Commission say whether the active participation of a Commission Director-General in an organisation receiving considerable sums in subsidies from the Community budget was consistent with Commission rules on the avoidance of conflicts of interest? Will the Commission ask the Director-General of Eurostat to make good the damages caused to taxpayers? Was the Director-General of Eurostat also involved with other firms or organisations which received subsidies from the Community budget? If so, which?

Answer given by Mr Solbes Mira on behalf of the Commission

(17 February 2003)

An audit launched at the joint initiative of Eurostat's Internal Audit Service and DG Financial Control (DG Audit at the time) and carried out during the first quarter of 2000, identified several alleged irregularities

in connection with the execution of grant agreements awarded from the Community budget for the calculation of intra-EU and extra-EU correction coefficients. The audit concluded that the Commission should issue a recovery order for the amount of EUR 1 009 016. The recovery order was issued on 19 May 2000. It is still open because Eurocost ASBL's liquidation is not yet completed.

Eurostat's audit report was issued on 28 March 2000 and sent by the Director-General of Eurostat to OLAF on 31 March 2000.

In view of the ongoing criminal investigation in Luxembourg, OLAF does not wish to make any comments at this stage.

The procedures of DG AUDIT foresaw transmission of reports covering the control of community subsidies to the competent Director general and, in case of suspicion of fraud, to OLAF. There was no rule of general transmission to the Commissioner responsible for Financial Control. In the case of the Eurocost report drawn up by DG AUDIT, transmission to DG ESTAT and OLAF took place on 10 April 2000.

The Commission does not automatically transmit internal audit reports to the Parliament, but any formal request from the Parliament would be dealt with in accordance with existing rules and procedures.

The Commission confirms that Eurostat's Director-General was a founding member of Eurocost ASBL and chairman in his capacity as Director-General of Eurostat during the second semester of 1989.

Eurocost was created following the Commission Decision to extend the correction coefficients to all countries where Commission officials are employed, but without providing additional human resources for this task.

This task was financed through grants in order to ensure the production of intra-EU and extra-EU correction coefficients under the Staff Regulations.

A Communication of the Commission of 22 July 1998(1) specified the rules applicable to such entities.

Eurostat followed the Commission's Communication and in the grant agreement with Eurocost ASBL signed in early 1999, it was explicitly stated that this was the last annual grant.

The Commission Communication approved on 16 November 1993(2), having identified a number of risks linked to its participation in private-law bodies, namely the possible conflict of interests, adopted guidelines to control such participation. Following the adoption of these guidelines, an inventory of the Commission participation in private-law bodies was drawn up and all the existing situations were examined on a case-by-case basis. At the end of this exercise, the Commission, on the one hand, decided to authorize the continuation of the Statistical Office participation in Eurocost and, on the other hand, also decided that this participation would be phased out (Commission Decision of 17 October 1995(3)). The Director-General of Eurostat resigned from his position in Eurocost ASBL in April 1997.

On the basis of the information available at this stage, there is no link between the position of Eurostat's Director-General and the alleged irregularities committed by Eurocost ASBL.

As founder member of Eurocost ASBL, Eurostat's Director General was invited to and participated in the General Assembly of Eurocost ASBL until 1997. He had no management role in Eurocost ASBL.

The Director-General of Eurostat was a member of CESD-Communautaire (Centre européen de formation des statisticiens économistes des pays en voie de développement) in his capacity as DG of Eurostat along with the Directors General of the National Statistical Institutes of the Member States. He participated in the CESD-Communautaire's General Assembly until 1997. In the same capacity of DG of Eurostat, he was a founder member and participated in CESD-Madrid, Lisbon and Rome, until 2000.

(1) SEC(98) 1217.

(2) SEC(94) 389.

(3) SEC(95) 1684.