Resolution on the accounts of the European Communities in respect of the 1996 financial year
Date: 1999-05-04
Institutions: Committee on Budgetary Control, European Parliament
Subjects: European Commission, balance sheet, financial management, general budget (EU), parliamentary scrutiny

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16.
Reaffirms its call for an easing of the burden of taxation on labour and fair taxation of company
earnings and investment income and emphasises the Commission’s call for the convergence of corporate
taxes to prevent the relocation of undertakings solely on tax grounds;

Reaffirms its call for a serious, medium-term and non pro-cyclical effort by the Member States to

17.
consolidate their public finances;

Points out that the Stability Pact makes it possible for the European Central Bank to lower interest

18.
rates in order to stimulate willingness to invest;

19.
Calls for the removal of excessively rigid labour market rules, for the limitation of the burden of
taxes and other charges and for the reduction of non-wage labour costs through developing other sources
of financing which do not entail additional burdens on male and female workers;

Calls  for  intelligent  working  time  models  and  the  reduction  of  overtime  and  advocates  flexible

20.
working hours with full respect for social security protection;

Supports the Member States’ efforts to implement the European infrastructure programme (TENs)

21.
to promote growth, employment and competitiveness;

22.
Refers to the importance of developing a functioning European venture capital market and new
forms  of  financing,  especially  for  innovative  SMEs,  and  firms  in  the  ‘Third  System’  and  calls  on  the
European  Investment  Bank  and  European  Investment  Fund  in  this  context  to  consider  whether  the
resources for venture capital transactions and technological projects cannot be allocated more quickly and
whether the upper limits cannot be raised;

Advocates a strategy to release the social potential in terms of creativity, innovation, entrepren-

23.
eurship, investment and achievement in line with the employment policy guidelines;

24.
Is of the opinion that the geographical mobility of labour is also an important requirement for a
smoothly functioning labour market; calls on the Commission, therefore, to increase its efforts to achieve
complete freedom of movement for EU citizens, workers and their families within the European Union
and to take account in its proposals of other factors that represent obstacles (e.g. taxation of supplementary
pensions) and to present appropriate legislative proposals on transfrontier training and mobility;

Instructs  its  President  to  forward  this  resolution  to  the  Council  and  Commission  and  to  the

25.
governments and parliaments of the Member States and representatives of the two sides of industry.

33. Discharge

(a)  A4-0196/99

Resolution on the accounts of the European Communities in respect of the 1996 financial year

The European Parliament,

−  having regard to the ECSC Treaty and in particular Article 78g thereof,

−  having regard to the EC Treaty and in particular Article 276 (former Article 206) thereof,

−  having regard to the EAEC Treaty and in particular Article 180b thereof,

−  having regard to the budget for the 1996 financial year,

−  having regard to the revenue and expenditure account, the financial analysis and the balance sheet of

the European Union for the 1996 financial year (C4-0196/97),

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−  having regard to the Annual Report for 1996 (C4-0599/97) (1) and the special reports of the Court of

Auditors and the replies of the Institutions,

−  having regard to the Council recommendation of 9 March 1998 (C4-0168/98),

−  having regard to its resolution of 31 March 1998 informing the Commission of the reasons for the
postponement of the discharge in respect of the implementation of the general budget of the European
Union for the 1996 financial year (2),

−  having regard to its decision of 17 December 1998 not to grant discharge to the Commission in respect

of the 1996 financial year (3),

−  having  regard  to  its  resolution  of  14  January  1999  on  improving  the  financial  management  of  the

European Commission  (4) following the refusal of the 1996 discharge,

−  having regard to the report by the Committee on Budgetary Control (A4-0196/99),

1.
Recalls  its  definitive  decision  not  to  grant  discharge  to  the  Commission  in  respect  of  the  1996
financial year and the reasons therefor as voted by Parliament on 17 December 1998, which are annexed;

Considers that the accounts of the EC budget for the 1996 financial year should now be noted by

2.
Parliament so that the work on the accounts of later years may be proceeded with;

Takes note of the following data established by the Commission in order to close the accounts for the

3.
financial year 1996:

(a)  Revenue: General budget
including EFTA/EEA

− 

(b)  Expenditure

−  payments made for the financial year

including EFTA/EEA
− 
appropriations carried over to 1997
−  EFTA-EEA appropriations carried over

(c)  Balance for the financial year 1996

calculated as follows:
− 

revenue for the financial year
−  payments from the appropriations for the financial year

including EFTA/EEA
appropriations carried over to 1997
− 
−  EFTA-EEA appropriations carried over

appropriations carried over from 1995 which have lapsed
exchange difference in the financial year 1996

− 
− 
−  overrun on non-differentiated appropriations carried over

−  Commission
−  Other Institutions

Balance for the financial year 1996

This  balance  reflects  the  accounting  situation  only  and  does  not
include expenditure actually incurred during this financial year.

ECU

ECU

81 275 072 138,98

45 258 019,00

76 165 594 807,11
40 985 655,68
1 288 466 623,48
55 300,00

76 165 594 807,11
40 985 655,68
1 288 466 623,48
55 300,00

+143 860 659,67
+423 465 513,01

00,00
–241,13

77 454 116 730,59

81 275 072 138,98

–77 454 116 730,59

4 388 281 339,94

(d)  Utilisation of appropriations for commitment

83 736 599 319,12

(1)  OJ C 348, 18.11.1997, p. 1.
(2)  OJ C 138, 4.5.1998, p. 43.
(3)  Minutes of that date, Part I, Item 7.
(4)  Minutes of that date, Part II, Item 1.

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(e)  Balance sheet as at 31 December 1996

Fixed assets
Stocks
Current assets
Cash accounts
Prepaid expenses
TOTAL

Fixed capital
Short-time liabilities
Cash accounts
Accrued expenses
TOTAL

ASSETS (ECU) LIABILITIES (ECU)

11 622 101 713,06
100 583 209,71
3 022 732 383,76
11 696 726 750,64
567 563 724,97
27 009 707 782,14

16 343 779 173,98
8 776 630 117,35
1 599 782 123,84
289 516 366,97
27 009 707 782,14

4.
Instructs  its  President  to  forward  this  resolution  together  with  its  annex  to  the  Commission,  the
Council, the Court of Justice, the Court of Auditors, the Economic and Social Committee, the Committee
of the Regions, and the European Investment Bank and to have them published in the Official Journal
(L series).

ANNEX

Reasons leading to the decision not to grant discharge as voted by Parliament on 17 December 1998
(already adopted by the European Parliament on 17 December 1998 (1))

The European Parliament,

1.
Recalls that, for the third year in succession, the European Court of Auditors has declined to provide
positive global assurance as to the legality and regularity of the transactions underlying the payments for
the financial year (2),

2.
Recalls that, on 31 March 1998, the European Parliament expressed deep concern about the many
problems in nearly all categories of the budget, amounting to an unacceptably high number of cases where
the  execution  of  the  budget  has  been  inappropriate,  and  decided  to  defer  the  granting  of  discharge  in
respect of the 1996 financial year mainly for the following reasons:

(a)  the  non-execution  of  the  recommendations  of  its  Committee  of  Inquiry  into  the  Transit  System,

especially regarding the computerised control system,

(b)  the lack of democratic accountability in the fight against fraud inside the European Institutions,

(c)  the lack of coherence and sound financial management which led to a low level of execution of all

major foreign policy programmes, i.e. Bosnia-Herzegovina, PHARE, TACIS and MED,

(d)  regarding the agricultural sector, the delay in the implementation of the Integrated Control System and

the number of recommendations still not implemented from the BSE committee,

(e)  the lack of any precise information as to the results of the proposed measures for job creation in SMEs

through the Structural Funds.

Furthermore, considerable concern was expressed over the need for the Commission to redefine its staff
policy and review its human resources management in the light of policy priorities, and in particular the
custom of delegating public administration prerogatives to third parties;

3.
Underlines, with firmness, that the few improvements which have been made so far to fighting fraud
in the EU budget and toughening up management procedures have come from the European Parliament’s
recommendations;

(1)  Minutes of that date, Part I, Item 7.
(2)  Volume II of the Annual Report, p. 8.

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Notes  that  the  Commission  has  fulfilled  the  following  conditions  laid  down  in  its  resolution  of

4.
31 March 1998:

(a)  it  has  made  progress  in  implementing  the  Committee  of  Inquiry’s  recommendations  concerning

transit;

(b)  it  has  taken  measures  which,  after  the  failures  of  the  last  two  years,  will  permit  effective

implementation of the reconstruction programme in the former Yugoslavia;

(c)  it  has  started  to  implement  the  staff  increase  Parliament  requested  for  the  Commission  unit
responsible for clearance of the EAGGF accounts and thereby met the conditions laid down for the
approval of clearance of accounts for 1992;

(d)  it  has  presented  an  inventory  of  all  measures  aimed  at  providing  aid  for  small  and  medium-sized

enterprises in the Structural Funds;

(e)  it  has  given  assurances  regarding  the  implementation  of  the  Integrated  Management  and  Control
System in the Member States and has also announced the financial adjustments to be made in respect
of the delays;

Concludes, however, that the Commission has failed to comply, or to comply satisfactorily, with
5.
Parliament’s requests in some decisive respects and that three major conditions remain to be fulfilled,
as illustrated by recent events;

Lack of democratic accountability

6.

Recalls its resolution of 31 March 1998 on the postponement of the discharge, which calls for:

(a)  lists of all current internal investigations involving allegations of fraud and corruption on the part of

officials of the European institutions to be regularly supplied and found to be adequate,

(b)  measures to be been taken to ensure that the competent national judicial authorities are swiftly and
without exception informed of any case of alleged fraud, corruption or any other offence when there is
a suspicion that EU officials might be involved;

7.
Points out that in its resolution of 31 March 1998 and, prior to that, in its resolution of 17 February
1998 on the Commission’s conduct in respect of alleged fraud and irregularities in the tourism sector (1)
it stated that it would grant the discharge only once the conditions laid down in paragraph 6 have been met;

8.

Notes that

(a)  although the statistics now forwarded by the Commission on cases of fraud and corruption committed
by  EU  officials  reveal  that  not  a  single  official  has  yet  been  convicted,  they  do  not  contain  any
information on the nature and scale of the cases examined,

(b)  it has still not been ensured that the competent national judicial authorities are notified of each case of
suspected  fraud,  corruption  or  other  offences  without  delay,  in  full  and  without  exception,  as  the
recent ECHO case has shown, the Commission having waited more than six months despite warnings
from the UCLAF investigators before suspending the main suspect and handing the case over to the
judicial authorities,

(c)  the Commission has not complied with Parliament’s request for a proposal for a joint decision of the
European  Institutions  establishing  an  Anti-Fraud  Office  (Office  de  lutte  anti-fraude  −  OLAF),
submitting instead a proposal for a regulation based on Article 235, which signifies a step backwards
in this matter since it fragments the terms of reference relating to the fight against fraud and negates
the independent right of investigation in the case of internal checks;

9.
Notes that the Commission has ignored its repeated calls, in connection with the MED affair, to turn
over the entire case to the legal authorities in Belgium, France and Italy, even though the reports by the
Court of Auditors and the internal financial audit carried out by the Commission contain clear evidence of
actions (improper overlapping of interests, illegal exertion of pressure on officials, manipulation of public
tender procedures) which should be examined in the light of criminal law;

10.
Notes, with incomprehension and indignation, that even after the MED affair came to light some of
the technical aid offices involved, or their proprietors, were awarded further direct or indirect contracts
with the Commission;

(1)  OJ C 80, 16.3.1998, p. 36.

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11.
Notes that the procedure chosen by the Commission makes it impossible for effective improve-
ments to be made rapidly in the fight against fraud and that the Commission is thus doing serious harm not
only to its own credibility but also to the credibility of all the European Union’s Institutions;

Lack of coherence and sound financial management in external policy areas

12.
Notes that the significant management errors and irregularities detected during the 1996 financial
year and afterwards have not only resulted in major financial losses but have also done serious harm to the
European Union’s reputation and credibility;

13.
Notes that, despite progress in certain respects, the Commission is still by and large incapable of
implementing the Community’s external policies effectively as the recent report from the European Court
of  Auditors  on  the  management  of  nuclear  safety  programmes  within  the  framework  of  PHARE  and
TACIS illustrates;

14.
Points  out  that  it  called  on  the  Commission  in  its  resolution  of  10  April  1997  on  the  1995
discharge (1) to take energetic measures to solve the serious administrative problems encountered in the
implementation of nuclear safety programmes in Central and Eastern Europe; notes that the Commission
has not complied with Parliament’s request immediately to set up a task force for this purpose;

Lack of effective measure for improved administrative and budgetary management

15.
Notes that the Commission has not yet given a comprehensive follow-up to Parliament’s request to
redefine  its  staff  policy,  in  particular  by  submitting  realistic  estimates  of  its  needs  to  the  budgetary
authority,  and  to  review  its  human  resources  management  in  the  light  of  policy  priorities,  especially
enlargement  and  the  requirements  in  terms  of  deconcentration  which  it  implies;  recalls  that  a  regular
screening report has already been requested by Parliament already in its resolution of 5 April 1995 (2)
in the guidelines for the 1996 budget;

16.
Notes  that  lack  of  action  has  enabled  abuses  of  procedures  in  the  appointment  of  officials  to
continue unabated, leading to an incapacity of the Commission to ensure that all applicants are treated
equally in its recruitment procedures; notes, moreover, that this appears to be a problem which all the
institutions have in common;

Notes also that high-profile and recent cases involving certain Members of the Commission with

17.
regard to staff appointment are severely damaging the credibility of the Commission;

18.
Recalls that, according to the Court of Auditors, the practice of delegating public administration
prerogatives to third parties has assumed dangerous and reprehensible proportions and leads to numerous
irregularities, and in particular confusions of interests, and a deterioration in the Commission’s monitoring
of the regularity and effectiveness of expenditure;

19.
Considers that the following conclusions can be drawn from these observations arising from the
central  notion  that  flaws  in  management  organisation  have  inevitably  led  to  operational  distortions  in
implementing policies (for example ‘Mini-budgets’);

Parliament’s access to information

20.
Considers that the right of information accorded to it by Article 206(2) of the Treaty in respect of
discharge requires the Commission to submit to it, in their entirety, all documents it considers necessary
for the exercise of this responsibility;

21.
Believes that the Commission has taken a step backwards, as compared with its former practice, by
refusing to make certain basic documents available to Parliament; strongly deplores the communication of
a heavily censored report concerning ECHO to render the document illegible, an action considered by
many to show contempt of Parliament;

22.
Notes that Parliament is still unable to verify the actual magnitude of the irregularities concerning
ECHO  or  to  assess  the  responsibilities  or  the  measures  taken  to  improve  administration,  since  the
Commission continues to refuse to forward certain documents;

(1)  OJ C 132, 28.4.1997, p. 140.
(2)  OJ C 109, 1.5.1995, p. 46.

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23.
Notes that, as its Committee of Inquiry into the Community Transit System was not informed by the
Commission of the real scale of its problems with the computerisation of the transit system, it made an
incorrect analysis of the reasons for the delay in the introduction of the system;

Personal responsibility of Commissioners

24.
Considers that examples discovered during the discharge procedure have revealed a real concern
that irregularities are committed without individual Commissioners perceiving the need to take personal
responsibility for such actions;

Weaknesses in the Commission’s structure

Believes that the discharge procedure has illustrated in many cases a lack of flexibility in personnel
25.
management  with  unacceptable  abuses  arising  from  this.  Urgent  action  is  required  to  modernise  the
structures in preparation for an incoming Commission on 1 January 2000.

(b)  A4-0201/99

Resolution informing the Commission of the reasons why the discharge cannot at present be given in
respect  of  the  implementation  of  the  general  budget  of  the  European  Communities  for  the  1997
financial year

The European Parliament,

−  having regard to the revenue and expenditure accounts and the financial statement of the European
Communities for the 1997 financial year (SEC(98)0519 − C4-0350/98, SEC(98)0520 − C4-0351/98,
SEC(98)0522 − C4-0352/98),

−  having regard to the report of the Court of Auditors for the 1997 financial year (1) and to the special

reports relating thereto,

−  having regard to the Council recommendation of 15 March 1999 (C4-0156/99),

−  having regard to Article 276 of the Treaty establishing the European Community,

−  having regard to Article 89 of the Financial Regulation, and in particular paragraphs 1 and 4 thereof,

−  having regard to Rule 86 of its Rules of Procedure,

−  having regard to the initial report of the Committee of Independent Experts on the allegations of fraud,

mismanagement and nepotism in the European Commission,

−  having  regard  to  the  attached  Working  Document  of  the  Committee  on  Budgetary  Control  on  the
implementation of the general budget of the European Community for the 1997 financial year,

−  having regard to the report of the Committee on Budgetary Control and the opinions of the Committee
on  Research,  Technological  Development  and  Energy,  the  Committee  on  Employment  and  Social
Affairs,  the  Committee  on  External  Economic  Relations,  the  Committee  on  Regional  Policy,
the Committee  on  Transport  and  Tourism,  the  Committee  on  the  Environment,  Public  Health  and
Consumer Protection, the Committee on Culture, Youth, Education and the Media, the Committee on
Development and Cooperation, the Committee on Civil Liberties and Internal Affairs, the Committee
on Fisheries and the Committee on Women’s Rights (A4-0201/99),

A.  whereas, pursuant to Article 276 of the EC Treaty, the European Parliament gives discharge to the

Commission in respect of the implementation of the budget,

B.  whereas the President and Members of the Commission have resigned from office,

(1)  OJ C 349, 17.11.1998.