Resolution on the accounts of the European Communities in respect of the 1996 financial year
Date: 1999-07-03
Institutions: European Parliament
Subjects: European Parliament, financial year

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II

(Acts whose publication is not obligatory)

EUROPEAN PARLIAMENT

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

RESOLUTION

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),

 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 therefore as voted by Parliament on 17 December 1998, which
are annexed;

2. Considers that the accounts of the EC budget for the 1996 financial year should now be noted
by Parliament so that the work on the accounts of later years may be proceeded with;

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

for the financial year 1996:

(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, point 7.
(4) Minutes of that date, Part II, point 1.

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(a) Revenue: General budget

 including EFTA/EEA

(b) Expenditure

 payments made for the fincancial 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

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

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(ECU)

81 275 072 138,98

77 454 116 730,59

81 275 072 138,98

– 77 454 116 730,59

+ 143 860 659,67

+ 423 465 513,01

00,00

– 241,13

4 388 281 339,94

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

(d) Utilisation of appropriations for commitment

(e) Balance sheet as at 31 December 1996

83 736 599 319,12

Assets

Liabilities

Fixed assets
Stocks
Current assets
Cash accounts
Prepaid expenses

Fixed capital
Short-time liabilities
Cash accounts
Accrued expenses

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

Total

Total

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).

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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)

ANNEX

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 European Union budget and toughening up management procedures have come from the European
Parliament’s recommendations;

4. Notes that the Commission has fulfilled the following conditions laid down in its resolution of 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 implementa-

tion of the reconstruction programme in the former Yugoslavia;

(c) it has started to implement the staff increase Parliament requested for the Commission unit respon-
sible 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;

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

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

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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 European Union 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 European Union 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;

11. Notes that the procedure chosen by the Commission makes it impossible for effective improvements 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 (2) 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;

(1) OJ C 80, 16.3.1998, p. 36.
(2) OJ C 132, 28.4.1997, p. 140.

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Lack of effective measures 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 (1) 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;

17. Notes also that high-profile and recent cases involving certain Members of the Commission with 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 prerogat-
ives 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 imple-
menting 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;

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

25. Believes that the discharge procedure has illustrated in many cases a lack of flexibility in personnel
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.

(1) OJ C 109, 1.5.1995, p. 46.