Resolution of the European Parliament containing its comments accompanying the European Parliament decision giving discharge to the Commission in respect of the sixth, seventh and eighth European Development Funds for the 1998 financial year (COM(1999) 227 - C5-0003/1999 - 1999/2004(DEC))
Date: 2000-07-06
Institutions: European Parliament
Subjects: European Commission, European Development Fund, European Parliament, budgetary discharge, financial year

16.9.2000

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Official Journal of the European Communities

L 234/37

RESOLUTION

of the European Parliament containing its comments accompanying the European Parliament
decision giving discharge to the Commission in respect of the sixth, seventh and eighth European
Development Funds for the 1998 financial year (COM(1999) 227 — C5-0003/1999 — 1999/
2004(DEC))

THE EUROPEAN PARLIAMENT,

Having regard to the balance sheets and accounts of the sixth, seventh and eighth EDF for the 1998
financial year [COM(1999) 227 — C5-0003/1999],

Having regard to the Convention signed in Lomé on 31 October 1979 (sixth EDF, Lomé II) (1),

Having regard to the Convention signed in Lomé on 8 December 1984 (seventh EDF, Lomé III) (2),

Having regard and to the Convention signed in Lomé on 15 December 1989 (eighth EDF, Lomé IV) (3)

Having regard to the Convention signed in Mauritius on 4 November 1995 (eighth EDF, Lomé IV bis) (4);

Having regard to the report of the Court of Auditors for the 1998 financial year, and the replies of the
institutions (C5-0266/1999) (5),

Having regard to the recommendation of the Council of 13 March 2000 (C5-0154/2000),

Having regard to its resolution of 13 April 2000 on postponement of the decision concerning discharge to
the Commission in respect of the financial management of the sixth, seventh and eighth European
Development Funds for the 1998 financial year 1998 [COM(1999) 227 — C5-0003/1999-2004(DEC)],
pending a commitment to enact a series of recommendations in an action plan before 15 May 2000,

Having regard to the Commission's action plan responding to each of the points raised by Parliament
adopted formally by the Commission on 10 May 2000 and duly transmitted to the Committee on
Budgetary Control,

Having regard to Article 276 of the EC Treaty,

Having regard to Rule 93 and Annex V of its Rules of Procedure,

Having regard to the report of the Committee on Budgetary Control (A5-0167/2000),

Whereas:

A. External pressure from Parliament has helped the Commission to deal rapidly with a number of cases of

negligence and irregularity within its management of the European Development Fund.

B.

In the past Parliament, the Anti-Fraud Office and the Court of Auditors were not systematically
informed by the Commission of alleged or prima facie cases of fraud or negligence in development aid
programmes, leaving Parliament on a number of occasions to uncover irregularities and alert the other
two bodies.

C. The Commission has announced that in future it will inform Parliament's Committee on Budgetary
Control, the Anti-Fraud Office and the Court of Auditors of its audit and evaluation work programmes,
detected irregularities and corrective measures taken or planned.

D. General weaknesses in the use of aid were illustrated in the implementation of Structural Adjustment
Support programmes in a number of countries whereby the use of counterpart funds suffered at times
from inadequate management, poor supervision and insufficient evaluation.

(1) OJ L 347, 22.12.1980, p. 1.
(2) OJ L 86, 31.3.1986, p. 1.
(3) OJ L 229, 17.8.1991, p. 1.
(4) OJ L 156, 29.5.1998, p. 1.
(5) OJ C 349, 3.12.1999, p. 1.

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E. The Commission intends in future to draw up memoranda of understanding with beneficiary govern-
including corrective measures, the first such memorandum of

ments setting out their obligations,
understanding having been signed in Côte d'Ivoire on 7 September 1999.

F. The Commission has undertaken to inform Parliament of the recovery of ineligible expenditure for six

other countries as soon as final audit reports have been completed.

G. When mismanaged funds are recovered from beneficiary country authorities, the Commission should

try to ensure equivalent supplementary financing to NGOs operating in this country.

H. Some Commission delegation staff appear, in a number of instances, to have failed to act as an effective
first line of control against misuse of funds; whereas the Commission is carrying out a substantial
reform which also affects staff and the duties of its delegations.

I. The Commission is looking to make radical improvements in the speed, quality and impact of external
aid programmes by overhauling its approach to assistance and reunifying the project cycle in the hands
of a single external body, Europe Aid, which will replace the Joint Relex Service created in July 1998,
and by devolving greater power to the delegations.

J.

Following Parliament's insistence on zero tolerance of fraud the Commission has promised to recover
embezzled funds and launch administrative enquiries into the role of delegation staff in irregularities
and has made a commitment to open disciplinary proceedings on the basis of evidence of involvement
in or cover-up of the fraudulent use of Community funds.

K. The central Internal Audit Service created on 1 May 2000 will not be fully staffed before the end of

2000.

L. The Commission will improve the flow of information to ensure that feedback from often expensive
and time-consuming evaluation reports is systematically used in the design of programmes and projects.

M. The Court of Auditors, in its annual report for 1999 (1), reminded the Commission that supervision is
primarily the task of the delegation in each country concerned and called explicitly for improvements in
monitoring by delegations and strengthening of controls in national administrations through the
systematic supply of technical assistants.

N.

In a follow-up enquiry in 1999, the Court of Auditors found that a number of problems flagged earlier
were still persisting, with a general failure by the Commission to appraise service providers, to analyse
costs or to evaluate technical cooperation.

O. On 4 May 1999 Parliament gave discharge in respect of the sixth and seventh European Development
Funds for the 1997 financial year (2) based on firm commitments that the Joint Relex Service would
show a more robust and systematic approach for tendering, executing, audit and evaluations, that
delegation staff would carry out more rather than fewer checks, evaluations would measure the quality
that a decentralised accounting system would be
of
introduced to ensure a tighter grip on financial controls, and that technical assistance to National
Authorising Officers would be reinforced.

impact rather than the quantity of

inputs,

P. The Commission has assured Parliament that it will continually strive to learn from best practice on
audit and evaluation systems of Member States in response to the call for a benchmarking exercise.

Q. Its Committee on Budgetary Control and the Committee on Development and Cooperation have
worked in close cooperation during the 1998 EDF discharge procedure so that budgetary control and
development policy aspects were taken into account during the appraisal of
the Commission's
performance in 1998, as well as its Action Plan,

(1) OJ C 340, 12.11.1996, p. 1.
(2) OJ C 279, 1.10.1999, p. 132.

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Adoption of action plan

1. acknowledges that the Commission has taken a first step in the process of reforming external relations,
both at its headquarters and in its delegations, by seeking to address problems in the delivery of external
aid and expects, therefore, that this reform will result in the effective management of funds by both the
Commission and local authorities and will help final beneficiaries towards the goal of sustainable
development.

2. welcomes the Commission's adoption of an action plan and looks forward to receiving a clear timetable
information on steps taken by

on measures initiated by the Commission and, as far as possible,
beneficiary countries.

Ongoing monitoring of action plan

3. welcomes the commitments made by the Commission and asks to be informed every six months about

progress achieved as regards implementation of the action plan as of October 2000:

An output-oriented approach

(a) an output-oriented approach should be adopted, in which clear and disaggregated targets are set for
specific results expected from the aid programme; reporting on EU development cooperation must
evolve further towards DAC/OECD standards and shift gradually from input orientation towards
results — with OECD standards adopted for reporting by 2001;

(b) more attention should be devoted to actual disbursement levels and mechanisms should be put into
place to increase the rate of disbursement, as this would bring about a real improvement in getting
aid to the poor;

Independent administrative and disciplinary procedure

(c) the Commission is rightly committed to launching administrative and, if necessary, disciplinary
proceedings and these should be conducted in a professional and transparent manner, with
information provided to Parliament on a case-by-case basis;

Delegations

(d) as the number of properly qualified staff in certain delegations is not always commensurate with the
amount of funds managed in the beneficiary countries, a reallocation of human, administrative and
financial resources should be made to ensure that the size of delegations is proportional to the risks
involved, with more use being made of locally hired staff, particularly to ensure appropriate levels
of qualified professionals;

(e) a culture of accountability and sense of financial responsibility in delegation staff should be fostered
by spelling out clearly the role of officials, local agents and other categories of staff, with particular
emphasis on the management powers of heads of delegation and ensuring that delegation staff have
a greater degree of autonomy in taking financial decisions;

(f) as the Commission agrees that decentralisation of responsibilities to delegations will need to be
accompanied by a reinforcement of officials with appropriate expertise (e.g. in health, education,
gender) and project management abilities, staff with suitable experience should be assigned and
provided with induction training during the handover period between outgoing and incoming staff;

(g) greater emphasis should be placed on measuring the performance of delegation staff and in

particular their management of development aid projects and programmes;

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Relations between headquarters and delegations

(h) communication between the centre and periphery would be improved markedly with more system-

atic use of IT tools;

(i) the operation of the EDF Committee should be refocused on the programming stage of the project
cycle, concentrating on issues of policy and strategy rather than on an examination of individual
projects; the Committee should only deal with major projects over a certain size;

Evaluations

(j) positive and negative lessons drawn from evaluations in the field should be fed back to both
headquarters and other delegations to improve planning and implementation of future operations;

Capacity building in beneficiary countries

(k) the sustainability of aid should be strengthened by promoting ownership of aid projects and
programmes by local beneficiaries and by encouraging the participation of local administrations,
consultants and NGOs;

(l) the capacity of local administrations to monitor and control expenditure in a proper fashion should
be supported by the European Union along with other donors in order to make assessments of
public finances that go beyond a simple analysis of the budget, and include:

(i) legislation on the budget preparation, expenditure and reporting,

(ii) quality of the procedures on the same aspects,

(iii) quality of budgetary control at both governmental and parliamentary level;

Improved coordination

(m) to reduce any possible overlap and improve added value, the Commission must improve coordina-
including officials of Member States in the countries concerned, the

tion with other actors,
European Investment Bank and bilateral and multilateral donors.

Anti-Fraud Office

4.

invites the Anti-Fraud Office to report promptly on cases of alleged fraud or corruption relating to the
management of the EDF.

Court of Auditors

5.

invites the Court of Auditors to investigate the audit and control systems used by delegations to monitor
Structural Adjustment Support and to make recommendations for improvements to the EDF manage-
ment before 15 March 2001 and to report on the effectiveness of the EU in implementing international
targets on poverty reduction.

Follow-up

6.

informs the Commission that it intends to examine closely in the next discharge procedure progress
made on overhauling the management of development aid.