Resolution of the European Parliament containing the observations which form an integral part of the decision concerning the discharge in respect of the implementation of the budget of the European Coal and Steel Community (ECSC) for the 1999 financial year
Date: 2001-04-04
Institutions: European Parliament
Subjects: ECSC, budgetary discharge, financial year, implementation of the budget

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of the European Parliament containing the observations which form an integral part of the decision
concerning the discharge in respect of the implementation of the budget of the European Coal and
Steel Community (ECSC) for the 1999 financial year

RESOLUTION

THE EUROPEAN PARLIAMENT,

Having regard to Articles 78g and 97 of the ECSC Treaty,

Having regard to the report of the European Court of Auditors on the financial statements of the European
Coal and Steel Community at 31 December 1999 (1),

Having regard to Article 89(7) of the Financial Regulation of 21 December 1977, pursuant to which each
of the institutions of the Community is required to take all appropriate steps to act on the observations
appearing in the discharge decisions,

Having regard to the Court of Auditors' annual report on the ECSC for the financial year 1999 (including
replies
the ECSC),
statement of
the
(C5-0654/2000) (2),

together with the Commission's

concerning

assurance

Having regard to the Council recommendation of 12 March 2001,

Having regard to the Council resolutions of 20 July 1998 (3) and 21 June 1999 (4),

Having regard to the Commission's communication to the Council, the European Parliament, the ECSC
Consultative Committee, the Economic and Social Committee and the Committee of the Regions, ‘Expiry of
the ECSC Treaty: Financial activities after 2002’ (COM(2000) 518),

Having regard to the Commission's communication to the Council, the European Parliament, the ECSC
Consultative Committee, the Economic and Social Committee and the Committee of the Regions,
‘The
future of structured dialogue after the expiry of the ECSC Treaty’ (COM(2000) 588),

Having regard to the follow-up report on the 1998 financial year presented by the Commission,

Having regard to the conclusions of the Amsterdam Council on growth and employment,

Having regard to the report of the Committee on Budgetary Control and the opinion of the Committee on
Industry, External Trade, Research and Energy (A5-0097/2001),

Whereas:

A.

B.

C.

D.

E.

F.

Article 2 of the ECSC Treaty lays down objectives of economic expansion, growth of employment
and a rising standard of living.

In view of the forthcoming expiry of the ECSC Treaty, the ECSC's financial activities (notably loans)
have all but ceased.

Since 1 January 1998, the ECSC levy on coal and steel products, which was until then one of the
main resources of the ECSC budget, has been set by the Commission at 0 %, but is still included in
the budget.

The ECSC's main source of funding is now represented by the net balance from the management of
the various reserves and positions.

The balance sheet of the ECSC, which has continued to decline since 1997, shows a fall of EUR 539
million from 1998, with 55,1 % as loans and 41,1 % as liquid assets.

The profit and loss account posted a fall of EUR 130 million from the previous year, losses on
financial operations fell from EUR 73 million to EUR 33 million, and on the income side interest
received fell from EUR 345 million to EUR 254 million while income relating to the operating
budget fell from EUR 145 million to EUR 104 million.

(1) OJ C 281, 4.10.2000, p. 26.
(2) OJ C 347, 4.12.2000, p. 1.
(3) OJ C 247, 7.8.1998, p. 5.
(4) OJ C 190, 7.7.1999, p. 1.

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G.

H.

I.

J.

K.

L.

M.

N.

O.

P.

Q.

The Commission has fixed a solvency ratio of 100 % to apply at the moment of expiry of the ECSC
Treaty.

This solvency ratio currently stands at 37,8 %, and is expected to reach 100 % by 23 July 2002.

The resolution of the European Council on growth and employment adopted in Amsterdam on 16
and 17 June 1997 and the abovementioned Council resolution of 21 June 1999 on the future of the
ECSC call for the revenues of outstanding reserves to be used for a research fund for activities related
to the coal and steel

industries.

Under current forecasts it is estimated that in 2002 the ECSC's reserves will amount to approxi-
mately EUR 1,6 billion (from which sum should be deducted approximately EUR 495 million
allocated to the repayment of outstanding debts,

leaving approximately EUR 1,1 billion).

The remaining sum could be considered as own resources which should yield annual interest to the
sum of approximately EUR 45 million, to be allocated to research related to the coal and steel
industries (outside the framework programme for research).

Having regard to the Commission's explanations concerning the property acquired with ECSC funds
and ECSC loans to officials, pursuant to the request made in the resolution of 13 April 2000 on the
ECSC discharge for 1998 (1).

OLAF has replied to the comments in the abovementioned resolution of 13 April 2000 concerning
charges of fraud which have proved to be unfounded.

The expiry of the ECSC Treaty on 23 July 2002 will entail the complete disappearance of the ECSC's
legal regime and procedures and the dissolution of the Consultative Committee set up by that Treaty.

The Annual Report on the ECSC for the 1999 financial year was adopted by the Court of Auditors
on 11 and 12 October 2000.

The Court of Auditors concludes that the financial statements of the ECSC at 31 December 1999
give a true and fair view of the assets and financial situation of the ECSC at 31 December 1999 and
of the results of its operations for the financial year ending at the same date.

The Court of Auditors states that the legality and regularity of the transactions, on the whole, are
adequately guaranteed, and therefore proposes a positive statement of assurance,

Winding-up of the ECSC

1. Requests the Commission to gauge the impact of ECSC interest subsidies on the competition situation
in the coal industry and their significance compared to the State aids paid by certain Member States;

2. Reiterates its demand made concerning the 1998 discharge, for the Commission to evaluate, prior to
the expiry of the ECSC Treaty on 23 July 2002, to what extent the ECSC has fulfilled the objectives of
economic expansion, growth of employment and a rising standard of living laid down in the Treaty;

3. Takes into account the fact that the solvency rate of 100 %, fixed for 23 July 2002 by the Commission,
is considered realistic by the Court of Auditors which is following its evolution very carefully and
wishes to be kept informed about it;

4. Looks to the Commission to assure Parliament that sufficient reserves will be available after 2002, so

there will be no risk for the loan operations, when they come to an end;

5. Stresses that Parliament will continue to monitor the effective use of taxpayers' money even after the

winding-up of the ECSC;

6. Notes the strength of the balance sheet of the ECSC, which stood at EUR 4,488 billion at the end of

1999;

(1) OJ C 40, 7.2.2001, p. 392.

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7. Welcomes the fact that, in line with the recommendations made by Parliament in the abovementioned
1998 discharge resolution, the Commission has presented a proposal for a Council Decision laying
down the multiannual technical guidelines for the research programme of the Coal and Steel Research
Fund (1), published in 2000 a ‘five-year assessment’ of the ECSC Steel RTD (Research and Technological
Development) (2) drawn up by a panel of independent consultants specialised in applied scientific,
industrial and social research, and now publishes criteria against which ECSC steel research projects are
selected, monitored and appraised;

8. Asks the Commission to explain why a similar assessment does not exist for the coal sector;

9. Reiterates its call to the Commission, in the context of the 1998 discharge, to carry out an assessment
of real staffing needs with a view to the expiry of the ECSC Treaty, to reorganise the services concerned
if necessary, and to submit such a plan to Parliament prior to expiry of the Treaty;

10. Calls on the Commission to urge the Member States to ensure that the composition and operating
methods of the Economic and Social Committee, which will assume responsibility for the structured
dialogue after expiry of the ECSC, reflect the specific expertise of the coal and steel

industries;

11. Calls on the Commission,

in view of enlargement, to negotiate with the countries concerned the

conditions of their participation in the new research fund;

Follow-up to previous recommendations — liquid asset management performance

12. Considers unacceptable that the financial report for 1999 lacks any data making it possible to assess
the quality of the financial management; calls on the Commission to provide the Court of Auditors and
Parliament, as promised, with all necessary information, beginning with that dating back to the year
1999 and in any event not later than the year 2000, so that the financial performance of the liquid
asset management can be evaluated in the framework of market conditions;

13. Considers that this information is of primary importance to the evaluation of the net revenue from the
management of ECSC assets, which will be allocated to the research fund after expiry of the Treaty;
therefore asks the Commission to make concrete proposals to Council and Parliament concerning the
future resources of the research fund and the management costs of this fund;

Cancellation of dormant commitments

14. Regrets the Commission's belated cancellation of considerable sums, which highlights inadequate

management by the services of the Commission;

Repayment of taxes levied at source

15. Notes the loss suffered by the ECSC in unpaid legal interest thanks to the system prevailing in Italy, and
notes that this situation will not recur, but considers again that this is due to poor management by the
services of the Commission;

Loans to officials

16. Expresses surprise at the fact that the accounts relating to loans to officials were still drawn up in 1999
on the basis of estimates and not real figures; takes into account the fact that the Commission has
submitted a plan for ending new loans to officials after expiry of the ECSC Treaty;

17. Calls on the Commission to draw up a plan to enable the system of loans to officials, based on the old
ECSC pension fund, to be converted at the lowest possible cost into loan capital for use in the outside
banking sector;

18. While welcoming the broadly positive assessment by the Court of Auditors of the Commission's
management of the ECSC budget in the financial year 1999, as well as the Commission's undertaking
on the provision of information concerning the average rate of yield on liquid assets in the ECSC's
annual report from the financial year 2000 onwards, stresses the necessity for the Commission to
ensure maximum transparency in the disclosure of data affecting the value of the ECSC's assets,
particularly in the approach to the expiry of the ECSC Treaty and the creation of the Research Fund for
Coal and Steel.

(1) OJ C 29 E, 30.1.2001, p. 254.
(2) EUR report No 19301

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ANNEX

ECSC BALANCE SHEET AT 31 DECEMBER 1999

ASSETS

31 December 1999

31 December 1998

(euro)

Balance with central banks

95 385

27 373

Loans/advances to credit institutions

1 007 935 493

1 665 753 225

Loans/advances to customers

Fixed income securities

Tangible and intangible assets

Others assets

1 683 067 740

1 680 676 255

1 768 229 093

1 559 191 292

710 287

21 094 201

1 293 461

8 083 389

Prepayments and accrued income

106 529 763

121 505 439

Total assets

4 487 661 962

5 026 530 434

Off balance sheet commitments

427 969 333

372 924 076

LIABILITIES

Amounts owed to credit institutions

1 404 681 748

1 847 547 032

Debts evidenced by certificates

1 027 547 730

958 179 659

Other liabilities

Accruals and deferred income

27 764 503

84 524 667

29 591 303

93 919 208

Provisions for liabilities and charges

113 461 382

122 906 181

Commitments for ECSC operating budget

556 154 370

695 662 822

Total

liabilities vis-à-vis third parties

3 214 134 400

3 747 806 205

Provisions for financing ECSC operating budget

434 735 261

476 042 442

Provisions for large exposures

Reserves

Value adjustment reserve

Surplus brought forward

Surplus for the financial year

18 000 000

23 000 000

802 014 946

777 340 723

16 946 242

666 841

1 164 272

1 195 230

1 145 834

Net total

1 273 527 562

1 278 724 229

Total liabilities

4 487 661 962

5 026 530 434

Off balance sheet commitments

415 913 293

497 605 519

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PROFIT AND LOSS ACCOUNTS FOR YEAR ENDING 31 DECEMBER 1999

31 December 1999

31 December 1998

(euro)

Interest payable and similar charges

179 314 809

232 061 730

Commissions payable

Net losses on financial operations

Administrative expenditure

Value adjustments (tangible assets)

Other operating charges

439 353

33 227 071

5 000 000

328 378

308 312

561 449

73 457 022

5 000 000

407 994

267 708

Value adjustments (loans/advances/provisions)

2 874 287

30 102 913

Total operating charges

234 971 675

374 193 186

Extraordinary charges

Conversion difference

Allocation to value adjustment reserve

2 984 370

16 946 242

137 845

2 735 343

Legal commitments for the financial year

145 553 799

153 992 955

Allocation to provision for ECSC operating budget

Allocation to the guarantee fund

34 000 000

23 000 000

26 000 000

30 000 000

Total charges

457 456 086

587 059 329

Surplus for the financial year

1 164 272

1 145 834

Total

458 620 358

588 205 163

INCOME

Interest received and similar income

254 449 772

346 079 959

Net profit on financial operations

Value adjustment (loans/advances/provisions)

Other operating income

Extraordinary income

17 415 474

39 891 747

455 630

14 166

24 256 800

63 963 378

2 729 291

22 262

Total operating income

312 226 789

437 321 690

Conversion difference

15 556 247

Withdrawal from the value adjustment reserve

313 119

Income related to ECSC operating budget

104 837 322

146 570 354

Withdrawal from provisions for large exposures

Withdrawal from provision for budget variations

5 000 000

21 000 000

4 000 000

Total income

458 620 358

588 205 163

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IMPLEMENTATION OF THE ECSC OPERATING BUDGET

(euro)

BUDGET OUT-TURN

31 December 1999

31 December 1998

Expenditure

Administrative expenditure

Legal commitments

Financing of future operational budgets

Revenue

Levy

Fines

Interest subsidies

Miscellaneous

Cancellations of legal commitments

Net balance for the year

5 000 000

145 553 799

34 000 000

5 000 000

153 992 955

26 000 000

Total

184 553 799

184 992 955

16 605 836

2 557 049

320 008

85 354 429

79 716 477

6 686 169

4 808 477

831 970

134 243 738

38 422 601

Total

184 553 799

184 992 955

Budget out-turn

0

0

Result for financial year

Result from non-budgetary operations after deducting the net balance
allocated to the operating budget

3 164 272

31 145 834

Out-turn of the budget

0

0

Total

3 164 272

31 145 834

Allocation to provision for operating budget/budget variations

21 000 000

Allocation to the Guarantee Fund

– 23 000 000

– 30 000 000

Result before allocation

1 164 272

1 145 834