Report from the Commission to the European Parliament and the Council - Follow-up Report on the European Parliament resolution on 2000 Discharge for the General Budget
Date: 2002-12-10
Institutions: European Commission
Subjects: financial control, general budget (EU), institutional reform, interinstitutional relations (EU), management audit, operation of the Institutions

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 10.12.2002
COM(2002) 696 final

REPORT FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

Follow-up Report on the European Parliament resolution on 2000 Discharge for the
General Budget

TABLE OF CONTENTS

1.

2.

I.

SUMMARY..................................................................................................................3

FOLLOW-UP REPORT ON THE 2000 DISCHARGE RESOLUTION FOR THE
COMMISSION (EP document A5/0103/2002)............................................................4

EFFECTIVENESS .............................................................................................................4

The administrative machinery of the Commission .....................................................................5

The procedures..........................................................................................................................17

Contractual management procedures and Community subsidies .............................................26

The complexity of procedures and legislation ..........................................................................31

The controls ..............................................................................................................................37

Own resources...........................................................................................................................47

II.

REGULARITY, COMBATING FRAUD AND PROTECTION OF FINANCIAL INTERESTS...........48

Export Refunds .........................................................................................................................52

Corrections................................................................................................................................64

As regards the Anti-Fraud Office .............................................................................................67

Enlargement ..............................................................................................................................71

Involvement of Parliament........................................................................................................73

Spending sectors .......................................................................................................................73

III.

SECTORAL ISSUES ........................................................................................................73

Justice and home affairs sector (JHA) ......................................................................................73

Agencies....................................................................................................................................76

DAPHNE Programme...............................................................................................................76

Trans European Transport.........................................................................................................77

Cooperation...............................................................................................................................77

IV.

ACCESS TO DOCUMENTS ..............................................................................................82

2

SUMMARY

I/ Context

1/Scope of the Follow-up Report

Article 276 of the Treaty establishing the European Community (EC Treaty) determines the discharge
procedure. Its Paragraph 3 stipulates that "The Commission shall take all appropriate steps to act on
the  observations  in  the  decisions  giving  discharge  and  on  other  observations  by  the  European
Parliament relating to the execution of expenditure […]. At the request of the European Parliament or
the Council, the Commission shall report on the measures taken in the light of these observations and
comments and in particular on the instructions given to the departments which are responsible for the
implementation of the budget […]." The Commission accordingly, at Parliament’s request, produces
the present Follow-up Report which relates to the resolution voted by the European Parliament on 10
April  2002.  This  Report,  as  well  as  the  one  addressed  to  the  Council,  is  sent  to  all  the  other
institutions concerned by the discharge procedure.

2/Object of the follow-up report

In accordance with the EC Treaty, the object of this Follow-up Report is mainly to present the action
taken by the Commission or that which it intends to take in response to the comments contained in the
discharge resolution in respect of the implementation of the general budget of the European Union for
the financial year 2000 voted by the European Parliament on 10 April 2002.

3

* * *

2.

I.

1.

2.

FOLLOW-UP  REPORT  ON  THE  2000  DISCHARGE  RESOLUTION  FOR  THE  COMMISSION  (EP
DOCUMENT A5/0103/2002)

EFFECTIVENESS

Notes that Commission effectiveness must be gauged on the basis of three criteria in relation
not only to compliance with the objectives laid down by the political authority, but also to the
speed  and  simplicity  of  the  administrative  and  budgetary  measures  taken  to  realise  those
objectives, and to the best possible use of the budget resources deployed;

Takes the view that the following bases for that effectiveness must be examined as a matter
of  priority:  the  administrative  machinery  of  the  Commission;  the  various  regulatory
procedures and the system of checks; the respect by the Commission of the political priorities
and budget guidelines as defined by the European Parliament;

Commission's reply :

The  Commission  has  implemented  a  new  management  system  (Activity-Based  Management).  By
doing so, the Commission wishes to gradually increase cost awareness through integrated decisions
on  priorities  and  allocation  of  resources,  objectives,  planning,  monitoring  and  evaluation  of
activities  and  to  develop  performance  management  by  emphasising  results  rather  than  input
control.  This  clearly  shows  the  efforts  the  Commission  has  made  and  is  continuing  to  make
regarding  this  very  important  issue  that  represents  a  profound  cultural  change  in  management
practices.

The first Annual Policy Strategy (APS), adopted in February 2001 for the year 2002, launched the
strategic  planning  and  programming  cycle, 
linking  political  priorities,  key  actions  and
corresponding resources. Even if some inevitable weaknesses emerged within the assessment of this
exercise, several  improvements  were  noted  concerning  the  second  APS  decision,  adopted  in  2002
for the year 2003, namely in the area of definition of priorities, corresponding resource orientations
and a new structured dialogue with the European Parliament and the Council.

The Commission also reformed its Work Programme to provide better focus on political priorities
and  introduced  a  new  system  of  operational  programming  to  ensure  more  effective  delivery  on
priority objectives.

Moreover,  new  supporting  management  tools  were  introduced  for  the  first  time  in  2002:  Annual
Management  Plans  as  key  instruments  to  help  management  integrate  priorities,  objectives  and
resource allocation at the operational level  and  Annual  Activity  Reports  aggregating  information
on  outcomes  and  use  of  resources  according  to  the  principles  of  sound  financial  management
(economy, efficiency and effectiveness).

However, this is a long-term and complex learning process which represents a major challenge for
the success of the Reform, and some lessons have to be drawn by the Commission from those first
exercises in order to make it more effective in the future.

4

THE ADMINISTRATIVE MACHINERY OF THE COMMISSION

3.

Believes  that  Commission  departments  must  be  structured  to  ensure  management  with  the
utmost  integrity  and  effectiveness;  notes  the  administrative  reform  under  way,  some  basic
aspects of which were launched in the financial year 2000, and encourages the Commission
to continue its efforts to ensure that results become visible as quickly as possible with regard,
in particular, to reform of the external service according to the political guidelines adopted by
the  European  Parliament  and  to  the  reform  of  financial  management  and  control  within
departments;

Commission's reply :

Firstly,  as  regards  human  resources  management,  in  order  to  make  reform  measures  visible  as
quickly as possible the Commission has initiated a series of actions to fully exploit the potential for
reform  under  the  existing  Staff  Regulations.  The  Commission  has  adopted  a  large  number  of
decisions implementing the new staff policy in all those fields that do not require modifications of
the Staff Regulations. Until June 2002 the Commission has adopted decisions on:

- the conduct of administrative inquiries and disciplinary proceedings;
- mobility;
- guidelines for job descriptions;
- whistleblowing;
- social policy;
- the Mediation service;
- national experts;
- training;
-  and  the  general  provisions  for  implementing  Article  43  and  Article  45  of  the  Staff  Regulations
(appraisal and promotion).

Commission  decisions  and  guidelines  on  further  reform  issues  such  as  flexible  working  time,
teleworking, financial liability (Article 22 of the Staff Regulations), moral harassment, advisers and
heads of units are currently being prepared.

In  addition  to  new  rules,  the  reform  entails  organisational  changes.  A  new  “Investigation  and
Disciplinary  Office  of  the  European  Commission”  (IDOC)  was  set  up  early  in  2002.  The  inter-
institutional  “European  Personnel  Selection  Office”  (EPSO)  will  become  operational  from  1
January 2003.

However,  a  large  number  of  reform measures  require  amendments  to  the  Staff  Regulations.  The
Commission  submitted  its  proposal  for  amendments  to  the  Council  in  April  2002.  It  is  envisaged
that  the  Council  will  adopt  these  amendments  by  June  2003.  The  full  benefit  of  reform will  thus
only be visible after the amended Staff Regulations have entered into force.

Secondly,  the  Council  on  25  June  adopted  unanimously  the  new  Financial  Regulation.  As
Parliament  will  recall,  the  process  leading  to  this  new  Financial  Regulation  was  marked  by  an
intensive inter-institutional dialogue allowing to take into account the views of all actors involved.

Together with its Implementing Rules (a proposal for which has been adopted by the Commission
on  24  July  and  subsequently  been  transmitted  to  the  other  institutions  for  an  opinion),  the  new
Financial Regulation will form the cornerstone for a modern system of financial management and
control as from 1 January 2003.

5

Thirdly  ,  with  the  help  of  the  budget  authority,  the  BA  lines  created  in  2000  now  offer  a  frame
under which technical and administrative assistance for programme implementation and which is
of a non public authority task can be funded ; this has considerably alleviated the constraints under
which many programmes had to operate and has provided the Commission with the means without
which the start of a massive deconcentration of external aid programmes and absorption of TAOs
would not have been thinkable.

Fourthly, as regards the key elements of the reform of the external service, launched in May 2000,
results have already been obtained. These are:

– 

– 

– 

on the intention to achieve a better match between programming of assistance and political
priorities, through the development of Country and Regional Strategy Papers: so far over
110 Country Strategy Papers have been prepared;

on the aim of a more coherent approach to delivery of projects, with the whole project cycle
managed  by  a  single  new  entity,  EuropeAid  Cooperation  Office:  since  then,  old  and
unspent commitments have been halved;

on  the  objective  of  the  management  of  these  projects  at  a  more  local  level,  through
deconcentration  of  responsibilities  to  the  European  Commission's  Delegation  offices:  by
the  end  of  2002,  all  Delegations  in  Europe,  Central  Asia,  the  Mediterranean,  Asia  and
Latin America as well as 13 Delegations in the African, Caribbean and Pacific countries
(ACP) region will be working with this new model.

The  Commission  is  grateful  for  the  support  it  has  received  from  the  European  Parliament  and
hopes  that  the  dialogue  will  continue.  In  particular,  it  has  been  very  helpful  that  the  Budgetary
Authority  decided,  for  the  first  time  in  the  Budget  2002  procedure,  to  lift  the  reserve  on  the
resources intended to finance the Delegations (title A-6 of the Commission budget). It permitted a
smooth  and  efficient  financing  of  their  activities.  Provided  that  the  necessary  resources  are
forthcoming in future budgets, the process will continue and should lead to an enhancement of the
role and visibility of the European Union (EU).

4.

Notes a delay, however, in implementing some of the White Paper actions, as emerges from
the implementation scoreboard forwarded by the Commission (Annex 5 to the replies to the
questionnaire),  because  of  ongoing  interinstitutional  procedures,  concerning  both  the
Financial  Regulation  and  the  Staff  Regulations  of  Officials;  notes  concerning  Action  96
(recovery of unduly paid funds) that the Commission in its December 2000 Communication
has established a new organisational structure for treatment of recoveries; notes also that the
internal  procedures  concerning  enforced  recovery  are  in  preparation  and  wishes  to  be
informed about the effectiveness of this new control system, in an area which is a matter of
priority for the Budgetary Control Committee;

Commission's reply :

Firstly,  as  regards  the  personnel  policy  reform,  an  updated  scoreboard  summarising  the  state  of
play of the implementation of Reform Actions as at 31 March 2002 and showing that several delays
could be caught up, was transmitted to Parliament in May 2002.

However,  it  is  correct  that  delays  occurred  in  2001  with  respect  to  the  initial  timetable.
Nevertheless,  as  regards  personnel  policy,  the  discussion  in  the  framework  of  a  high-level  body
chaired  by  the  former  Secretary-General  of  the  Council,  Mr  Ersboell,  brought  a  very  positive

6

outcome:  the  agreement  reached  between  the  Commission  and  the  trade  unions  representing  the
majority of staff in electoral terms on the global package of personnel policy reform. In May, June
and  October  2001  the  “Ersboell  Group”  organised  meetings  with  representatives  of  the  other
institutions  (Secretaries-General/Administration  and  staff  representatives)  before  drawing  up  its
report.  The  meeting  produced  a  very  fruitful  discussion  that  allowed  the  group  to  draw  its
conclusions and draft its recommendations to the Commission with full knowledge of the different
positions and contributions of the other institutions.

Moreover, the administrations of the other institutions had the opportunity to express their views on
all reform proposals in a group of Human Resource Experts set up by the Heads of Administration.
The group met several times in 2001 in parallel with the consultations that were ongoing within the
Commission. The group exchanged views on individual proposals and identified at an early stage
points of particular interest to the institutions.

As a result of the aforementioned meetings, the consultation with the staff and the “concertations”
with  the  trade  unions,  the  Commission  approved  a  draft  proposal  for  a  Council  Regulation
amending the Staff Regulations in December 2001.

According to Article 10 of the Staff Regulations the inter-institutional Staff Regulations Committee
has to be consulted by the Commission on any proposal for revision of the Staff Regulations. Thus
the  draft  proposal  for  a  Council  Regulation  amending  the  Staff  Regulations  had  first  to  be
transmitted  to  the  Staff  Regulations  Committee  before  it  could  be  adopted  as  a  proposal  of  the
Commission. In January 2002 the Commission submitted its draft proposal to the Staff Regulations
Committee,  which  gave  its  opinion  at  the  beginning  of  April.  On  24  April  2002  the  Commission
adopted the proposal for a Council Regulation amending the Staff Regulations, taking account of
the comments made by the inter-institutional Staff Regulations Committee. The overall timetable –
agreed by the General  Affairs  Council on 15 April 2002 - foresees  to  finalise  negotiations  by  the
end of the Greek Presidency (June 2003). In view of this the General Affairs Council has appealed
to the other institutions to provide their opinion by the end of 2002.

Secondly,  as  regards  financial  control,  all  final  decisions  foreseen  as  part  of  the  Reform  are
scheduled  to  be  taken  before  the  end  of  2002.  But  in  some  cases,  the  implementation  of  reform
actions will not be possible until certain items of legislation enter into force: namely the entry into
force on 1 January 2003 of the new Financial Regulation adopted by the Council on 25 June last
and  of  the  implementing  rules,  the  draft  of  which  the  Commission  submitted  to  the  other
institutions for their opinion at 25 July 2002.

Some  measures  decided  under  the  action  plan  adopted  by  the  Commission  on  13  December 2000
(More  effective  management  of  the  recovery  of  unduly  paid  funds,  SEC(2000)2204/3)  are
provisions which could not be put into effect without a change in legislation. On this matter, and as
regards measures which could be taken without any change in legislation, see the comments under
point 79.

A communication to the other institutions is being prepared with the dual objective of reporting on
measures taken under the December 2000 first plan of action referred to above on the recovery of
established  amounts  and,  in  accordance  with  the  undertakings  given  by  the  Commission  in
December 2000, of adding new measures to this plan of action to ensure the most efficient recovery
of debts. This communication should take into account the conclusions drawn in an IAS report on
recoveries which will be soon finalised.'

7

5.

Asks that the competent committees of the European Parliament be regularly informed about
implementation of certain reform actions and management decisions, in particular:

– 

a  precise  review,  and  a  genuine  forward  schedule,  of  operations  to  discontinue  or
extend the life of Technical Assistance Offices (TAO) and equivalent bodies and set up
new ones in particular as regards the Community equal opportunities programme under
heading B3-4012, the management of which was much criticised by the Court (annual
report - paragraph 3.95),

Commission's reply :

In future, Article 57 of the Financial Regulation 2002 (together with the proposal on Implementing
Rules) stipulates clear rules concerning the kind of tasks that can be given to private sector bodies
and  how  to  proceed  in  such  cases.  No  measure  of  implementation  of  funds  may  be  entrusted  to
private sector bodies any longer.

As  regards  Technical  Assistance  Offices  (TAOs)  as  identified  in  the  letter  of  amendment  N°1
(Annex 3 to the letter of amendment No 1 to the preliminary draft budget 2001 SEC(2000) 1363 of
4 September 2000),  the  list  is  regularly  updated  by  the  Commission  and  sent  to  the  relevant
Committees of the European Parliament. This list contains detailed information on:

- the dates on which contracts expire;

- the number of TAOs dismantled;

- the number of TAOs to be dismantled.

The  present  situation  is  that  out  of  a  total  of  126  TAOs,  87  had  already  been  dismantled  at
1 May 2002, seven are to be dismantled in 2002 and one in 2003.

As  regards  technical  and  administrative  assistance  as  covered  by  the  Guide  "Guidelines  for
outsourcing  of  technical  and  administrative  assistance  to  private-law  entities  for  the  purpose  of
programme  implementation",  the  Commission  conducts  systematic  advance  checks  to  ensure
compliance with the rules and in particular that the tasks to be outsourced do not involve exercise
of public authority or discretionary powers.

With  regard  to  the  use  of  TAOs  under  the  Equal  Opportunities  Programme,  the  Commission
confirms:

- that the tasks devolved to the technical assistance office to which the Court of Auditors refers in
its 2000 Annual Report were reinternalised within DG EMPL over the two budget years 1999 and
2000;

- that the appropriations relating to technical assistance were reduced very considerably under the
Equal Opportunities Programme 2001-2005;

- that this reinternalisation policy was backed up by regular resources enabling the Commission to
perform its tasks in favourable conditions.

8

-

in  connection  with  the  executive  agencies  entrusted  with  certain  tasks  in  the
management  of  Community  programmes  (COM(2000)  788),  specific  tasks  identified
by the various directorates-general as being outsourceable,

Commission's reply :

According to the Commission’s proposal,  on which the Parliament  gave its opinion  last  July,  the
new instrument “executive agency” is supposed to be potentially applicable in the management of
Community  programmes  in  all  policy  fields.  The  Budgetary  Committee  of  the  Council  recently
reached an agreement on the proposal on 26 September 2002. The opportunity of establishing an
executive  agency  will  have  to  be  assessed  in  each  case;  the  Parliament  will  be  informed  of
individual implementing projects at least on a yearly basis during the budgetary procedure.

-

the regulatory instruments laying down the Community programmes where the method
of  management  is  the  use  of  a  network  of  national  agencies;  asks  to  be  consulted  on
these regulatory instruments,

Commission's reply :

Article  54  of  the  new  Financial  Regulation  (F.  R.)–  which  is  the  result  of  an  intensive  inter-
institutional dialogue - contains general rules on how and when  to  resort to national agencies in
the implementation of Community programmes. In the draft regulation laying down detailed rules
for  the  implementation  of  the  new  F.  R.,  the  Commission  considers  submitting  the  delegation  of
powers to national public-sector bodies or private-law entities to strict conditions. These ones relate
to  applicable  law,  financial  guarantees  requested  and  compliance  with  sound  financial
management rules (economy, effectiveness, efficiency). As  to individual programmes,  they  will be
adopted according to the procedures set out in the EC Treaty.

-

the  Commission's  management  policy  for  the  EU  financial  assistance  to  the  different
world regions including deconcentration towards the delegations and decentralisation in
favour of external agencies, as well as their impact on improving EU external aid,

Commission's reply :

The  Commission  will  continue  to  keep  the  EP  regularly  informed  about  the  introduction  of
deconcentration  towards  the  Delegations,  and  is  happy  to  transmit  to  the  EP  the  latest  progress
report on deconcentration.

Building on the Communication on the reform of the management of external assistance of 16 May
2000  and  the  ongoing  process  of  deconcentration,  a  memorandum  to  the  Commission  on  the
administrative reform of the unified external service was presented on 2 July 2002. The approval of
this  memorandum  by  the  Commission  is  a  significant  step  that  will  lead  to  improvement  in  staff
training and  in the management of Delegations.  It  is  proposed  that  a new  single  department will
manage  Delegation  staff,  that  there  should  be  a  clearer  definition  of  Delegation  responsibilities,
and that there should be a new career structure for those who will serve in third countries. These
measures are designed to ensure speedier and more efficient delivery of EU assistance.

-

the  establishment  of  a  European  College  of  Administration  and  of  a  European
Recruitment Office,

Commission's reply :

9

The Secretaries General of the Institutions established an inter-institutional working group on the
subject of a "European Administrative School".

A first ideas paper produced by the working group was discussed in the meeting of the Secretaries-
General on 9 July 2002 and a mandate has been given to the working group to elaborate a more
detailed draft to be transmitted to Secretaries General by January 2003.

While  agreeing  in  principle  to  set  up  such  a  school  in  the  course  of  2004,  Secretaries  General
agreed  that  the  school  should  focus  primarily  on  three  main  priorities,  i.e.  the  induction  of  new
staff, management training and upskilling/career development. In this way the establishment of the
European  Administrative  School  would  contribute  to  a  more  coherent  administrative  and
managerial culture in the Institutions.

Following  the  agreement  of  all  Institutions  the  inter-institutional  European  Personnel  Selection
Office (EPSO) will be established and start working from 1 January 2003 (see also reply to para.
11).

-

the  multiannual programme to convert temporary posts  into  permanent  posts,  and  the
sectors concerned,

Commission's reply :

In its Reform White Paper the Commission stated its intention of launching an operation to convert
temporary  posts  into  permanent  posts.  This  operation  was  justified  by  the  finding  that  some
temporary staff in the Commission were in fact engaged in what had become permanent tasks.

These  conversions  in  no  way  mean  that  the  institution  will  no  longer  be  employing  staff  on  a
temporary basis for certain specific duties requiring special expertise. As was indicated in the White
Paper, other types of status as proposed in the Reform should replace some of the temporary posts.

The  document  on  human  resources  accompanying  the  2001  preliminary  draft  budget  (PDB)
announced a first operation involving 180 A and 90 B posts, in three annual instalments of 60 A
and 30 B.

150 conversions were carried out over the budget years 2001 and 2002. In 2003, they should affect
67  posts  (20  A4,  20  A5,  1  LA5,  6  LA7,  10  B1  and  10  B2).  The  remaining  conversions  will  be
requested for the budget year 2004.

The conversions  are  being  carried  out  in  all  the  Directorates-General  except  the  Commissioners'
cabinets.

-

strengthening of the external element in the disciplinary procedure,

Commission's reply :

On  19  February  2002  the  Commission  adopted  a  decision  on  the  conduct  of  administrative
inquiries and disciplinary proceedings (C 2002 (540)). In order to strengthen the external element
in  disciplinary  proceedings,  Article  10  of  this  decision  provides  that  the  Chairman  of  the
Disciplinary Board is to be chosen from among former officials, serving officials (to be placed on
special  leave  during  their  mandate)  and  former  members  of  the  European  Institutions.  The  new

10

Chairman  of  the  Disciplinary  Board,  a  former  Member  of  the  Court  of  First  Instance,  will  take
office on 1st November 2002.

-

a reform of the invalidity pension arrangement especially with regard to the weighting
system;

Commission's reply :

The main point of the Reform being proposed to the Council on the Community Invalidity System is
the replacement of the invalidity pension by an invalidity allowance equal to 70% of the last basic
salary  while  in  active  service;  this  allowance  will  be  subject  to  the  pension  scheme  contribution.
Step advancement will be withdrawn. The invalidity allowance will not be lower than the minimum
subsistence figure.

In  the  proposal  submitted  in  April  by  the  Commission  to  the  Council,  a  weighting  factor  was
specifically established for pensions, which was determined after  comparison of the cost of living
between  countries.  The  weighting  factors  applied  to  the  pensions  will  likewise  be  applied  to  the
invalidity  allowances.  The  new  weighting  factors  based  on  the  comparison  between  countries
instead of between capitals - as it is today - will be closer to the real differences between the cost of
living in the various countries of the European Union.

6.

Asks the Commission, in view of the recent proliferation of decentralised bodies, to propose
a  review  mechanism  for  Agencies,  based  on  the  cost-benefit  ratio  and  the  added  value
compared to other alternatives;

Commission's reply :

As  already  indicated  under  point  5,  second  indent  ,  the  Commission  proposes  for  the  new
instrument “Executive Agency” an individual assessment of the opportunity to create an Executive
Agency in the specific case in question. In addition, the Commission’s proposal explicitly foresees
the  possibility  to  abolish  an  Executive  Agency,  once  its  continuation  is  no  longer  considered
opportune. As regards the existing Community Agencies, only in the case of the European Agency
for Reconstruction, the legal mandate provides explicitly a possibility to abolish the Agency.

7.

Stresses that any measure involving amendment of the Staff Regulations of Officials and the
Conditions  of  Employment  of  Other  Servants,  such  as 
the  new  career  system,
underperformance, flexible retirement, and the rules governing whistleblowing must comply
with the  principles of independence, neutrality and continuity of the European  civil  service
and modern standards of administration, especially providing service and openness towards
the citizens;

Commission's reply :

The Commission committed itself in the White Paper to base the whole reform on the key principles
of independence, responsibility, accountability, efficiency and transparency.

In its proposal for amendments to the Staff Regulations the Commission has suggested a number of
measures  which  reinforce  the  principles  of  independence,  neutrality  and  continuity  of  the
European Civil Service. The principal obligations of European officials governing the performance
of their duties and their conduct such as impartiality, objectivity and loyalty, which are recognised

11

by case law, are  set out  clearly in  the  proposal. The  obligations  of  officials  in  situations  liable  to
give  rise  to  conflicts  of  interest  have  been  redefined.  Rules  on  professional  discretion  have  been
revised to better align them on the new EU rules regarding public access to documents. Finally, the
Commission has introduced a variety of measures to safeguard professional and ethical standards
such as new disciplinary rules, rules on whistleblowing and professional incompetence.

The  continuity  of  the  European  Civil  Service  will  be  guaranteed  under  the  amended  Staff
Regulations. Basic principles such as the lifetime employment of European officials and a career-
based  system  will  be  retained.  Moreover,  it  should  be  emphasised  that  the  Staff  Regulations  will
continue to apply to officials of all European Institutions and agencies.

8.

Expects  that  the  human  resources  allocated  to  the  various  aspects  of  the  reform  will  be
sufficient to ensure that it is introduced quickly and effectively, e.g. staff allocated for reform
of  the  external  service  and  staff  affected  by  that  reform;  likewise,  as  regards  reform  of
financial management and control within Commission's departments and delegations, wishes
to know what recruitment problems, if any, the Commission faces;

Commission's reply :

The  problems  encountered  by  the  Commission's  departments  and  Delegations  in  relation  to  the
reform of the external service is related to the uncertainty of prior availability of sufficient financial
resources  to  be  able  to  ensure  continuous  progress  as  planned.  As  the  role  of  the  Commission
Delegation offices grows, the Commission has to ensure that sufficient resources are available and
has therefore asked for increased funds in 2003 (under Title A6) to cover infrastructure linked to
deconcentration and increased staff numbers.

The  Commission  is  committed  to  deconcentrating  the  management  of  external  assistance  and
implementing  the  associated  transfer  of  responsibilities  to  the  78  Delegations  managing  aid,
according to the following schedule: 21 Delegations were covered in 2001, a further 26 Delegations
will be covered  in  2002  and the remaining 31 in  2003.  On  top  of  this  the  Commission  intends  to
complete the installation of a new office in Kabul in 2002.

The Commission's approach has always been that the Commission's Delegations in third countries
must be  given  the  necessary  means  to  discharge  their  new  responsibilities  to  the  required  quality
standards.  This  includes  the  provision  of  additional  human,  technical  and  budgetary  resources
from the different parts of the budget (A6 as well as the BA lines).

Some  of  the  new  posts  authorised  in  the  2001  and  2002  budget  covered  the  deployment  of
additional  staff  in  the  Delegation  network,  and  the  2003  PDB  includes  further  demands  for
accelerating the deployment of existing posts from headquarters to Delegations.

The transfer of responsibilities on a specific country portfolio will be gradual, the pace depending
on the speed of increase of the absorptive capacity of Delegations. Delegations have identified an
important  need  for  posts  and  non-permanent  personnel.  Part  of  the  latter  is  to  be  financed,  in
accordance  with  agreements  reached  in  the  framework  of  the  dismantling  of  the  TAOs,  from
appropriations under the BA headings of the relevant external actions programmes.

In  order  to  ensure  that  the  human  resources  allocated  are  sufficient  to  ensure  that  the  various
aspects of the reform are developed effectively, the Commission, in the context of the Annual Policy
strategy (APS) 2003, has decided to allocate more personnel for this priority:

12

-  it  is  proposed  that  around  a  third  of  the  posts  becoming  vacant  as  a  consequence  of  early
retirements in 2003 be used by services to cover their needs in this area. The logical link of using
these  posts  for  a  new  staff  policy  is  apparent,  as  this  policy  focuses  on  investing  in  people,  in
particular by intensifying training and career guidance.

- The Commission has thereby demonstrated its determination to meet the target of reinforcing the
human resources dedicated to the implementation of the Reform and will continue to ensure in the
framework  of  the  APS  cycle  2004  that  the  posts that  will  become  available  as  a  result  of  further
early retirements will be devoted to the priority needs of making the reform a success.

As regards recruitment problems, in view of a lack of suitably qualified people on reserve lists and
the  ensuing  need  to  train  inexperienced  staff,  the  Commission  has  decided  to  review  as  soon  as
possible  profiles  for  recruitments  needed  by  DGs  in  financial  management  and  related  issues,
compare these with the current  competitions programme in this area and launch additional open
competitions as appropriate. In this respect, DG Personnel and Administration will draw up a plan
to be implemented by the new personnel selection office, EPSO, as from early 2003. As an interim
measure, the recruitment of temporary agents on vacant permanent posts will be extended up to the
point at which sufficiently long reserve lists for the related competitions will be available. Thereby
the Commission has managed to reduce the number of vacant post (as of 2 October 2002) to 594
(3,3 % of the total population under the operational budget). In addition, DG Budget will provide
the necessary training for staff on financial management as well as training specifically geared to
the implementation of the new Financial Regulation.

9.

Takes  the  view  that  a  motivated  workforce  is  essential  to  the  success  of  the  policies
implemented by the Commission  and asks the  Commission to  ensure maximal  consultation
with  all  levels  of  staff;  welcomes  the  fact  that  agreement  has  been  reached  between  the
Commission  and  trade  unions  representing  a  large  majority  of  staff  to  the  proposed
amendment  of  the  staff  regulations  which  it  considers  to  be  an  essential  part  of  the
Commission reform process and invites all parties concerned to  cooperate  constructively in
the reform process;

Commission's reply :

The Commission is also committed to ensuring maximum consultation with all levels of staff and
all parties concerned and to cooperating constructively in the reform process (see reply to point 4).
On  all  reform  decisions  within  the  current  Staff  Regulations,  the  Commission  has  not  only  gone
through  the  full  formal  concertation  procedures,  but  also  far  beyond  the  usual  mechanism.  By
doing this, the Commission has established a framework of confidence with the social partners in
the Commission and followed its line of a fully transparent social dialogue.

On  the  reform  package  represented  by  the  Commission’s  proposal  of  a  Council  Regulations  on
modifications  to  the  Staff  Regulations,  the  Commission  has  organised  extensive  political
consultations  and  held  formal  concertations  with  staff  and  staff  representatives  of  an
unprecedented  level.  The  Commission  has  also  encouraged  interinstitutional  social  dialogue  and
welcomed  the  presence  of  staff  representatives  from  other  Institutions  in  almost  every  single
concertation.

With regard to the ongoing negotiations in the Council the Commission concluded, on the occasion
of  the  finalisation  of  the  reform  package,  a  Protocol  Agreement  which  will  ensure  a  constant
exchange of information and consultation. So far  this  Agreement  has  been  signed  by  two unions

13

representing in electoral terms 60 % of staff of the Commission. Both unions are also represented
in  other  Institutions.  The  Commission  has  taken  all  the  necessary  steps  to  make  the  Protocol
Agreement operational and to open it to further staff unions from the other Institutions.

In view of the objective to finalise negotiations by June 2003 and the implications that the reform
may have for the  organisation and  running  of  each  institution,  the  Commission  and  the  Council
have agreed to establish an informal Contact Group allowing a regular exchange of information on
the  timetable  and  the  progress  made  within  each  institution.  The  first  meeting  of  this  Group
covering all Institutions took place at the end of the Spanish Presidency on 28 June 2002.

10.

Calls  on  the  Commission  to  make  sure  the  process  of  reform  does  not  have  any  adverse
impact, e.g. as regards a reduction in the on-the-spot checks carried out by the Commission
(cf. paragraph 3.72 of the Court of Auditors’ annual report);

Commission's reply :

The overall objective of devolving responsibility to the Directorates-General (DGs) initiated by the
Reform  has  led  to  the  transfer  from  Financial  Control  to  the  operational  DGs  of  resources
allocated to on-the-spot checks, responsibility for which now lies fully with the DGs.

As regards the specific Court of Auditor’s observation mentioned, the transitional process in 2000
resulting from the reform did in some cases have an impact on the number of on-the-spot checks
carried  out,  but  it  can  be  seen  now  that  this  was  a  temporary  phenomenon.  Considerable  efforts
have  been  made  by  allocating  additional  staff  to  audit  tasks  and  ,  where  necessary,  by  having
greater  recourse  to  external  auditors.  The  overall  situation  having  remained  stable  in  2001,
reinforcement  of  the  audit  units  has  continued  in  2002.  This  will  be  reflected  in  a  continuing
increase in the level of audit activity, in particular for the Cohesion Fund.

For example, for the ERDF the number of on-the-spot checks increased to 70 in 2001 from 52 in
2000 and 61 in 1999. For the Cohesion Fund the figures are 6 in 2001, 3 in 2000 and 7 in 1999. In
addition, in 2001 80 audits on the spot were carried out by external auditors contracted by the DG
to verify directly managed projects financed under Articles 7 and 10 of Regulation 4254/88.

11.

Asks the Commission to assess the cost-benefit of introducing the reform, including the cost
of  professional  training  (in  particular  in  the  field  of  financial  management),  the  cost  of
recruitment  and  of  termination-of-service  arrangements  (regarding  Article  50  of  the  Staff
Regulations of Officials) and to inform it of the results;

Commission's reply :

The mission statement of the Directorate-General for Personnel and Administration (DG ADMIN)
states  that  one  of  its  main  missions  is  to  "contribute  to  the  reform  related  to  Personnel  and
Administration.  Therefore  this  DG  continuously  updates  its  programming  for  the  reform  in
accordance with a culture of change and experience gathered in the implementation and evaluation
process". An evaluation function within this DG was established in 2001.

Evaluations are and will be carried out for DG ADMIN’s own policy-making purposes, to provide it
with  information  that  helps  to  (re-)orient  its  policies  or  activities,  and  to  be  accountable  for  the
results  achieved.  The  evaluation  function  systematically  examines  the  effectiveness,  efficiency
(cost-benefit),  relevance,  utility  and  sustainability  of  a  selection  of  the  activities.  It  focuses  in
particular  on  the  reform  initiatives  for  which  it  was  made  responsible  in  the  White  Paper  on

14

“Reforming the Commission” of March 2000. The evaluation plan of DG ADMIN for 2002, being
part of the Annual Management Plan, includes a sample of actions relevant to the Reform:

- Evaluation of the language training;
- Evaluation of management training;
-  Evaluation  of  the  equal  opportunities  policy  in  the  Commission,  with  an  emphasis  on  career
policy in regard to gender equality;
-  Evaluation  of  the  information  technology  (IT)  infrastructure  policy  and  support  for  the  e-
Commission initiative.

The results of these evaluations will become available during the first half of 2003. To ensure that
the conclusions of evaluations are as sound as possible, different evaluation tools are combined to
collect and analyse data from the same “object of study” (e.g. a target group), which is known as
methodological triangulation. This allows the strengths of one to offset the weaknesses inherent in
another.

As regards measures not or only partly covered by this evaluation plan:

1.

Professional Training

The main budget lines for professional training of Commission staff in 2001 were :

– 

– 

– 

– 

A7060 (for general training) :

9.000.000 €

A4030 (for language training) :

3.868.000 €

A2 & A5 (for IT training) :

2.145.000 €

C651 (for training of research staff) :

0.055.000 €

Financial administration training was a priority topic in 2001 and represented 19% of total number
of (general) training days organised centrally for Commission staff in 2001 (4 802 training days out
of a total of 24 643).

The  cost  of  this  training  was  only  5%  of  the  A7060  budget  for  central  training.  Many  of  these
courses were facilitated by DG Budget staff due to the very nature of the subject. In this respect, six
different training courses were provided amounting to 203 person/days.

The Commission holds these expenses to be indispensable. As it  already  pointed out in the White
Paper “Reforming the Commission” of 1 March 2000 “a fundamental factor necessary to ensure
the robustness of the new audit, financial and control system is that financial operations must be
run by highly competent staff. Any shortfall in human resources, skills or expertise would seriously
undermine the reliability of the system. … To ensure a common understanding of the concepts and
vocabulary  of  the  new  audit,  financial  and  control  system  across  the  Commission,  staff  will  be
trained  immediately  on  the  principles  behind  the  financial  reforms.  Managers  in  charge  of
spending  programmes  will  be  given  training  courses  on  strategies  for  maximising  the  value  for
money of their activities. Once the new operational manuals with simplified and consolidated rules
and procedures are available, an intensive and thorough training programme will be provided for
operational staff responsible for programmes that involve expenditure. …. An introduction to the
way the Commission’s budgeting and financial systems work will be compulsory for all staff.”

2. ARTICLE 50

15

In 2000 the total cost of article 50 decisions taken amounted to €3 861 715. This represents 0.11%
of  the  total  salary  bill  including  pensions  (0.15%  excluding  pensions)  and  can  therefore  be
considered to be very modest.

In addition these figures do not take into account the fact that the cost of Article 50 decisions could
be offset by savings resulting from the fact that officials departing under the terms of Article 50 are
often  replaced  by  officials  at  the  initial  step  of  the  grade  in  question.  In  other  words,  the  salary
costs for the newly appointed officials are often lower than for their predecessors.

The  provisions  of  Article  50  constitute  an  element  of  flexibility  in  the  management  and
organisation of the services of the institutions, in that senior officials can be retired whenever, for
organisational  reasons,  it  is  considered  to  be  in  the  interest  of  the  service  (e.g.  in  the  case  of
restructuring  or  reorganisation  of  services,  or  to  ensure  a  better  matching  of  the  profiles  of  the
senior officials with the tasks of the institution).

3.  Recruitment  –  Cost-benefit  analysis  of  the  inter-institutional  European  Personnel  Selection
Office (EPSO)

As pointed out in the replies to paras. 3 and 5 EPSO will become operational from 1 January 2003
onwards.

See annexed table which illustrates the recruitment costs and savings generated by the setting-up of
EPSO.

Savings are proved if the cost per successful candidate is less after the setting-up of EPSO.

The estimate of the number of successful candidates needed each year is linked to the posts to be
filled. The number of posts to be filled depends on turnover (retirement), ad hoc measures such as
the conversion of appropriations into posts or termination of service, and the number of new posts
(whether normal or linked to enlargement).

The duration of  a competition varies between 15  and  18  months  for multilingual competitions. It
can be considered that 58% of the costs are borne in the year of publication of the competition and
42% in the year in which the lists of successful candidates are drawn up.

Taking account of these factors, it can be seen that, in the context of enlargement, EPSO reduces
the cost of a successful candidate by a little less than half. This saving comes essentially from the
considerable  number  of  candidates  who  will  have  to  be  recruited  following  enlargement.  The
rationalisation of selection procedures as a result of the creation  of EPSO will lead  to savings of
about 20% per successful candidate compared with costs for the Commission, recruitment unit, in
2001 and 2002. When enlargement is taken into, there will be additional economies of scale leading
to a reduction in cost of approx. 37% per successful candidate.

12.

Considers that the ‘management declarations’ by each director-general, introduced under the
new  internal-management  system  (and  effective  as  of  May  2002),  will  provide  a  welcome
new tool in assessing the performance of Commission Directorates-General and will make it
easier  to  identify  areas  where  further  improvements  need  to  be  made;  underlines  that  the
management  declarations  do  not  in  any  way  diminish  the  individual  or  collective
responsibility of Members of the Commission;

Commission's reply :

16

Within  the  new  management  and  accountability  framework,  the  Annual  Activity  Reports  and
Declarations  are  newly  implemented  management  tools  whereby  the  Commission's  Directors-
General and Heads of Service having individual responsibility and liability for the resources that
they  manage,  render  account  to  the  College  and  other  stakeholders  (Council  and  European
Parliament).  As  the  Commission  pointed  out  in  its  response  to  Parliament’s  discharge  resolution
for 1999, in no way does this alter the individual or collective responsibility of the Members of the
Commission.

The  first  Annual  Activity  Reports,  concerning  the  year  2001,  were  produced  by  all  Directors-
General and Heads of  Service by  1  May  2002.  These  reports  should  be  considered  as  a  first  step
towards a totally consistent strategic planning and programming cycle but the preparation process
and the scope of the report and the declaration will require a continuation of methodological work
in the light of this first year’s experience.

On the basis of these reports, the Commission adopted a synthesis report on 24 July 2002 which has
been subsequently transmitted to the European Parliament, the Council and the European Court of
Auditors, together with all Annual Activity Reports and the reports of the Financial Controller and
of the Internal Auditor under Articles 24 and 24a of the Financial Regulation.

13.

Expects the Commission to inform the European Parliament in the event of any other reforms
under way;

Commission's reply :

The Commission has informed the European Parliament as well as the other institutions right from
the very beginning of the  reform process. This will,  of  course,  also  be  done  in  the  event  of  other
reforms, such as the modernisation of the accounting system and process which is under the way.

THE PROCEDURES

14.

Notes, as the Court of Auditors’ annual report stresses, that procedures are not commensurate
with the objectives pursued; in particular,

(a)

deplores  a  weakness  of linkage  between the  Commission  and  the  Member States: the
lack of uniformity of own-resources-related information forwarded to the Commission
by the Member States in connection with, for instance, fraud, irregularities established
and  checks  introduced  to  prevent  them  (cf.  paragraph  1.61  of  the  Court  of  Auditors’
annual report), the failure by some Member States to forward data in connection with
the clearance of accounts (cf. EAGGF, Guarantee Section, paragraph 2.59 of the annual
report) and the same failing concerning the Structural Funds, and the lack of statistics at
the Commission on premiums within the sheepmeat and goatmeat CMOs (cf. 2.117 of
the Court of Auditors’ annual report);

Commission's reply :

For traditional own resources and in particular with regard to cases of fraud and irregularities, the
Commission  and  the  Member  States  are  linked  via  the  OWNRES  system  which  provides  for  an
overall  view  of  the  situation.  However,  because  of  differing  definitions  of  fraud  and  irregularity
used by Member States, the information obtained is sometimes difficult to compare. To provide for
an adequate solution, in 2001, the Commission tabled a proposal for an EP and Council directive

17

on the criminal law protection of the Community's financial interests, which includes a distinction
between fraud and irregularity. OWNRES, while functioning acceptably from a technical angle, is
currently under review with the aim of enhancing its user-friendliness.

Furthermore, in the framework of the Advisory Committee on Fraud Prevention (COCOLAF), the
Commission  regularly  reminds  the  Member  States  of  the  importance  of  providing  homogeneous
information on cases of fraud or irregularity communicated in the area of own resources.

As  regards  the  Structural  Funds,  information  on  how  Member  States  are  using  the  Structural
Funds  should  improve  as  a  result  of  computerisation  and  stricter  enforcement  of  reporting
obligations. Innovations introduced in this area in the new period include: the common Structural
Funds  financial  database  SFC,  the  linking  of  interim  payments  to  submission  of  annual  reports,
better  forecasting  of  payment  claims,  coding  of  projects  according  to  a  standard  classification,
reporting  of  financial  corrections  and  recoveries,  and  access  to  detailed  project  information  for
analysis before audits.

In  the  autumn  of  2002  the  Commission  Structural  Fund  Directorates-general  and  the  European
Anti-Fraud  Office  (OLAF)  will  audit  the  observance  by  Member  States  of  the  procedures  for
reporting irregularities in the Structural Funds.

As  regards  the  statistics  on  premiums  within  the  sheepmeat  and  goat  regime,  there  is  only  one
Member State which transmitted incomplete data and appropriate measures were already taken by
the Commission. It therefore disagrees with the statement regarding the sheep sector. The reform of
this sector was made with viable statistics They were the basis for the feasibility study and for the
budget  simulations  of  different  policy  alternatives,  including  the  calculation  for  the  additional
payments.

(b)

notes  the  Commission’s  acknowledgement  of  this  state  of  affairs  (in  its  reply  to
paragraph 2.117); does not accept, however, that a shortcoming detected in one sector
may be used as an excuse with regard to others, and therefore calls on the Commission
to  make  the  necessary  representations  to  the  Member  States  in  time  for  the  next
discharge  to  ensure  that  they  meet  their  obligations  on  time  and  that,  in  all  Member
States,  the  information  forwarded  matches  standard  definitions  (in  particular  where
fraud or irregularities are involved);

Commission's reply : As regards the reform of the sheep sector, see answer to point a).

The  Commission  is  continuing,  in  the  framework  of  the  regular  meetings  of  the  COCOLAF,  the
Advisory Committee for the Coordination of Fraud Prevention, a dialogue with the Member States
to  ensure  that  the  reporting  of  fraud  and  irregularities  in  the  Structural  Funds  by  the  Member
States  follows  standard  procedures.  A  presentation  was  made  by  the  Commission  services  on  the
need  to  have  standard  procedures  in  the  areas  of  both  the  Structural  Funds  and  agricultural
expenditure  at  the  most  recent  meeting  of  the  COCOLAF  in  July  2002  and  an  audit  of  three
procedures will be carried out in the autumn of 2002 (see answer to point a).

(c)

deplores  certain  Member  States’  resistance  to  applying  certain  strategies,  as  was  the
case  concerning  the  measures  taken  by  the  Commission  to  detect  and  eradicate  BSE,
and  as  exposed  by  the  Court  of  Auditors  (Special  Report  14/20011),  and  the  lack  of

1

OJ C 342, 20.11.2001.

18

                                                
emergency rules allowing such situations to be put right promptly, (proceedings before
the Court of Justice not being appropriate for managing emergencies);

Commission's reply :

Until the adoption of European Parliament and Council Regulation No 178/2002 laying down the
general principles  and  requirements  of  food  law,  the  Commission  had  very  limited  powers  (apart
from  infringement  procedures)  to  take  prompt  and  quick  action  in  the  event  of  a  Member  State
failing  to  implement  feed  and  food  safety  rules,  or  to  impose  financial  corrections  concerning
veterinary expenditure or market-related measures financed by the EU. This was a major handicap
with regard to the detection and eradication of BSE.

With  the  forthcoming  proposal  on  official  feed  and  food  controls,  the  Commission  aims  to
introduce new tools that would empower the Commission to take more efficient measures against
Member States that fail to implement EU feed and food law. The aim is to submit this proposal to
the European Parliament and Council before the end of 2002.

(d)

notes  that  some  of  the  errors  detected  by  the  Court  (cf.  paragraph  2.36-2.41  of  the
Court  of  Auditors'  annual  report  2000)  proved  to  be  systemic.  The  principal  type  of
systemic  error  observed  concerns  unwarranted  deductions  from  aid  payments
(paragraph 2.36).  Notes  that  the  Court  mentions  examples  of  unwarranted  deductions
from  aid  payments  in  Sweden,  Greece  and  Spain;  notes  that  the  Commission  is
currently  investigating  the  administrative  fees  introduced  in  Denmark  on  applications
for export refunds; asks the Commission to be fully informed on developments in this
case;

Commission's reply :

As  regards  deductions  from  EAGGF  subsidies  operated  by  farming  cooperatives,  producer’s
associations  and  related  bodies  implementing  tasks  related  to  the management  of  the  aid  scheme
concerned which have been delegated to them by public authorities or otherwise conferred on them
pursuant to existing EC legislation, the Commission is of the view that if these deductions are made
in  sectors  where  a  full  payment  provision  exists  and  are  related  to  the  management  of  the  aid
system  by  these  bodies,  such  deductions  are  not  allowed  by  Community  law,  unless  sectoral
Community legislation provides explicitly for such deductions.

As regards the administrative fees introduced by Denmark on applications for export refunds, the
Danish authorities have informed the Commission by letter of 23 April 2002 that as of 1 May 2002
these fees have been abolished.

For  Greece,  flat-rate  corrections,  equivalent  to  the  amounts  deducted  from  area  aid  and  bovine
premium  payments,  have  been  applied  under  the  clearance  of  accounts  procedure  for  the
marketing  years  1993  onwards.  The  application  of  such  financial  corrections  is  under
consideration in respect of ovine and caprine payments effected as from the financial year 2000.

Concerning specific measures for nuts in Spain, after examination, no correction will be proposed
as,  for  the  scheme  in  question,  there  is  no  integral  payment  clause  and  as  the  beneficiary  is  the
producer organisation and not the producer. In addition, this does not represent a deduction but a
compensation which is not forbidden by Community rules.

19

For Sweden the Commission is considering a financial correction equivalent to the amounts levied
by the Swedish authorities and deducted from area aid payments in 1999 for maps.

(e)

regrets that in the area of external aid the Tacis programme for transborder cooperation
failed - after four years of implementation to fulfil one of the main objectives, namely
improvement  of  living  conditions  in  the  border  areas  (e.g.  special  report  Court  of
Auditors  11/20012);  asks  the  Commission  to  reinforce  the  cooperation  between  the
different  programmes  (Tacis,  Interreg,  Phare)  and  to  give  priority  to  projects  for  a
better living environment; asks to be informed about the concrete results, by July 2002,
of the programme, which the Commission expected for the year 2001;

Commission's reply :

The  Commission  acknowledges  that  the  impact  of  the  programme  was  limited  at  the  time  it  was
examined by the Court of Auditors (four years after the programme began). The Court itself noted
that  at  best  only  a  modest  impact  could  be  expected  due  to  the  limited  funds  available.  The
programme experienced some start-up problems which have now been resolved.

The programme has achieved some measurable results. One border post was completed at Leushen
in Moldova in 2001; one bridge and four other border crossings have been completed, or are almost
complete, and will be formally opened in the third quarter of 2002. These are the Jagodin  bridge
over the Bug River between Ukraine and Poland with its access road; two border posts at Salla and
Svetogorsk on the Finnish/Russian border; the border post in Chop on the Hungarian/Ukrainian
border, and the post at Kameny Log on the Belarus/Lithuanian border. These have contributed to
more efficient and effective controls and reduced waiting times. Construction of a new border post
at Bagrationovsk between Kaliningrad and Poland started in June 2002 and will  be  completed in
early 2003. In addition, work on the border demarcation between Belarus and Lithuania started in
March 2002.

The business incubator established in the economic development project at Uzghorod in Ukraine is
full  and  has  a  waiting  list  of  potential  clients,  and  a  scheme  has  been  launched  to  promote
innovative ideas by micro-enterprises and to provide more business skills training. A new project is
currently under preparation to foster the economic development of the lower Danube  Euroregion
by supporting  small  and medium enterprises and by promoting cross-border  trade  with  Romania.
While these results are welcome, the impact on local living conditions will not be felt for some time
to come.

Strengthening coordination between Tacis CBC, INTERREG and PHARE has been and continues
to be a priority for the Commission. Since most of the present Tacis-PHARE borders are expected
to become Tacis/INTERREG borders in 2004 the emphasis of the work has been very much on the
latter.  In  April  2001  the  Commission  published  "A  Guide  to  bringing  INTERREG  and  Tacis
together"  which  contained  a  number  of  practical  measures  to  facilitate  preparing  and
implementing joint projects across the borders. The implementation of the guide is progressing well
and further procedures to link these two instruments are being developed. The priorities of the two
instruments  have  been  harmonised,  projects  which  receive  funding  under  one  instrument  will
receive priority treatment under the other, and an electronic newsletter has been introduced to keep
interested  parties  up-to-date  on  developments  with  both  instruments  There  has  already  been  a
marked rise in the number of linked projects being funded on both sides of the border. A seminar

2

OJ C 329, 23.11.2001.

20

                                                
was held in St Petersburg in November 2001 where participants of all the relevant NIS countries,
candidate  countries  and  Member  States  had  the  opportunity  to  discuss  issues  related  to  the
coordination  between  the  different  Community  instruments  and  cross  border  cooperation  more
generally  as  one  of  the  key  elements  of  the  EU's  strategic  approach  on  its  present  and  future
external borders.

In candidate countries' border regions adjacent to NIS, PHARE national programme funds can be
used  to  support  social  and  economic  activities  of  a  cross-border  nature.  In  so  doing,  PHARE
national programmes can provide the matching funds required for improving coordination with the
Tacis cross-border cooperation programme.

(f)

notes  that  the  Commission  has  improved  the  administrative  procedures  of  Echo,  in
order to be able to better handle emergencies (e.g. special report 2/20013 - humanitarian
aid  for  victims  of  Kosovo);  asks  for  an  assessment  report  to  be  made  on  the
management of recent humanitarian crises (payment timing, decision making capacity,
cooperation with NGOs and evaluation of the aid);

Commission's reply :

The Commission approved a new framework decision procedure for primary emergency procedures
to give further flexibility in responding to emergency humanitarian crises. This new procedure has
allowed ECHO, since 2001, to become a first wave donor in all breaking emergencies since it was
introduced.  ECHO  can  now  take  a  decision  in  the  case  of  new  emergencies  inside  a  given
framework and within a maximum delay of 72 hours. Since these new procedures were adopted, the
new 'first emergency procedure'  has been applied 4 times.  In  all  cases  the  Commission  approved
the  funding  Decision  with  in  a  maximum  of  3  days  after  the  emergency  occurred.  A  fast  track
process for the disbursement of funds (5 days) then follows these decisions.

ECHO also uses an Emergency Decision process that gives  a response in 5 days  from a crisis or
event  and  is  also  accompanied  with  a  fast  track  disbursement  of  funds  process  that  also  takes  5
days. In 2001 there were 31 Emergency Decisions for more than a total of €92 million.

In 2001 ECHO  started  strategic  dialogues  with  its  international  partners,  in  particular  the  ICRC
and  UN  families,  in  order  to  plan  and  better  target  humanitarian  aid  for  long-term  and  more
forgotten  crises.  These  dialogues  are  annual,  but  also  continuous  in  the  field  and  in  specific
situations and therefore a dynamic relationship between ECHO and its partners has developed.

The broader negotiations between the Commission and the United  Nations family  to develop new
streamlined working practices as well  as  the  development  of  strategic  dialogues  with the  UN  and
other international partners are active and well  advanced.  The revision  of the EU-UN agreement
will take some time yet as, among other matters, the UN and the EC have to agree on quantifiable
and  measurable  performance  indicators.  However,  it  is  intended  that,  by  the  end  of  2002,  the
negotiations should be substantially advanced. This will however also depend on the capacity of the
UN system to quickly meet the next phases of the dialogue.

The  main  funding  mechanism  used  by  ECHO  is  the  Framework  Partnership  Agreement  that
includes  a  partner  vetting  process  and  is  a  comprehensive  grant  contract  specific  to  the  needs  of

3

OJ C 168, 12.6.2001.

21

                                                
humanitarian operations. The contract will undergo a further revision in 2002 to better encompass
both the recast Commission rules and the mandate of ECHO, with more flexibility and simplicity.

(g)

considers  that  in  the  framework  of  the  CSFP,  as  is  highlighted  in  the  Special  Report
13/2001 of the Court of Auditors4, the present arrangement is unsatisfactory; asks the
Council and the Commission to produce immediately - as indicated by the Commission
(e.g.  reply  to  the  questionnaire  5.1)  -  an  agreed  definition  of  administrative  and
operational  expenditure  for  EU  Special  Representatives  (EUSR);  asks  that  clear  rules
on remuneration and salary related-costs be clearly established for staff working in the
EUSR offices and that clear arrangements be made on adequate reporting, auditing and
evaluation;

Commission's reply :

In  a  Joint  Declaration  (doc.  14835/01  of  4  December  2001),  the  Council  and  the  Commission
agreed to review the "Guidelines on appointing procedure and administrative arrangements for the
EU  Special  Representatives"  (EUSR),  adopted  on  30  March  2000  (doc.  7089/00  CFSP  136  FIN
104), with a view to arriving at an agreed definition of the scope of administrative and operational
expenditure before 31 March 2002.

The  discussion  on  the  definition  of  administrative  and  operational  expenditure  for  EUSRs  was
undertaken  in  the  Council  External  Relations  Counsellors  working  group.  The  Commission
actively searched for a definition and presented its own contribution in the form of a Commission
Services' working paper. Unfortunately the discussion was overtaken by a debate on the scarcity of
resources to finance the EUSRs, notably from the administrative budget of the Council. Indeed, in
accordance with the guidelines of 30 March 2000, EUSRs are to be financed under the Council’s
administrative  budget  as  they  are  under  the  authority  of  the  High  Representative/Secretary-
General. The working group failed to reach a conclusion. The Commission agrees that the present
arrangement  is  unsatisfactory  in  that  the  present  Guidelines  on  EUSRs  of  March  2000  do  not
provide an adequate definition of administrative and operational expenditure. The Commission will
continue to pursue the issue actively with the Council.

Clear rules on remuneration and salary-related costs for staff working in the offices of the EUSRs
and other Special Advisers of the Commission are presently being established by the Commission.

As  regards  reporting  by  the  Commission  to  the  European  Parliament  (EP),  the  weekly
implementation  tables  received  by  the  EP  at  chapter  level  include  CFSP  under  Heading  4.
According  to  the  Interinstitutional  Agreement  (IIA)  of  6  May  1999,  point  40.1,  the  Council
Presidency  will  regularly  inform  the  EP  about  the  development  and  implementation  of  CFSP
actions.  Hence,  the  provision  of  regular  information  to  the  EP  on  CFSP  actions  is  a  joint
responsibility  of  the  Council  and  the  Commission.  Further,  according  to  point  40.3  of  the  said
agreement,  on  a  quarterly  basis,  the  Commission  informs  the  budgetary  authority  about  the
development  and  implementation  of  CFSP  actions.  This  reporting  has  been  regular  since  the
beginning of 2001.

As  regards  reporting  by  the  implementing  bodies  to  the  Commission,  clear  arrangements  are
already in place. The submission of interim and final reports from the bodies implementing Joint
Actions  is  a  prerequisite  for  payments.  The  Commission  is  putting  emphasis  on  audits  and

4

OJ C 338, 30.11.2001.

22

                                                
evaluations of CFSP actions, organising  2 audits and 1 evaluation in 2001,  and is continuing its
efforts in this regard.

(h)

recommends that the Council and the Commission present to the European Parliament,
a  proposal  for  the  criteria  for  the  definition  of  operational  and  administrative
expenditure in CFSP, and a proposal for  an  interinstitutional agreement  clarifying the
role  of  the  Commission  in  determining  the  financial  and  operational  framework  of
budgetary implementation and presenting the auditing and evaluation systems set-up in
this area;

Commission's reply :

In  the  Commission's  view,  it  is  not  necessary  to  present  specific  criteria  for  the  definition  of
operational and administrative expenditure for CFSP. The Financial Regulation 2002 will apply to
both categories, with the only exception of operational expenditure not charged to the general EC
budget.

The need to define the scope of administrative and operational expenditure only arises as regards
the  mandates  of  EU  Special  Representatives,  which  enjoy  a  special  regime  set  up  by  the  Council
Guidelines  of  March  2000,  which  make  a  distinction  between  administrative  expenditure  to  be
charged to the administrative budget of the Council and operational expenditure to be charged to
the CFSP budget.

The Commission welcomes the suggestion made by the European Parliament for clear operational
principles  and  arrangements  with  regard  to  the  Commission's  role  in  the  implementation  of  the
CFSP and considers that an enhanced role for the Commission will lead to an overall improvement
of  the  management  of  CFSP  actions.  The  Commission  will  give  due  consideration  to  the  EP's
recommendation to propose a new IIA.

15.

Asks the Commission to carry out special audits of the representations in the Member States
in the light of the allegations of malpractice in the Stockholm representation; asks to be fully
and adequately informed of the result of the disciplinary cases in relation to the Stockholm
representation;

Commission's reply :

The Commission has already taken a number of preventive and control measures with the aim of
limiting the risks of embezzlement in its decentralised services:

– 

– 

A unit for "Inspections of the Representations in the Member States" was created in April
2001 in DG PRESS. The specific task of this unit is to ensure that administration within
the  Representations  is  fully  compliant  with  the  different  internal  rules  that  apply  (and,
where appropriate, external rules such as national law). Regular inspections of the various
Representations will continue to be carried out to this end.

DG PRESS has also had an internal audit capacity since an audit unit was set up in April
2001.  Although  this  unit  has  responsibility  for  the  whole  DG,  it  can  also  audit  the
Representations in the Member States and hence ensure that their management complies
fully with certain predefined criteria. Ad hoc audits of the Representations may be carried
out within this framework in coordination with the inspection unit, without prejudice to the

23

general  remit  of  the  Commission's  internal  audit  service  (IAS)  to  carry  out  additional
audits.

– 

Finally, DG PRESS has put in place internal inspection standards as required under the
reform in all the Commission's Directorates-General.

With regard to the disciplinary  cases in relation to  the Stockholm representation the Disciplinary
Board  has  now  delivered  opinions  in  all  three  cases  and  the  Commission  is  about  to  adopt  final
decisions in two of the three related cases very soon. Disciplinary proceedings in the third case had
to  be  suspended  because  the  Swedish  judicial  authorities  have  initiated  criminal  proceedings
against the official concerned. The fifth paragraph of Article 88 of the Staff Regulations provides
that, where the official is prosecuted, a final decision by  the  Appointing  Authority  shall  be  taken
only after the Court has reached a final verdict.

16.

Calls  on  the  Commission  to  improve  budget  forecasts  and  reduce  the  divergences  between
estimates  and  out-turn  and  improve  communication  between  Commission  and  Member
states, especially in the framework of the budget network for information exchange;

Commission's reply :

With a  view to improving  the budget expenditure  forecasts specially  in  the  area  of  the  Structural
actions,  the  Structural  Funds  Regulation  (1260/99)  requires  Member  States  to  submit  detailed
payment  forecasts  to  the  Commission  by  30  April  each  year  to  cover  that  year  and  the  following
year. After analysis the forecasts can be used in establishing the levels of payment appropriations
required under each objective in the following year’s budget. So far, however, they have been too
late  to  be  included  in  the  draft  budget,  which  has  to  be  submitted  by  the  Commission  before  the
Member States' replies are received.

The Commission has made efforts to improve the reliability and timeliness of these forecasts so that
they can become a management tool, despite the inherent uncertainties (expenditure deriving from
large numbers of individual projects) and the lack of experience with the new reimbursement-based
payments system. In March 2002 the Commission wrote to the Member States reminding them of
their obligations and stressing the importance of the forecasts. This message has been repeated in
letters by the Structural Fund Commissioners and through the advisory committees.

In 2002 all Member States have supplied the forecasts

As regards the budget revenue forecasts, see the answer under point 50.

17.

Takes the view that the Commission must equip itself with tools to improve budget forecasts
and  make  greater  use  of  the  budget  network,  in  order  to  prevent  a  recurrence  of  excessive
budget surpluses;

Commission's reply :

The Commission refers to its replies under points 16 and 50.

18.

Is convinced that the management method of the present-day Union, and the enlarged Union
of  tomorrow,  must  continue  to  rely  on  the  principle  of  decentralisation;  this  demands
comparable  and  equally  efficient  management  capacity  on  the  part  of  the  various  national
administrations,  as  required  by  the  new  rules  on  the  Structural  Funds  (Regulation  (EC)  No

24

1260/1999) launched in 2000, which also involve a clarification of the respective roles of the
Commission,  the  Member  States  and  the  various  partners  referred  in  article  8  of  the
regulation;  notes,  however,  when  a  budgetary  action  involves  several  Member  States  in
several operations of the CAP, more intervention by the Commission may be required; insists
that  the  success  of  the  decentralised  management  of  Sapard  and  Ispa  in  the  candidate
countries  and  of  the  activity  of  their  national  administration  will  depend  on  the  EU
commitment  to  support  these  countries  in  improving  their  administrative  capacity;
encourages  the  Commission  to  continue  its  training  efforts  in  the  formation  (via  twinning
with applicant countries) and information (such as round tables with the responsible bodies in
the Member States);

Commission's reply :

The Commission is giving priority  to ensuring  that  Member  States  have  the  necessary  systems  in
place to manage Structural Funds well. Sound decentralised management is one of the thrusts of
the Structural  Fund  Regulation No 1260/1999  and the requirements  have  been  reinforced  by  the
implementing  regulations  Nos  438/2001  (management  and  control  systems)  and  448/2001
(corrections).  A  parallel  control  systems  and  corrections  regulation,  Regulation  (EC)  No
1386/2002,  was  adopted  by  the  Commission  in  July  2002  for  the  Cohesion  Fund,  which  like  the
Structural Funds after accession will also operate in the new Member States. The Commission is
now  concentrating  on  systems  in  its  audit  work.  The  Commission  has  continued  its  activities
designed to support the process of institution and system building in the Applicant Countries (AC)
in the area of Public Internal Financial Control (PIFC) particularly through training of national
officials and networking with counterpart organisations in Member States (MS) and AC. In March
2002 a PIFC training seminar for Turkish officials took place in Ankara. A workshop on regional
aspects  of  financial  control  of  structural  aid  was  organised  in  May  in  Krakow,  Poland  with
participants  from  3  MS  and  3AC.  The  5th  meeting  of  the  Contact  Group  of  European  Financial
Control Organisations (MS, AC and Commission) will take place in October next.

The  Commission  will  further  pursue  these  activities  throughout  the  remaining  pre-accession
period.  Similar  emphasis  is  being  put  on  institution  and  system-building  in  the  pre-accession
instruments.

The  Commission  organised  a  seminar  involving  representatives  of  the  SAPARD  Agency  and  the
Managing Authority of the SAPARD Programmes  of all  ten  beneficiary countries on  17-18 June
2002 in Brussels. All countries participated actively in this seminar, freely exchanging information
on both progress on implementation as well as on difficulties encountered.

Decentralised  management  of  ISPA in  candidate  countries  is  a  priority  for  the  Commission.  The
objective is that those countries should mostly operate under the extended decentralisation system
(EDIS) before they accede likely in 2004. This should allow countries to acquire sufficient practical
experience  in  the  management  of  a  fully  decentralised  implementation  system  before  accession.
The candidate countries concerned are at present at the first stage of the implementation of EDIS
for ISPA, the "gap assessment" (as defined in the "Road map to EDIS for Phare and ISPA" which
was  communicated  to  candidate  countries  in  2001).  In  this  context  the  Commission  adopted  the
suggestion  of  the  European  Parliament  to  establish  High-Level  Working  Groups  in  all  PHARE
countries.  These  High-Level  Working  Groups  will  supervise  and  monitor  the  transition  to  EDIS
process. They constitute important apparatus in the sound financial management of pre-accession
funds and are instrumental in ensuring compliance  with commitments on financial control made
by  the  candidate  countries  in  the  negotiations.  The  EDIS  Roadmap  clearly  indicates  that

25

responsibility and ownership for undertaking this transition rests with the candidate countries for
the first three steps:

1.  Gap  Assessment;  this  involves  carrying  out  an  assessment  of  the  target  national  institutions
(inter alia the National Fund and the implementing agencies) in order to determine to what extent
the  conditions  for  EDIS  are  currently  met  and  to  identify  specific  actions,  changes  and
improvements required.

2. Gap Filling; the national authorities must make the necessary changes and improvements to the
target  institutions  and  procedures  through  implementation  of  the  recommendations  of  the  Gap
Assessment Report (GAR).

3.  Compliance  Assessment;  this  exercise  enables  the  national  authorities  responsible  for  the
financial management of the Community instruments to determine whether the pre-conditions for
formal application of EDIS are fulfilled.

PHARE assistance is being provided to the candidate countries to enable them to address stages 1
to 3 above in a timely, efficient and effective manner.

The final analysis and verification stage is the exclusive responsibility of the Commission services
in  order  to  enable  the  Commission  to  decide  whether  to  grant  EDIS  under  Article  12(2)  of  the
Coordination Regulation No 1266/1999.

The Commission makes available Technical Assistance funds from ISPA (and from Phare in some
countries for some steps in the “road map”) to assist these countries to prepare for EDIS. Most of
the  countries  also  use  external  auditors  to  assist  them.  This  assistance  will  also  help  in
strengthening the implementation structures for the Cohesion Fund.

Agreement for the implementing agencies for ISPA to operate on a fully decentralised basis will be
given upon demonstration that they have in place appropriate resources, structures and systems for
the  effective  and  timely  management  of  Community  assistance  and  effective  internal  controls
including  an  independent  audit  function  and  an  effective  accounting  and  financial  reporting
system meeting internationally accepted audit standards.

Independently  of  the  preparation  for  EDIS,  audits  were  undertaken  in  the  first  half  of  2002  to
assess the adequacy of the management and control system of candidate countries, in line with the
requirements  of  Article  9(2)  of  Regulation  1267/1999.  These  audits  will  be  followed  up  in  the
second  half  of  2002.  Their  findings  will  provide  assurance  that  candidate  countries  have
established proper management and control systems ensuring that ISPA funds are correctly spent
for the purposes intended and in accordance with the rules of sound financial management.

CONTRACTUAL MANAGEMENT PROCEDURES AND COMMUNITY SUBSIDIES

19.

Asks the Court of Auditors to assess to what extent contractual management procedures for
Community  appropriations  (invitation  to  tender,  awarding  of  contracts)  comply  with
transparency principles, in terms of objectives, selection board make-up, candidate selection,
compliance with procedures and reasons for decisions, and in particular has concerns about
invitation-to-tender procedures in the research sector; notes, that the Court of Auditors, in its
annual report, has come to positive conclusions concerning the procurement procedures used
by the institutions to purchase services, supplies and work and stresses the need for increased

26

use  of  long  term  environmental  and  social  benefit  criteria  in  selection  procedures;  in
particular,  asks  the  Court  of  Auditors  to  assess  the  transparency  of  present  Commission
arrangements regarding external aid, such as the establishment of a set of shortlists where the
same companies are supposed to be always the most efficient solution to apply Community
grants of up to EUR 200 000 in every corner of the world;

20.

Calls on the Commission to always use the most appropriate procedure, having regard both to
the  difficulties  for  applicants,  particularly  with  research  projects  and  costs;  underlines
however, that research is a high risk sector and requires very intensive controls;

Commission's reply :

The  recast  Financial  Regulation,  adopted  on  25  June  2002  still  strengthens  the  general,
transparent  and  fair  rules  for  awarding  both  grants  and  procurement  contracts.  The  ensuing
harmonisation  of  procedures  throughout  Community  policies  should  simplify  candidacies  for
applicants.

Besides, the proposed implementing rules allow for some flat-rate amounts and scales in the award
of  grants,  which  should  prove  easier  to  manage  for  both  beneficiaries  and  officials  while  still
guaranteeing sound financial management.

Furthermore, preventive actions will be encouraged through an extended  system  of  exclusion  for
applicants guilty of past misconduct, including fraud, corruption or any illegal activity, as well as
violation of community rules and mismanagement of  funds allocated under previous  contracts or
grant  agreements.  Financial  sanctions  may  also  be  imposed  in  the  latter  case  or  in  case  of  false
declarations.

Finally,  the  use  of  financial  guarantees  will  be  further  developed,  especially  when  major
prefinancing payments are made, and no final payment shall be made without controls.

In the research sector, the  Commission  constantly  strives  to  find the correct  balance  between,  on
the  one  hand,  rapid  and  simple  procedures  and,  on  the  other  hand,  the  requirements  of  sound
financial  management.  With  respect  to  the  implementation  of  the  Research  programmes,  the
Commission ensures that correct and transparent procedures are observed. The selection process of
the  Research  proposals  ensures  impartial  and  equal  treatment,  and  full  transparency  is  observed
towards the proposers. The proposals contain technical part which is evaluated separately from the
other  parts.  The  evaluation  is  done  by  scientific  and  technical  experts  comprising  individual
assessments,  consensus  meetings  and  where  necessary  panel  meetings.  With  regard  to  the
implementation  of  the  5th  Framework  Programme,  a  comprehensive  information  dissemination
programme  has  been  implemented  by  the  services  concerned,  including  web-sites  and  helpdesks,
rapid  information  on  the  results  of  the  evaluation  process  and  there  is  an  accelerated  internal
processing of contracts and payments.

By their nature research and technological development projects carry an inherent risk with respect
to  the  expected  results.  The  progress  of  the  work  is  monitored  and  regularly  reviewed.  On  the
financial side the Commission continues its efforts to improve control systems. These include legal
and  financial  viability  checks  during  the  contract  preparation  phase  and,  if  needed,  the
implementation of protective measures. Financial audits have been substantially increased in 2001,
as in the years before. A pilot action for audit certificates has been set up. Contractors are required
to submit along with their cost claim an audit certificate issued by an external independent auditor.

27

At  each  stage  of  the  definition  of  the  6th  Framework  Programme  these  considerations  have  been
taken into account by the Commission.

When  preparing  the  6th  Framework  Programme,  the  Commission  tried  to  find  an  adequate
equilibrium  between  the  need  to  have  an  « applicant-friendly »  system  and  the  necessity  of
management  and  control  procedures  allowing  to  reduce  the  inherent  risk  to  an  acceptable  level.
However, the means intended to reach this objective, which were also recommended by the Court of
auditors,  were  not  all  accepted  by  the  Council  and  the  Parliament,  in  particular  as  regards  the
simplification  of  the  cost-reimbursement  system  or  the  use  of  flat-rates.  Nevertheless,  the  6th
Framework  Program  includes  several  improvements,  in  particular  external  certification  of  costs,
limited  joint  and  several  liability  of  partners  and  entry  of  penalties  on  the  basis  of  Regulation
2988/95.

21.

Asks the Commission  to  explain,  in  connection  with  the  selection  procedure  for  the  Media
and  Media  Plus  proposals,  what  type  of  TAO  carries  out  preparatory  work  on  which  the
Commission makes a final selection of the beneficiaries of programmes and decides on the
support to be granted (cf. Council Decision 2000/821/EC5); asks the Commission to indicate
what the geographical breakdown of programme beneficiaries was for 2000;

Commission's reply :

1. “Type” of Technical Assistance Office (TAO) and role of the TAO in the selection procedure
of projects.

(Note  :  the  relevant  provisions  of  the  Decisions  establishing  the  MEDIA  II  (1996-2000)  and
MEDIA Plus (2001-2005) programmes are enclosed as an Annex).

The decisions establishing the MEDIA II programme (1996-2000) provided  for the obligation for
the Commission, in its technical appraisal of proposals presented for Community funding, to obtain
the  expertise  of  recognised  specialists  in  the  fields  covered  by  the  programme  (training,
development and distribution). The decisions also provided that "to this end, the Commission may
involve intermediary organisations which, on the basis of their professional expertise, will provide
technical  assistance  and  will  formulate  proposals  for  the  choice  of  the  beneficiaries,  without
prejudice to other selection methods".

For  the  implementation  of  these  provisions,  the  Commission  contracted,  through  open  call  for
tender procedures, three technical intermediary organisations (one in the area of training, one in
the area of development, and one in the area of distribution), which were selected on the basis of
their knowledge and expertise of the audiovisual sector.

For  the  MEDIA  Plus  Programme  (2001-2005),  which  started  on  1st  January  2001,  the  decisions
establishing the Programme also provide for the use of one or several Technical Assistance Offices
(TAOs) to assist the Commission in its implementation of the programme.

In accordance with the orientations put forward by the Commission in its Letter of Amendment n°
1 to the Preliminary Draft Budget 2001 (SEC(2000)1363), the Commission proposed to renew the
use  of  TAOs  for  the  MEDIA  Programme  as  a  transition  solution  to  the  implementation  of  an
executive agency.

5

OJ L 336, 30.12.2000, p. 82.

28

                                                
Furthermore,  the  Commission  decided  to  restrict  the  technical  assistance  to  one  TAO  (instead  of
three  in  MEDIA  II),  which  was  selected  further  to  an  open  call  for  tender  on  the  basis  of  its
technical expertise in the audiovisual area.

The assistance provided by the TAO in the framework of the procedure for selection of projects is of
a purely technical and administrative nature, and does not include any public-authority tasks. The
tasks carried out by the TAO are based on clear assessment guidelines defined by the eligibility and
selection  criteria  contained  in  the  calls  for  proposals.  It  is  only  one  part  of  the  overall  selection
procedure, which can be described as follows :

Step 1 – publication of a call for proposals by the European Commission;

Step 2 – proposals are received by the European Commission. The Commission keeps one copy of
each proposal and transfers a copy of each proposal to the TAO for assessment;

Step 3 – assessment of all proposals received by the TAO, on the basis of the eligibility and selection
criteria  defined  in  the  Call  for  Proposals.  Further  to  this  step,  the  TAO  establishes  for  the
Commission for all proposals received an assessment report drawn in accordance with the models
provided by the Commission.

Step  4  –  All  the  projects  are  submitted  again  to  either  panels  of  independent  experts  from  the
audiovisual area or to internal evaluation panels, who make a second assessment of the projects.

Step 5 – On the basis of these two sets of assessments (TAO + evaluation panel), the final selection
decision is established and adopted by the Commission.

Step  6  –  In  the  cases  defined  in  Council  Decisions,  the  projects  proposed  for  selection  by  the
Commission  are  also  submitted  to  the  opinion  of  the  MEDIA  Committee  in  its  management
procedure.

2. Geographical breakdown of the programme beneficiaries in 2000: see Annex.

22.

Takes  the  view,  as  regards  the  current  procedures  for  granting  Community  subsidies  to
specific organisations, namely in the context of A-302 lines, that a system of both earmarking
and  calling  for  proposals  is  unsatisfactory  and  calls  on  the  Commission  to  suggest  to  the
budgetary authority  a  more transparent system,  which  also  might  help  to  avoid  the  state  of
permanent insecurity which hangs over some organisations, without creating dependence on
Community funds for their survival; notes that Activity  Based  Budgeting may help  end the
present  system;  calls  on  the  Commission  to  ensure  new  organisations  that  wish  to  bid  for
money  are not excluded from doing so;  asks  the Commission  to cooperate  with OLAF  and
the Court of Auditors in auditing associations or centres funded almost exclusively from the
Union budget;

Commission's reply :

The  new  Financial  Regulation  contains  a  general  framework  for  the  award  and  supervision  of
grants in accordance with the principles of transparency, equality of treatment and co-funding. It
extends the call for proposals procedure already forecast in the vade-mecum on grants and in most
legal  bases  -  as  this  is  the  most  transparent  and  non  discriminatory  way  to  hand  out  subsidies,
especially with regard to newcomers. The Activity Based Budgeting (ABB) and the disappearance
of parts A and B in the budget imply indeed that this procedure should also apply to former part A
lines, lest some justified exceptions (e.g. institutional beneficiaries) are foreseen in the legal bases
the Commission will propose to the legislative authority in the coming months.

29

The recast Financial Regulation also provides for compulsory cofinancing and a check on the lack
of profit-making in order to reinforce the beneficiaries’ independence towards Community funds.

As  to  audits,  the  recast  Financial  Regulation  stresses  the  authorising  officers’  responsibility  in
soundly managing Community funds and clearly states the need for ex ante and ex post controls,
especially in relation to final payments.

Furthermore,  the  Commission  has  stated  its  intention  to  submit  legislative  proposals  with  the
objective of determining the global criteria to apply to awards under article 108(b). These measures
will represent the culmination of a process, initiated by the Commission’s vade-mecum on grants,
aiming to establish a clear, fair and stable legal environment for beneficiaries.

In the context of the impending disappearance of Part A of the budget, the Commission will thus
need  to  present  one  or  more  proposals  for  a  legal  basis  to  allow  this  funding  to  continue  in  the
context of the introduction of the ABB approach. On this occasion it will make proposals regarding
the  management  regime  to  be  used  for  these  headings  and  will  raise  the  question  of  earmarking
some of them and the difficulty of reconciling the two current methods of awarding these subsidies:
designation  of  beneficiaries  by  the  Budgetary  Authority  in  some  cases  and  the  use  of  calls  for
proposals in others.

The Commission considers that the use of competitive procedures (calls for proposals) for granting
subsidies constitutes an egalitarian, transparent and effective procedure and hence that it would be
counterproductive to challenge it. As stated above, the new Financial Regulation incorporates the
principle of equality of treatment of beneficiaries.

It  could  be  difficult  to  completely  and  rapidly  abandon  the  designation  of  certain  beneficiaries.
Currently,  in  fact,  there  are  two  sorts  of  earmarked  beneficiaries:  some  are  or  could  be
"institutional" (the College of Europe, for example); others are not (beneficiaries representing only
themselves).  On  the  one  hand,  it  is  not  necessarily  desirable  to  stop  supporting  "institutional"
beneficiaries; on the other, the practice of earmarking has, over the course of the years, created de
facto  dependence  on  the  part  of  the  current  beneficiaries,  which  have  sometimes  benefited  from
Community  funding  for  years:  stopping  this  financing  from  one  day  to  the  next  could  create
excessive  insecurity  for  the  bodies  concerned.  However,  in  future,  designation  of  beneficiaries
should  be  the  exception  rather  than  the  rule,  and  should  therefore  be  limited  and  properly
monitored.

For  the  time  being,  the  Commission  welcomes  the  fact  that  the  existence  of  separate  headings
(earmarked  beneficiaries;  beneficiaries  to  be  selected  on  the  basis  for  calls  for  proposals)  in  the
2002 budget makes the situation more easily manageable than in the past when the earmarking did
not always concern all the appropriations for a given budget heading.

OLAF  has  been  given  full  independence  to  exercise  its  investigation  function  to  fight  fraud,
corruption and any other illegal activity affecting the financial interests of the Community. OLAF
itself  is  not  an  audit  service.  However,  should  the  Commission  or  the  Court  of  Auditors,  in  the
course of their audits, have suspicions that a fraud or irregularity detrimental to the Communities'
financial interests has been committed, Article 7 of Regulation 1073/1999 sets out the obligations of
the institutions to inform OLAF.

23.

Notes  that  in  year  2000,  EUR  800  000  earmarked  under  budget  line  A-3040  towards  the
operating  cost  and  the  work  programme  for  European  Migrants  Forum;  notes  that  an
investigation  has  begun  by  OLAF  after  allegations  of  fraud  and  mismanagement  in  this

30

organisation  and  that  OLAF  sent  the  case  to  the  Belgian  judicial  authorities  in  June  2001;
expects  to  be  fully  informed  of  the  conclusions  of  the  Belgian  authorities;  asks  the
Commission to ensure that this body and others funded under A-3 Community subsidies are
effective in meeting their objectives;

Commission's reply :

The Commission, in collaboration with OLAF, will provide Parliament with information as soon as
it is able.

OLAF has completed its investigation into the matter of the European Migrants Forum and a file
has  been  referred  to  the  Belgian  judicial  authorities  with  which  OLAF  is  in  periodic  contact  to
monitor progress on the case.

ECRE, a body funded by the Commission under Chapter A-3, is currently being audited. The report
should be finalised in October 2002.

The  recast  Financial  Regulation  and its  implementing  rules,  which  are  to  apply  with  effect  from
1 January 2003,  lay  down  a  number  of  rules  concerning  procedures  for  the  award  and
management of grants, which will afford greater protection of the Communities financial interests.
For  operating  grants  one  condition  is  that  external  audit  reports  must  be  produced  before
beneficiaries  are  selected  and  then  before  grants  are  paid  where  these  exceed  EUR 50 000,  save
where an exception is authorised by the authorising officer responsible in the case of public bodies
and international organisations or where a number of beneficiaries are jointly and severally liable.

The  Commission  may  also  reduce  the  grant  if  the  beneficiary  does  not  satisfy  the  contractual
obligations  properly,  in  full  or  at  all,  and  it  may  even  impose  financial  penalties  in  the  event  of
serious shortcomings.

Standard  grant  agreements,  incorporating  all  the  tools  available  to  the  Commission  to  ensure
beneficiaries comply with their contractual obligations (suspension of payments, reduction of grant,
termination with total or partial recovery, financial penalties) are being drafted centrally in order to
harmonise the contractual instruments used by Commission departments and bring them into line
with the implementing rules of the new Financial Regulation.

THE COMPLEXITY OF PROCEDURES AND LEGISLATION

24.

Agrees  with  the  Court  of  Auditors  that,  more  often  than  not,  Community  rules  are  too
complex,  causing  difficulties  for  beneficiaries,  and  asks  the  Commission  to  develop  a
systematic assessment of the efficiency of the various regulatory instruments in achieving the
policy objectives as defined in the Treaty or otherwise approved by the European institutions;

Commission's reply :

In  recent  years,  the  Commission  has  taken  both  horizontal  and  sectoral  initiatives  in  order  to
improve regulation. These respond to the general obligations to respect the proportionality principle
(cf. Protocol to the Amsterdam Treaty)  and  to the  growing recognition of the need for better and
simpler  regulation.  In  particular,  the  Commission's  internal  procedures  for  planning  and
programming  of  work  have  been  significantly  improved  (allowing  in  particular  for  the  results  of
policy and programme evaluations to be fed better into policy design). Moreover, the Commission

31

launched in June 2002 a major action plan on better regulation, introducing inter alia a common
framework for ex-ante assessment of its initiatives.

In conducting ex-ante impact assessments of its key initiatives, the Commission will also consider
the alternative regulatory instruments available to achieve a specific set of policy objectives. In this
task the Commission will take into account the respective competencies of the Community and the
Member  States  as  defined  in  the  Treaty  and  also  give  due  consideration  to  the  principles  of
subsidiarity and proportionality.

The assessment by the Commission of  the  regulatory instruments in achieving political objectives
has to rely on the monitoring, measurement and evaluation systems that its departments will have
to implement or adapt following the introduction of Activity-Based Management.

Even if the Commission services are constantly endeavouring to implement and improve the use of
these management instruments, it must be recognised that more needs to be done to adopt common
methodologies  and  best  practices  and  develop  consistent  and  coherent  approaches  in  order  to
respond to the Commission’s needs for assessing the efficiency and effectiveness of  its regulatory
instruments and the achievement of the expected results.

Further to the aggregation of the relevant information carried out by the  individual DGs in their
Annual Activity Reports, the Commission will produce a synthesis report on the achievement of its
political objectives by policy  area  that  will  be  communicated  to  the  Council  and  to  the  European
Parliament.

As  regards  specifically  the  agricultural  area,  in  Agenda  2000  and  subsequent  decisions,  the
Commission  has  taken  a  number  of  steps  to  promote  further  simplification  of  legislation  and  its
implementation.  The  Small  Farmers  Scheme  represents  an  important  precedent  for  reducing  the
administrative  burden.  However, 
the  common  market
organisations continues to create many complex obligations for  farmers and difficult control and
monitoring responsibilities for Member States and the Commission. This complexity is a brake on
initiative  and  may  discourage  entry  into  the  farming  profession.  In  some  sectors  such  as  beef,
farmers are eligible for several premiums with different requirements in addition to environmental,
food  safety  and  animal  health  and  welfare  legislation.  Considerable  simplification  could  be
achieved  if  checks  at  individual  farm  level  could  be  brought  together  into  a  more  integrated
framework.

the  range  of  mechanisms  within 

Simpler conditions on payments with less market-related procedures would enable farmers to spend
more time making their business successful and meeting their statutory requirements. It would also
allow Member States to concentrate on checking environmental, food safety and animal health and
welfare  requirements.  Greater  decentralisation,  particularly  through  the  reinforcement  of  the
Second Pillar, would allow Member States to better target local needs, and bring agricultural policy
closer to consumers.

The Commission has also started codifying numerous regulations and has proposed an amendment
of  the  current  mechanisms  whenever  it  has  been  possible  to  make  a  substantial  simplification
without  imperilling  the  other  objectives.  This  objective  of  simplification  was  taken  into  account
when the proposals for the mid-term review were drawn up.

As  regards  the  Structural  Funds,  the  Commission  recognises  that  the  application  of  the  new
provisions  governing  them  has  not  always  led  to  the  expected  result  of  a  simplification  of
management.

32

Since the informal Council in Namur in July 2001, where this question was raised, the Commission
has  started  to  look  at  the  possibilities  for  simplifying  the  application  of  the  provisions,  while
retaining  the  positive  elements  of  the  reform  of  the  rules  adopted  in  1999.  This  examination
concerns both the improvements that can be made in the current period and those which should be
envisaged for the period after 2006.

While, for the current period, the work of simplification is more  along  the  lines  of  interpretation
and  coordination,  for  future  regulation  it  reopens  the  political  question  of  the  division  of
responsibilities between the Commission and the Member States in a situation where the latter take
on  the  largest  share  of  setting  the  Structural  Funds  objectives  and  administering  the
appropriations.

The debate with the Member States on simplification is continuing in the advisory committees for
the Structural Funds. A meeting with the ministers for regional policy took place on 7 October and
a seminar will be held at the beginning of 2003.

25.

Notes that the Commission, in the new regulation on Structural Funds (EC) No 1260/99, has
declared  its  intention  to  simplify  the  rules;  hopes  that  this  will  be  verified  in  2001,  but
deplores  the  under-implementation  of  the  Structural  Funds  in  2000  due  to  delays  in
programming  (itself  accounting  for  much  of  the  budget  surplus);  points  out  that  the  same
difficulties  occurred  in  the  first  year  of  the  previous  programming  period  (1994);  also
wonders whether the present system is the  best  system for planning  the  future of  structural
measures  after  2006;  calls  on  the  Commission  and  the  Member  States  to  rationalise  and
simplify  the  procedures  for  implementing  structural  measures  in  order  to  prevent  the  same
difficulties from recurring when new programmes are established;

Commission's reply :

The  Commission  recognises  that  the  large  (43%)  gap  between  payment  forecasts  and  outturn  in
2001 for the Structural Funds and the Cohesion Fund (compared with 15% in  2000) was mainly
due to the slower than expected start of implementation of the 2000-06 programmes, itself linked to
delays  in  the  Commission’s  approval  of  the  programmes.  This  meant  that  payment  requests  only
started arriving in large number in the autumn of 2001. The Commission also recognises that some
of the delays in  the  approval  of  new  programmes  could  have  been  avoided  if  the  procedures  had
been simpler. While the Commission believes that the  overall  result  in  the  2000-06  programming
exercise  was  positive  in  terms  of  the  quality  of  the  new  programmes  and  their  management,  as
noted above in the reply to the previous point 24, it has already launched a process of reflection to
see  what  can  be  learned  from  it,  both  for  the  benefit  of  the  current  programmes  and  especially
those after 2006.

Account must be taken of the Commission's efforts to improve the reliability of payment forecasts
(see point 16 above) and reduce the amount outstanding (RAL). As far as the RAL is concerned, the
Commission has made closing its oldest programmes one of its top priorities. The Commission has
reduced the number of pre-1994 commitments outstanding to a handful of particularly contentious
cases  or  cases  involving  legal  action  which  is  still  going  on.  As  of  30  June  2002  the  balance  of
outstanding  commitments  from  pre-1994  programmes  amounted  to  €370  million,  or  0.6%  of  the
total funds committed between 1989 and 1993. By the end of 2002 only cases that cannot be closed
until the completion of legal proceedings should remain. With regard to  the programming  period
2000-06,  the  application  of  the  automatic  decommitment  rule  ("n+2")  will  have  the  effect  of
encouraging  payments  to  be  made  and  reducing  the  RAL  by  reducing  commitments.  The

33

Commission pointed out this rule and the risks it entails in letters sent in November 2001 to each
Member State and in May 2002 in a communication to Member States explaining in detail how the
rule  would  be  applied.  Since  then,  the  Commission's  services  have  kept  the  Member  States
regularly informed about the rates of implementation, programme by programme.

26.

Considers that the lack of adoption of Community Initiative Programmes in 2000 is due to
the  late  approval  of  Council  regulations,  to  delay  in  publishing  the  user  manual  and  late
publication  by  the  Commission,  the  long  period  taken  by  other  institutions  to  give  their
opinion, and also to late reaction from the Member States;

Commission's reply :

The main reason for the length of the approval process for Community Initiative programmes were
the  preliminary  stages  required  by  the  regulations.  The  periods  of  time  taken  by  the  other
institutions to give their opinion, and by the Member States to prepare their plans, were as short as
practicable, taking  into account the  need  to  ensure  that the  Guidelines  and the  subsequent  plans
were  of  the  highest  standard  possible.  As  regards  the  Community  Initiative  EQUAL,  please  see
Commission's response to point 28.

For  INTERREG  and  URBAN  the  process  was  delayed  to  some  extent  by  late  submission  of
programme proposals by Member States. Only 24 of 72 INTERREG III programmes and 13 out of
70 URBAN II programmes were received within the six months’ deadline.

27.

Notes  with  dissatisfaction 
transfers,  carry-forwards  and
rebudgetisation were the norm rather than the exception; reiterates its critical view of transfer
40/2000 resulting in a reduction of EUR 164 million and of the rebudgetisation resulting in
another EUR 30 million reduction in appropriations for innovative measures;

these  delays 

that,  due 

to 

Commission's reply :

The reasons for the delays are explained in point 25 above (see also the fuller explanations given in
the replies to the Annual report 2001 of the Court of Auditors,) with their consequences in terms of
carryovers and re-entry in the budget. A new financial perspective, amended accordingly, has been
adopted by the Council and Parliament and all the Structural Funds programmes concerned have
been adapted.

As for the implementation of innovative actions, between the end of 2001 and the beginning of 2002
the Commission adopted 81 programmes of innovative actions under the ERDF for a total amount
of €206.2 million, each programme benefiting a different EU region. This represents a catching up
on the utilisation of the maximum budget provided for these actions over the period 2000-02 in the
general Structural Funds Regulation (No 1260/99). The Commission has started preparing the new
programming phase for the remaining period with a view to allocating the whole budget provided
for  the  period  2000-06,  estimated  at  approximately  €400  million  (depending  on  the  actual
allocations awarded to each fund).

Point 17 of the Interinstitutional Agreement limited the scope for adjustments  to  programmes for
structural  operations.  The  Commission  was  therefore  of  the  opinion  that  it  was  inappropriate  to
transfer the unused appropriations for innovative measures.

34

28.

Is  particularly  concerned  at  the  serious  delays  in  launching  the  Community  initiative
EQUAL,  and  calls  on  the  Commission  and  Member  States  to  provide  assistance  in
establishing development partnerships and transnational connections;

Commission's reply :

The  Commission  had  no legal  basis  upon  which  to  build  EQUAL  until  the  adoption  on  21  June
1999  by  the  Council  of  the  Regulation  laying  down  general  provisions  on  the  Structural  Funds.
The  subsequent  requirement  to  consult,  inter  alia,  the  European  Parliament  and  the  Committee
assisting  the  Commission  in  the  administration  of  the  European  Social  Fund  (Article  147  of  the
Treaty) , meant that the Guidelines for EQUAL (the Communication from the Commission to the
Member States - 2000/C 127/02) was published in May 2000. The provisions of Article 15 (2) and
(4) of R. 1260/99 then allowed nine months in total for the preparation and approval of the Member
States' plans, bringing the earliest possible date for approval into 2001. The periods of time taken
by  the  other  Institutions  to  give  their  opinion,  and  by  the  Member  States  to  prepare  their  plans,
were as short as practicable, taking into account the necessity to ensure that the Guidelines and the
subsequent plans were of the highest standard possible. The Commission is satisfied that, as far as
EQUAL is concerned, no significant delays were experienced within the Commission.

In addition, the Commission has provided considerable assistance in the creation of Development
Partnerships and Transnational Co-operation Agreements, including through;

(1)  The  inclusion  of  an  Action  1,  lasting  up  to  six  months,  with  a  dedicated  budget,  to  allow
promoters  to  build  their  Development  Partnerships  and  to  establish  Transnational
Partnerships,

(2) The establishment of a database containing details of all Development Partnerships to assist in

the creation of meaningful and durable transnational partnerships,

(3)  The  establishment  of  a  working  group  on  transnationality  comprising  the  Commission  and
several Member States which produced a comprehensive Guide on Transnationality which
describes the various aspects of the transnational co-operation under EQUAL. It is made
up  of  12  briefs  (107  pages)  enabling  the  readers  to  deepen  their  knowledge  of  certain
issues with the aid of hyperlinks, and along with other information of use to promoters is
freely available on the Commission's EQUAL web site.

29.

Also  notes  that  the  complexity  of  the  rules  and  overlapping  between  measures  under  the
various funds and under Community policies may bring about an incoherent situation, which
can  reduce  the  effectiveness  of  funds  and  programmes  as  is  criticised  by  the  Court  in  its
Special Reports 1/20016 and 12/20017 and in its Annual Report (paragraph 3.121);

Commission's reply :

The Commission is making considerable efforts to coordinate its activities under the different funds
and  policies.  As  well  as  the  day-to-day  contacts  on  management  matters  between  the  Structural
Funds, the Commission regularly publishes horizontal and thematic communications on important

6

7

OJ C 124, 25.4.2001.
OJ C 334,28.11.2001.

35

                                                
areas of activity for regional development such as transport, the  environment, SME development,
R&D and innovation, and the “Northern Dimension”.

The rules governing the Structural Funds for the period 2000-06 have reduced the number of types
of  programme  and  required  better  follow-up.  They  have  consequently  reduced  overlaps  and  the
possibilities of a duplication of financing.

Concerning the simplification of rules, see reply to point 24 above.

30.

Comes to the same conclusion as regards the Sapard and Ispa regulations, the complexity of
whose  implementation  was  underestimated  by  the  Commission  and  poses  a  genuine
challenge for the candidate countries; also acknowledges the efforts made by the Commission
for ‘institution building’ within the Sapard system and for better internal coordination of pre-
accession  aid  programmes;  but  regrets  that  only  half  of  the  applicant  states  will  be  in  a
position to put the programmes into effect at the latest by 2002;

Commission's reply :

The Commission does not share the opinion that it underestimated the complexity of the rules and
regulations.  As  it  has  already  replied  to  the  Court’s  observations,  ISPA  and  Sapard  followed
normal Community practice, whereby new policy is defined by a  Council legal  framework, which
requires  subsequent  implementation  on  the  basis  of  Commission  manuals,  guidance  documents,
provisions and regulations. The Commission provided applicant countries with the legal framework
for  implementing  the  aid  programme  and  with  considerable  guidance  and  technical  assistance,
under several specific measures financed by Phare and other sources.

Already by August 2002 nine of the ten beneficiary countries had secured Commission conferral of
management  Decisions.  Five  of  them  had  done  so  by  the  end  of  2001.  Such  Decisions  are  taken
only when the country concerned has demonstrated its capacity to apply the SAPARD instrument
on  a  fully  decentralised  basis.  Such  capacity  is  largely  analogous  to  that  required  to  apply
Community  co-financed  policies  by  Member  States,  and  is  thus  relevant  for  post-accession
application of structural funds as well as of EAGGF guarantee funds. The country not yet with a
conferral  Decision  submitted  its  accreditation  package  on  1st  October  2002.  The  above  facts
indicate that the complexity was manageable and in substance the content is analogous to what is
required  of  a  Member  State,  including  new  ones.  Technical  support  continues  to  be  provided  in
accordance  with  needs  namely  under  the  PHARE  instrument  but  also  via  SAPARD  within  the
constraints of Council Regulation 1268/1999.

31.

Calls on the Commission to ensure, as a matter of priority, that procedures are simplified and
that clear rules and objectives are laid down which are transparent and understandable to the
citizens; calls on the Commission to make simplification of legislation, rules and procedures
an  intrinsic  part  of  the  midterm  review  of  the  agricultural  and  structural  policies;
acknowledges however, the difficulties faced by the Commission in fulfilling this goal in the
specific case of the adoption of rules of implementation for certain programmes, such as the
control procedures for the Structural Funds, where the comitology procedure is applied; notes
that often these committees, representing the  administrative  interests  of  the  Member States,
tend to contribute to the complexity of such rules;

Commission's reply :

36

The Commission refers to its reply under paragraph 24.

32.

Points  out  that  it  will  scrutinise  carefully  during  the  next  discharge  exercise  the  extent  to
which  the  Commission  has  properly  respected  the  political  priorities  and  budgetary
guidelines as defined by the European Parliament, and fulfilled the undertakings it has given
in response to criticism by the Court of Auditors (cf. paragraph 3.122 – annual report);

Commission's reply :

The  Commission  instituted  a  new,  policy-driven,  planning  and  programming  cycle  synchronised
with the budgetary process. It is thus the opinion  of the  Commission  that  Annual Policy Strategy
(APS)  decisions  must  become  the  tool  to  steer  the  entire  set  of  its  activities,  the  budget  drafting
process and the operational plans of the services and so the natural place where strategic decisions
on resource orientations are taken.

Following discussions with the European Parliament and the Council an agreement was reached
last  March  defining  the  respective  roles  and  the  workings  of  the  strategic  planning  and
programming  cycle  and  a  structured  dialogue  on  APS  was  carried  out  for  the  first  time  in  the
spring on the basis of the agreed timetable. The cycle includes an evaluation phase.

A stocktaking document  (APS+),  was  adopted  last  September  by  the  Commission  and  focused  on
the priorities and the initiatives, on recalling all meaningful suggestions made by the Council and
the  European  Parliament  and  on  major  changes  which  occurred  after  the  adoption  of  the  APS
either  in  the  budgetary  procedure  or  following  the  results  of  Council’s meetings.  Proposals  from
Parliament committees that have a budgetary impact should be dealt with in the right fora and will
be  subject  to  normal  considerations  of  responsible  budgeting  given  the  fact  that  resources  are
limited.

This process was successful in the Council and further improvements will take place following the
conclusions of the Seville European Council.

There is now a complete framework that can reassure  the European Parliament in the  future on
the proper respect by the Commission of the Union’s political priorities.

With regard to the Court's observations in paragraph 3.122 of its report about the poor quality of
the  indicators  in  the  first  URBAN  Community  Initiative,  common  sets  of  socio-economic  context
indicators  and  programme  performance  indicators  have  been  introduced  in  all  70  URBAN  II
programmes  and  the  discipline  on  the  submission  of  annual  implementation  reports  has  been
strengthened.

THE CONTROLS

33.

34.

Notes that the very complexity of the rules makes effective controls difficult;

Calls  on  the  Commission  to  substantially  increase  the  number  of  "sunset  clauses"  and
detailed business impact assessments included in legislation;

Commission's reply :

37

The  Financial  Regulation  2002  foresees  a  clear  system  of  “sunset  clauses”  for  expenditure
operations charged to the general budget of the EC (“n” for legal commitments covering individual
budgetary commitments, “n+ 1” for legal commitments covering global budgetary commitments; in
the field of external assistance the rule is “n+1” for funding conventions with beneficiary countries
and “n+3” for individual contracts implementing the funding conventions, exception for evaluation
and audit contracts). The specific rules for the Structural Funds (“n+2” clause) are not modified by
the new Financial Regulation.

35.

Notes that the system of checks is marked by weaknesses, such as:

(a)

inadequacy  or  complete  lack  of  checks  by  the  Commission  (e.g.  the  Court  of  First
Instance judgment of 10 May 2001 on the 'Turkish television sets' case pointed up the
serious  failings  of  the  Commission  in  monitoring  application  of  the  EC-Turkey
Association Agreement and Additional Protocol);

Commission's  reply  :  The  Commission  has  raised  the  problem  of  television  receivers  and  other
problems like the tuna  fish  in  all  EC/Turkey  Customs Co-operation  Committees  and  all Customs
Union  Joint  Committees.  These  problems  were  also  addressed  in  meetings  of  the  Association
Committee and Association Council with a view to solving the outstanding issues. Furthermore, the
Commission  launched  an  in-depth  examination  of  the  application  of  the  preferential  regime  for
agricultural  products  in  Turkey.  Following  the  Commission  assessment  of  weaknesses  and
inadequacies  of  the  Turkish  system  of  management  and  control  of  preferential  origin  of
agricultural  products,  the  Turkish  authorities  issued  a  new  Decree  containing  national
implementation  provisions  concerning  full  implementation  of  the  origin  protocol  in  Turkey.
Furthermore,  the  Turkish  authorities  established  guidance  for  economic  operators  and  customs
authorities as regards application of origin rules for agricultural products and initiated a system of
controls to be  carried out  regularly in firms.  The Commission  is  currently  assessing  the  progress
made  by  the  Turkish  side  as  regards  improvements  of  the  system  put  in  place  in  Turkey  for  full
compliance with the legislation.

Furthermore,  in  the  29th  EC/Turkey  Customs  Co-operation  Committee,  the  Commission
underlined  that  requests  submitted  by  Turkey  (for  example  inclusion  of  Turkey  in  the  system  of
pan-European  cumulation  as  far  as  agricultural  products  are  concerned),  will  receive  a  positive
reply from the Community  side  only once Turkey has made progress in  respecting  its  obligations
under the Customs Union and free trade arrangements. Turkey has also to prove its good will as
regards enhancing and strengthening co-operation and mutual administrative assistance in general
and in particular concerning some outstanding problems.

Following the Tribunal of First Instance's ruling, the Commission has addressed the consequences
of this ruling in all meetings held with the Turkish side, requesting the Turkish authorities to fully
co-operate  with  the  Commission  and  Member  States  to  avoid  a  further  ruling  of  that  kind.  The
Commission  is  permanently  monitoring  application  of  the  Customs  Union  Agreement  and  of  the
preferential regimes with Turkey to be in a position to remedy any major problems in due time.

(b)

inadequacy  or  lack  of  checks  by  Member  States  in  the  area  of  agricultural  spending
(export refunds) and structural measures (application of Commission Regulation (EC)

38

No  2064/978  on  financial  control  by  Member  States  of  operations  co-financed  by  the
Structural Funds);

Commission's reply :

The  controls  on  export  refunds  in  the  Member  States  are  basically  carried  out  by  the  customs
authorities  and  the  paying  agencies.  In  the  past  (1996-1997),  weaknesses  were  identified
concerning the  application of  Regulation  (EEC)  No  386/90  concerning  the  physical  checks  to  be
carried out by the customs authorities. Because these weaknesses might have had consequences for
the  EAGGF,  considerable  financial  corrections  were  applied  amounting  to  5%  of  all  refund
expenditure  declared  by  the  Member  States  concerned.  The  total  amount  of  the  corrections  was
about  188  million  EUR.  Afterwards,  Member  States  intensified  the  controls  in  this  respect  and
follow-up  audits under  the  clearance  of  accounts  procedure  confirmed  that  the  situation  had
become  satisfactory.  Concerning  the  controls  carried  out  by  the  paying  agencies,  it  was  found in
one  Member  State  that  the  paying  agency  accepted  unreliable  certificates  issued  by  surveillance
companies. A financial correction was again applied under the clearance of accounts amounting to
25%  of  the  expenditure  at  risk  (about  21  million  EUR).  There  are  no  indications  that  a  similar
situation exists in other Member States because traders in these countries did not make use of the
services of surveillance companies. Audits were, however, carried out in 2001 and 2002 to evaluate
the reliability of proofs of arrival accepted by paying agencies in all Member States.

For the Structural Funds, audits of Member States were carried out in 2001 and 2002 to assess the
implementation  of  control  bodies  and  independent  bodies,  the  work  done  by  these  institutions  in
quantity and quality and the progress towards closure of the programmes. The audits showed that,
at that stage, in certain countries or regions the control requirements of Regulation 2064/97 were
not being  satisfactorily fulfilled. On the  basis  of  the mission  reports,  the  Member  States’  Control
Authorities have been able to improve their work in order to achieve the desired standards and, in
particular,  to  adjust  their  further  control  plans.  Subsequent  follow-up  indicates  that  remedial
actions have generally been implemented. In any event, closure of programmes will be interrupted
if the minimum requirements set out in the regulation have not been respected when the request for
the final balance is submitted.

36.

Is concerned at the Court of Auditors' findings (Special Report 10/20019) that the application
of Regulation (EC) No 2064/97 posed difficulties for both the Commission and the Member
States because there was insufficient coordination between the Commission DGs responsible,
and  the  Member  State  bodies  who  are  not  familiar  with  the  audit  manual,  which  the
Commission submitted too late;

Commission's reply :

The application of Regulation No 2064/97 between the Structural Funds services is coordinated by
the Regional Policy Directorate-General, which also has taken the lead since August 2000 in both
checking the compliance of Member States with the requirements of the Regulation, and providing
advice and guidance. In view of the detailed recommendations made in the framework of the audit
activity,  as  well  as  the  information  provided  in  meetings  under  the  bilateral  administrative
agreements, and the replies to individual queries, there is no reason why Member States should not
be fully aware of their obligations.

8

9

OJ L 290, 23.10.1997, s.1.
OJ C 314, 8.11.2001, p. 26.

39

                                                
37.

Calls, in view of these findings, for each Member State to designate a single national ministry
with  responsibility  for  monitoring  progress  in  achieving  the  5%  control  rate  laid  down  for
every  individual  Structural  Fund  programme  in  Commission  Regulations  (EC)  No  2064/97
and (EC) No 438/200110; calls also for action to be taken to provide uniform coordination of
controls  in  Member  States  with  autonomous  regional  authorities;  proposes  that  such
coordination can best be achieved through the existing coordinating agencies and that those
agencies can also serve as the basis both for information exchange between the regions and
for coordinating and forwarding all information to the Commission;

Commission's reply :

The Commission has systematically recommended that there should be a central coordinating body
which  has  accurate  and  up-to-date  information  on  the  5%  checks  effected  for  each  form  of
assistance.  Such  bodies  also  perform  a  useful  role  in  organising  training  and  exchange  of  best
practice  and  in  discussing  common  problems.  However,  in  Member  States  with  autonomous
regional  authorities  and  sectoral  ministries,  the  competences  and  powers  of  a  single  central
national body to carry out such coordination are a matter of national law in which the Commission
cannot intervene. The Commission has, or is about to, sign new bilateral administrative agreements
with national control  bodies  pursuant  to  Article  38(3)  of  Regulation  No  1260/1999.  The  national
body carries out a coordinating role at national level, particularly in relation to the audit activity, as
well as generally providing the annual report under Article 13 of Regulation No 438/2001.

38.

Urges  the  Commission  and  Member  States  to  improve  financial  control  of  the  Structural
Funds,  in  view  of  the  findings  of  Special  Report  10/2001  of  the  Court  of  Auditors;  in
particular, calls for

– 

– 

– 

– 

an increase in the resources of the departments responsible for financial control,

an increase in on-the-spot inspections,

better coordination not only by the Member States but also by the Commission,

the creation of standard procedures for dealing with irregularities and the exchange of
information on them.

Commission's reply :

The Commission welcomes the initiative of the Parliament to support the Commission's efforts in
order to improve the current situation of financial control of the Structural Funds.

The Commission summarised the resources devoted to audit and financial management tasks in the
replies  sent  by  the  Director-General  of  DG  REGIO  to  the  Chair  of  the  COCOBU  on  8
February 2002. In 2000 DG REGIO received 15 posts which were redeployed from DG AUDIT for
its  audit  tasks.  In  2001  14  new  regular  posts  were  added  to  the  audit  services,  and  10  posts  to
accompany the setting-up of new financial channels. Thus in 2001 the number of staff assigned to
audits of the structural  funds  in  the  Commission  services was 67. In 2002, it has  reached  a  level
close  to  the  estimate  of  needs.  It  must  also  be  borne  in  mind  that  the  Commission's  audits
supplement, but cannot in any case replace, the audits and inspections to be carried out at Member

10

OJ L 63, 3.3.2001, p. 21.

40

                                                
State  level,  and  that  the  Commission's  audit  activity  is  currently  focused  on  checking  that
management and inspection systems put in place in the Member States are functioning properly.

With regard to the number of on-the-spot checks carried out by the Commission, please see point
10.

The Commission services endeavour to coordinate their programmes of on-the-spot checks to avoid
overlaps  and  duplication  of  effort  and  to  keep  Member  States  informed  of  changes  to  the  audit
programmes.  The  programmes  are  presented  and  discussed  at  the  beginning  of  each  year  in  the
annual bilateral coordination meetings under Article 38(3) of Regulation 1260/99.  As from 2002,
the  consolidated  audit  programme  is  being  updated  on  a  regular  basis  and  made  available  for
Member States on a special web site.

As regards the European Social Fund (ESF), one of the main control objectives before the end of
the year 2002, is to have effected at least one preventive audit in each Member State. These audits
will lead to a first evaluation of the descriptions of management and control systems (Article 5 of
Regulation 438/2001) notified to the Commission by the Member States, and form the major part of
the controls to be carried out in 2002. DG EMPL plans to have covered, by the end of the current
year,  34%  of  the  2000-06  Objective  3  programmes  and  17  %  of  all  programmes  involving  ESF
participation for the same period.

39.

40.

Asks the Court of Auditors to assess the present total cost of internal and external checks on
Community  funds,  distinguishing  between  costs  to  the  Community  budget  and  to  national
budgets  and  comparing  the  cost  of  the  various  types  of  control  carried  out  in  each
expenditure  area  with  the  amounts  involved  in  known  instances  of  fraud  and  irregularities
and recoveries made in each chapter;

Takes  the  view  that  the  Commission  ought  to  be  concerned  to  ensure  that  checks  are
economically  effective,  and  takes  note,  to  that  end,  of  the  Commission's  internal  reforms
concerning the 'management declaration' by directors-general, by which they will be bound,
and  the  setting-up  of  the  Commission's  internal  audit  system;  considers  that  the  impact  of
these  changes  on  control  effectiveness  should  be  assessed  during  forthcoming  discharge
exercises;

Commission's reply :

The Commission acknowledges the need for a thorough assessment of the effectiveness of checks
on the  use  of Community  funds  and  will  continue  its  efforts  to  implement,  in  agreement  with  all
interested  parties,  notably  the  European  Court  of  Auditors  (ECA)  and  Member  States'
administrations, an effective control system of the use of EC funds.

To maximise the effectiveness of its audit work the Commission is concentrating on system audits
(see point 38 above) and, when carrying out project audits, is attentive to the possibility of systemic
deficiencies  in  management  and  to  the  remedial  action  these  may  require  or  the  financial
corrections they may warrant. The Commission is continuously developing its audit methodology in
order  to  achieve  an  appropriate  balance  between  the  number  and  nature  of  checks  and  their
expected outcome. The Commission’s internal reforms including the management declarations are
certainly  important  tools  in  achieving  this  balance.  It  is  also  paying  close  attention  to  the  timely
delivery  of  its  audit  reports  and  the  exploitation  of  the  reports  supplied  to  it  under  the  bilateral
agreements with Member States.

41

The  Commission's  internal  reforms  aim  at  improving  the  efficiency,  the  effectiveness  and  the
economy of its activities. The goal of sound financial management is essential in the reform of the
control  and  audit  activities.  The  authorising  officers  by  delegation  must  state  in  their  annual
declaration their reasonable assurance that the resources assigned have been used in  accordance
with  the  principles  of  sound  financial  management.  The  setting-up  of  the  Commission's  internal
audit system is also contributing to making the internal control more effective and efficient, and to
assessing and increasing the overall assurance in that regard. The audit activities may themselves
be improved. This is why the Internal Auditor is developing cooperation with the Court of Auditors,
the Internal Audit Capabilities set up in the Directorates-General and the other EU audit bodies to
coordinate their work programmes and methodologies and optimise their work.

41.

Calls on the Commission to try to find the perfect balance in terms of the cost of controls and
the benefit of reduced level of error such controls lead to;

Commission's reply :

The  new  Financial  Regulation  and  its  implementing  rules  highlight  the  responsibility  of
authorising  officers  for  the  management  of  Community  funds  and  the  introduction  of  suitable
controls  to  guarantee  that  Community  funds  are  used  in  accordance  with  the  rules  and  also
efficiently and  effectively.  All  transactions must  systematically  be  checked  ex  ante.  As  regards  ex
post controls, each authorising officer by delegation has to find the right balance between the cost
of audits and the reduction in the error rate that they achieve.

The controls are set up by the management. The purpose of the internal control is broader than the
detection of errors and encompasses, notably, the effectiveness and efficiency of operations as well
as  the  safeguarding  of  assets.  The  right  balance  must  be  found  between  reasonable  assurance
about  the  adequacy  and  effectiveness  of  control  and  its  cost.  This  is  the  objective  followed  by  an
auditor when he/she recommends concrete improvements.

42.

Considers that the successful management of the Agency for Reconstruction in Kosovo was
due to the closeness of the operations to the beneficiaries, focus on a small number of sectors
and one structure for project identification to evaluation and to a large extent to the fact that
ex ante  financial  control  was  carried  out  by  the  Agency's  internal  financial  services,  which
allowed quick  implementation of measures;  notes  that  the  Commission's  amended  proposal
for a new Financial Regulation (COM(2001) 691) provides for the decentralisation of ex ante
financial  control  across  all  Commission  departments;  calls  on  the  Council  to  expedite  its
work on the Commission's amended proposal;

Commission's reply :

Within the overall framework of financial reform, the new Financial Regulation provides that ex-
ante controls will no longer  be carried out  by  DG  Financial Control: rather,  authorising officers
will have to put in place the appropriate organisational structure and the internal management and
control  procedures  suited  to  the  performance  of  their  duties,  including  ex-post  verifications.  The
new Financial Regulation will enter into force at the beginning of 2003.

The Agency's successful performance in 2000 is explained not by the system of controls, but by:

- its presence in the field, with closeness to the beneficiaries;

- from project identification to monitoring and evaluation under one structure;

42

-  following  multi-annual  indicative  programming  by  the  Commission,  programming  and
implementation of projects concentrated on a small number of sectors.

For reference,  ex  ante control was carried out  by DG Financial Control (FC) in Brussels  on  the
basis of extended site visits. DG FC was not present in the Agency in 2000.

43.

Recommends,  furthermore,  that  the  Commission  make  further  moves  towards  good
institutional  cooperation  with  the  Court  of  Auditors  and  its  audit  bodies,  but  also  with  the
Member States and their national audit bodies; wishes to be informed of progress made;

Commission's reply :

The  Commission  keeps  constantly  in  touch  at  all  levels  with  the  Court  of  Auditors  (ECA)  on  all
matters relating to a comprehensive interinstitutional cooperation.

With  regard  to  traditional  own  resources,  the  Commission  and  the  Court  of  Auditors  have  for
several years had a wide-ranging reciprocal exchange of information about their respective control
programmes, including themes and dates of inspection. This exchange of operational information
has  proved  fruitful,  whilst  not  adversely  affecting  inter-institutional  roles.  In  addition,  under  the
Joint Audit Arrangement Programme, the Commission closely co-operates with (customs) national
audit bodies in developing audit modules and strategies to be used in inspections. While all Member
States'  audit  bodies  have  contributed  to  the  development  of  the  various  audit  modules,  the
Commission  is  in  even  closer  co-operation  with  three  Member  States,  who  are  themselves  now
implementing  this  alternative  inspection  strategy.  The  results  therefrom  are  encouraging  and  the
Commission is seeking to widen the circle of participating Member States. The Budgetary Authority
is kept informed of progress via the Commission's report on the functioning of the system of own
resources (Art. 18§5 of regulation 1150/2000).

In  view  of  improving  its  financial  management,  the  Commission  closely  supports  the  Court  of
Auditors’  reflection  and  initiatives  with  regard  of  the  review  being  developed  on  the  DAS
methodology.

The  Commission  Internal  Audit  Service  is  developing  cooperation  among  its  audit  bodies,  with
ECA, with national audit institutions and with international organisations. This cooperation covers
the  exchange  of  professional  information  (audit  architecture,  methodology  developments,  audit
tools,  best  practices,  training,  etc.).  Within  the  Commission,  this  cooperation  also  includes  the
exchange of relevant information and work programmes.

The  Commission  already  cooperates  closely  with  national  audit  authorities  responsible  for
controlling expenditure from the Structural Funds under bilateral agreements (see point 38). This
cooperation was started by the DG for Financial Control and responsibility for it was transferred to
DG REGIO in  July 2000. By the end of June  2002  new  bilateral cooperation agreements  for  the
2000-06  programme  period  had  been  signed  with  2  of  the  Member  States  and  were  close  to
signature with six others.

44.

Takes  the  view  that  a  coordination  of  planning  controls  would  make  it  possible  to  prevent
unnecessary  duplication  of  effort  and  allow  better  division  between  internal  and  external
checks,  between  system  audits  and  project  controls,  in  the  light  of  the  risks  and  funding
involved;

Commission's reply :

43

The Commission shares the view that a better coordination of audit work plans will avoid gaps and
overlaps.  Action  has  been  taken  to  exchange  work  plans,  re-use  supporting  documentation  and
define coordination procedures. A further step would require each level of audit to rely on the work
of  other  auditors  (single  audit  concept).  The  Commission  should  further  investigate  this  possible
development. More specifically, DG BUDG ensures a system of coordination of on-the-spot control
checks to be carried out by Commission services, whereas the IAS has an overview of internal audit
activities in the Commission. In 2001, more than 1100 on-the-spot controls were carried out.

For the Structural Funds, an IT application is being developed (SYSAUDIT) which will be used for
the planning, preparation, reporting and follow-up of audit missions  by the  Commission services.
This is a tool which will significantly facilitate the organisation and coordination of audit activity in
the Structural Funds within the Commission, and which will be able to be used to improve planning
of controls with the European Court of Auditors and national control bodies also. The application
is  currently  in  the  testing  phase  and  will  become  fully  operational  during  the  second  half  of  the
year. See also points 38 and 40.

45.

Recognises that the actual method used by the Court of Auditors does not enable it to give a
rate of error for each sector of Community expenses, and takes the view that the DAS should
aim  to  give  this  information,  as  repeatedly  asked  by  Parliament's  Committee  on  Budgetary
Control, with a distinction between fraud and error, with consideration also of differences in
inherent risk between different sectors and taking into consideration corrections made by the
Commission, including comparison from year to year, in order to make this instrument useful
not only for the discharge authority,  but  also  for  the  Commission,  which  should  arrive  at  a
positive  DAS  as  soon  as  possible;  believes,  however,  that  on  the  basis  of  its  present
methodology, the Court of Auditors is unlikely to be able to give the Commission a positive
DAS in the near future;

Commission's reply :

The Commission has made major efforts to improve its financial management and strengthen the
controls.  These  efforts  are  gradually  having  a  positive  effect.  Despite  this  encouraging  situation,
the Commission cannot make any commitment regarding the content of the Statement of assurance
(DAS) in coming years; this is a matter for the judgment of the Court of Auditors. Moreover, with
the  progressive  recourse  to  a  methodology  based  more  on  systems  audit  it  is  for  the  Court  of
Auditors alone to determine whether the management methods of the Commission make it possible
to ensure that the implementation of the budget is done in a legal and regular way.

In addition, according to the conclusions of the European Council of Nice envisaging that "This
statement  may  be  supplemented  by  a  specific  assessment  for  each  major  area  of  Community
activity",  the  DAS  could  effectively  in  future  be  sectoral.  For  1999,  2000  and  2001,  there  was
already  a  distinction  between,  on  the  one  hand,  administrative  expenditure,  revenue  and
commitments receiving a positive DAS and, on the other hand, payments. This development should
continue.  The  Commission  considers  therefore  that  the  improvement  of  the  DAS  should  be
progressive. It should also be noted that the complexity and the specific risks are very different from
sector to sector. The Commission is of the opinion that the specific features of each area of activity
have  to  be  taken  into  account  in  the  appraisal  of  its  financial  management  "performance".
Moreover,  the  importance  of  shared  management  and  the  fact  that  many  final  beneficiaries  are
outside  the  EU,  make  financial management more  complex  and  is  one  of  the  causes  of  the  high
level of risk incurred by the general budget. Lowering this risk is one of the most important fields

44

for the Commission’s action; however, the effects of the reforms adopted by the Commission need
time and the improvement will be progressive.

Lastly, the Commission considers that account must be taken of its efforts to limit the effects of the
irregularities  which  affect  budget  execution.  This  aspect,  which  is  not  included  in  the  DAS
appraisal,  is  important.  The  financial  corrections,  the  clearance  of  accounts  and  the  recoveries
should constitute background information in the establishment of the DAS as they make it possible
to  reduce  Community  budget  losses  significantly.  Thus,  the  Commission’s  action  comprises  two
aspects:  improvement  of  the  management  and  control  systems  to  remedy  the  weaknesses  noted
under the Statement of assurance but also an ex post corrective action based on the strengthening
of controls so appropriations used improperly can be recovered.

46.

Questions the utility of the global Statement of Assurance for 2000 so long as the figures are
not  given;  notes  that  the  Court  of  Auditors  has  not  published  substantive  and  formal  error
rates  in  recent  years,  recalls  that  the  competent  Commissioner  for  the  agricultural  sector
provided the  figures  for  the  period  1995-1999  at  a  hearing  at  the  Committee  on  Budgetary
Control on 7.2.2001, asks the Court of Auditors and the Commission to provide the figures
for 2000;

Commission's reply :

The  Commission  welcomes  the  current  evolution  of  the  Court’s  methodology  towards  a  more
qualitative  assessment.  The  audit  of  management  and  control  systems  provides  more  useful
information as it shows what are the weaknesses that may occur and gives information on how to
improve  financial  management.  Such  an  approach  should  allow  to  make  comparisons  between
different financial years and to draw operational conclusions on the financial management quality
and to define the measures necessary to achieve improvements.

47.

48.

Calls  on  the  Court  of  Auditors  to  release  a  Statement  of  Assurance  and  error  rate  for  each
individual DG in order to highlight problem areas and substantially increase Commission and
Member State accountability;

Notes that the control and audit activities in relation to the EU budget are characterised by a
large number of auditors and audit services, each carrying out visits and drawing up reports
almost independently  but  often on the basis  of different  standards; asks  the  Commission  to
draw up a report on the feasibility of introducing a single audit model in relation to the EU
budget in which each level of control builds on the preceding one, with a view to reducing
the  burden  on  the  auditee  and  enhancing  the  quality  of  audit  activities,  but  without
undermining the independence of the audit bodies concerned; asks the Court of Auditors to
prepare  an  opinion  on  the  same  subject;  similarly  requests  the  Commission  to  see  to  what
extent  controls  and  in  particular  on-the-spot  controls  could  be  organised  in  a  more  rational
manner;

Commission's reply :

The Commission is examining possibilities for moving towards a single audit construct at EU level.
Inevitably  this  needs  to  be  a  broad  discussion  to  examine  possible  answers  to  the  present
weaknesses  of  the  existing  control  and  audit  governance  constructs.  In  order  to  explore  ways
forward  on  this  issue,  including  the  creation  of  a  common  language  on  public  sector  controls,

45

accounting and auditing, the IAS will dedicate the 2002 "Verstehen" Conference to the single audit
debate.

For example, the Structural Fund directorates general are making increased efforts to coordinate
their  audit  activity  with  that  of  the  Member  States’  authorities.  The  bilateral  administrative
agreements  governing  this  cooperation  already  provide  for  the  exchange  of  audit  reports  and
annual coordination meetings. The Commission is now also putting its audit programmes on to the
web-sites. The “single audit” approach is being actively considered in this context and is included
among the Commission’s proposals for simplifying the administration of the Structural Funds (see
point  25).  The  approach  has  the  advantage  of  consistency  of  standards  and  an  efficient  use  of
resources. Cooperation with the Court of Auditors has also increased. They take part, for example,
in the annual coordination meetings with national audit authorities.

49.

Following  Parliament's  resolution  of  17  May  200111,  and  in  particular  point  22  regarding
adulteration  of  olive  oil,  its  resolution  of  4  April  200112,  and  in  particular  point  9  (iii)
regarding  adulteration  of  milk  products,  and  the  Court  of  Auditors'  special  report  7/2001
regarding export refunds13, asks  the Commission to report to  the  Parliament  on the  state of
play  regarding  adulteration  of  agricultural  products  with  a  direct  or  indirect  impact  on  the
Community budget, addressing the regulatory  framework,  minimum  percentage  of  physical
analysis by sector, technical methods to detect adulteration and future  actions envisaged by
the Commission to deal with the situation;

Commission's reply :

The Commission has been following up for a long time the problems of fraud in the sector of the
olive oil, both with regard to the right to obtain aid and to the quality of the products launched on
the  market.  In  this  last  respect  it  adopted  Regulation  (EC)  n°  2568/91  which  specifies  the
characteristics  of  the  olive  oils,  in  particular  in  order  to  avoid  the  fraudulent  mixtures,  and  the
detail  of  the  analysis  methods  to  be  used.  Lately,  within  the  framework  of  the  strategy  for  the
quality  of  the  olive  oil  of  which  it made  one  of  priorities  for  the  sector,  the  Commission  adopted
Regulation (EC) n°1019/2002 which institutes additional rules for the control of the olive oil of the
marketed products.

Among the difficulties which have not found yet a final solution appears that of the mixtures with
imported hazelnut oils, owing to the chemical similarity of hazelnut oils and of the olive oils. In this
respect, the Commission has implemented for several year a Community research programme and
supports  actively  the  efforts  of  the  international  olive-growing  Council  (COI)  to  encourage  and
coordinate the chemists' specialised work. Until now research has not been able to develop yet of
reliable method to  detect without error  hazelnut  oils  in  the  olive  oils.  The  COI  recommended  the
use of a procedure involving three types of consecutive analysis. This procedure would be effective
enough  to  detect  the  presence  of  hazelnut  oil,  but,  at  this  stage,  it  can  also  conclude  to  such  a
presence in perfectly authentic olive oil. The legal implications of such possibilities of error prevent
the adoption of such a procedure by the Commission. New developments are in hand at the level of
research and the Commission continues following them very closely.

11

12

13

OJ C 34 E, 7.2.2002, p. 367.
OJ L 160, 15.6.2001, p. 2.
OJ C 314, 8.11.2001, p. 1.

46

                                                
As  regards  the  milk  products,  regarding  checks  on  composition,  the  Community  provisions
concerning official tests relating to the detection of foreign fats in milk fat appear in the annex to
Commission  Regulation  (EC)  No  454/95  and  have  since  been  inserted  in  Annex  XXV  to
Commission  Regulation  (EC)  No  213/2001  laying  down  detailed  rules  for  the  application  of
Regulation (EC) No 1255/1999 as regards methods for the analysis and quality evaluation of milk
and milk products.

Council  Regulation  (EC)  No  2991/94  lays  down  standards  for  spreadable  fats.  According  to  this
regulation, a product can only be marketed as butter if it satisfies the following criteria:

– 

– 

It  is  derived  exclusively  from  milk  and/or  milk  products.  However,  other  substances
necessary  for  its  manufacture  may  be  added,  provided  that  they  are  not  used  for  the
purpose of replacing, in whole or in part, any milk constituents.

It has a milk fat content of not less than 80%, but less than 90%, as well as a maximum
water content of 16%, and a maximum dry non-fat milk material content of 2%.

Regarding the general food chain, see answers under points 14c and 70.

OWN RESOURCES

50.

Takes  note  of  the  trend  towards  a  greater  reliance  on  GNP-based  contributions  to  the
Community budget and corresponding decline in the importance of traditional own resources;
observes  that  this  is  partly  due  to  the  capping  of  the  third  resource  (VAT)  and  the
Community’s international commitments to reduce customs duties; points nevertheless to the
difficulties in accurate  revenue  forecasting  based largely on  GNP  wealth  in  Member  States
and asks the Commission to assess how this is likely to be affected after enlargement;

Commission's reply :

The  Commission  continues  to  closely  monitor  implementation  of  the  budget  and  notes  that
recurrent  budget  surpluses  mainly  result  from  under-implementation  on  the  expenditure  side  (in
particular  structural  actions)  rather  than  from  underestimation  of  revenues.  The  Commission  is
often confronted with over-ambitious  payment  estimates  from  Member  States  which  make  proper
budget planning more difficult.

With regard to forecasting resources, the  Commission establishes  estimates of the VAT and GNP
bases for each Member State using its latest Spring economic forecasts and following an exchange
of views with, and after soliciting the advice of, Member States in the Advisory Committee on Own
Resources (ACOR). Estimates for traditional own resources, the VAT base and GNP are all based
on forecasts of inter-related economic variables subject to very similar degrees of accuracy. In fact,
differences between forecasts and out-turns tend to be relatively smaller for the GNP base than for
the  VAT  base  and  the  traditional  own  resources.  The  Commission  believes  that  forecasts  of
economic  variables  affecting  the  budgetary  position  of  Member  States  constitute  an  appropriate
method  for  determining  their  provisional  contributions  and  that  cyclical  and  short-term  effects
cannot be avoided. To improve the accuracy of the forecasts entered in the preliminary draft budget
(PDB), in 1998 the Commission introduced a new procedure updating the initial forecasts during
the  budgetary  year  in  question,  whereby  the  resulting  balance  is  budgeted  in  a  supplementary
and/or amending budget (SAB).

47

The  Commission  services  have  been  monitoring  the  ability  and  administrative  capacity  of
Candidate Countries for some time already in view of their accession. Particular attention has been
paid to ensure Candidate Countries are able to provide gross national income figures and VAT base
estimates  that  are  reasonably  accurate  and  reliable.  So  far,  there  are  no  reasons  to  assume  any
deterioration as regards the accuracy of revenue forecasting after enlargement. Moreover, since it
is the responsibility of the Commission to present estimates for the PDB, the Commission can enter
its own forecasts in case it considers them more accurate than those presented by a Member State.

51.

Notes with concern the misgivings of both the Court of Auditors and the Commission that the
VAT system is seriously affected by fraud although this does not necessarily lead to losses to
the  Community  budget.  Points  to  the  fact  that  Member  States  identified  EUR  534  million
worth of fraud and irregularities in 2000, corresponding to 3.5% of own resource revenue that
year, though mainly explicable by the case of New Zealand butter in the UK which accounts
for  half  of  the  total;  notes  that  Greece  was  alone  in  not  informing  the  Commission  of  any
irregularity detected that year in the area of own resources and questions whether this is due
to  a  100%  clean  record,  late  transmission  of  data  or  that  irregularities  simply  went
undetected;

Commission's reply :

Although this paragraph of the report opens with a statement relating to VAT own resources, the
two specific cases referred to are amounts of traditional own resources (TOR) (customs duties etc).
The appeals by the importers arising from the New Zealand case are currently  before a UK  VAT
and  Duties  Tribunal.  In  the  case  of  Greece,  the  Commission  was  notified  that  Greece  was
experiencing  transmission  difficulties  during  2000,  which  did  not  arise  from  the  OWNRES
application. These proved difficult to resolve and, despite the  Commission’s assistance, continued
through that year. However, in the last 18 months Greece has notified a further 33 cases. To limit
as much  as  possible  transmission  problems,  the  Commission  is  currently  developing  a  simplified,
web-based version of the reporting system.

Furthermore the Commission indicated in its Action Plan for 2001-2003 its intention to propose a
regulation based on Article 280 of the EC Treaty aimed at reinforcing cooperation to prevent and
combat amongst other things VAT cross-border fraud with  implications  at Community level. (See
also reply to paragraph 83).

52.

Underlines the criticism of the Court of Auditors that recovery measures by Member States
are neither efficient nor evenly applied, indicating a reluctance or a difficulty in tackling the
problem;  notes,  in  this  regard,  that  OLAF  opened  120  files  on  suspected  fraud  in  own
resources collection in 2000 for a total amount of EUR 608,7 million; urges the Commission
to  bring  forward  the  necessary  proposals  to  amend  Commission  Decision  97/245/EC14  on
transmission  of  data  from  Member  States  with  a  view  to  creating  equivalent  standards  of
reporting in all Member States;

Commission's reply : This reply to this point is dealt with under point 75 below.

53.

Recalls that Member States have now ratified the new Own Resources Decision, raising the
collection costs from 10% to 25%; calls on the Member States to ensure that this will lead to

14

OJ L 97, 12.4.1997, p. 12.

48

                                                
a  crack-down  on  customs  fraud  and  better  detection  of  irregularities  so  far  detected  in  the
area of own resources;

Commission's reply :

The  procedure  of  ratification  by  the  Member  States  of  Decision  2000/597  on  the  system  of  the
European Communities' own resources has been completed and the Decision entered into force on
1 March 2002.

II.

54.

REGULARITY, COMBATING FRAUD AND PROTECTION OF FINANCIAL INTERESTS

Recognises that the present system of protection of the Communities' financial interests and
prevention of fraud has to be strengthened;

Commission's reply :

The  Commission  is  fully  in  agreement  with  the  Parliament’s  view  on  the  need  to  strengthen  the
protection of the Community’s financial interests and fraud prevention in general. To this end, it
adopted a strategy on an overall strategic approach for the protection of the Community’s financial
interests and the fight against fraud. The Commission reported on further progress achieved in its
annual fraud reports for 2000 (COM(2001)255 of 23/05/01) and 2001. The strategy involves all the
Commission departments in the protection of financial interests and sets out priority measures on
which  they must  collaborate  when  initiatives  are  launched.  The  Commission  Action  Plan  for  the
years 2001 to 2003, the first working programme to reflect this overall strategy, sets out the priority
measures.

The four main parts of this approach are as follows :

Firstly,  developing  an  overall  anti-fraud  policy  based  on  Article  280  of  the  Treaty  to  provide
effective and equivalent protection of the Community’s financial  interests. This  involves adopting
legislation  to  cut  off  existing  opportunities  for  fraud  and  other  activities  harmful  to  the
Community’s interests, including regulations aimed at reinforcement of cooperation to prevent and
combat  money  laundering  and  VAT  fraud,  a  proposal  for  a  regulation  on  the  ‘black  list’
mechanism  and  an  initiative  concerned  with  the  integration  of  administrative  measures  and
penalties  in  the  field  of  direct  expenditure.  The  Commission  has  adopted  a  communication
concerning the fraud-proofing of legislation and contract management.

Secondly,  fostering  a  culture  of  cooperation  between  all  the  authorities  responsible  so  that  the
national and  Community  authorities  participate  fully  and in  concert  to  protect  financial  interests
and  combat  fraud.  A  Community  platform  of  services  is  under  construction.  Its  purpose  is  to
collect,  exploit  and  make  available  to  national  administrations  and  all  Commission  departments
information  gathered  on  the  ground  relating  to  the  protection  of  financial  interests  and  fraud
prevention. To this end, a specific Directorate for Intelligence was established in OLAF. It should
contribute  to  the  drawing  up  of  the  operational  priorities  of  the  Office  and  the  reinforcement  of
exchange of information with the Member States, including more precise information on the follow
up of cases by Member States on which the Parliament expresses concerns.

Thirdly, following an interinstitutional approach to preventing and fighting  fraud and corruption
with the aim of making all Commission officials and beneficiaries aware of the ethical aspects of
financial management and to lay down guidelines to prevent conduct harmful to the Community’s

49

financial  interests.  These  guidelines  have  been  adopted  in  the  form  of  a  code  of  conduct  and,  if
used  on  an  interinstitutional  basis,  should  enable  all  the  institutions  to  respond  better  to  the
concerns expressed by the Parliament in the application of Article 7 of Regulation No 1073/1999.
OLAF also adopted a communication on its action towards the institutions, which was transmitted
to the European Parliament in June 2002.

Fourthly, strengthening the criminal law dimension so that the most serious cases of wrongdoing
are  subject  to  criminal  proceedings.  To  this  end  OLAF  is  strengthening  its  cooperation  with  the
national  judicial  and  police  authorities.  The  Commission  has  adopted  a  Green  Paper  on  the
criminal  law  protection  of  the  financial  interests  of  the  Community  and  the  establishment  of  a
European Public Prosecutor.

The  priorities  set  out  in  the  White  Paper  on  reform  are  particularly  important  in  strengthening
protection  of  financial  interests.  An  example  of  the  key  preventive  elements  is  fraud-proofing
(Action 94) of legislation.

In  respect  of  the  curative  aspects,  where  fraud  is  suspected  and  Community  funds  could  be
recovered  as  a  result  thereof,  the  Commission  makes  sure  OLAF  is  duly  informed  according  to
Article 2 of Decision 1999/396/EC;ECSC, Euratom (SEC(1999)802).

Where fraud is established by OLAF or suspected, the Commission, following its Communication
on  recovery  of  unduly  paid  funds  of  13/12/2000  (SEC  (2002)2204/3)  ensures  that  OLAF  is  the
leading  service  for  enforcement  action  to  be  taken  towards  recovery,  including  where  necessary
relevant court actions before the competent bodies.

Articles 64 to 68 of the new Financial Regulation adopted by the Council on 25/06/2002 lay down
detailed  provisions  concerning  the  responsibility  of  authorising  officers,  accounting  officers  and
imprest  administrators.  Should  any  Community  agent  be  (suspected  of  being)  involved  in  any
fraudulent conduct likely to be detrimental to the Communities interests, the relevant disciplinary
and pecuniary actions are taken in accordance with Staff Regulations and applicable law related to
the protection of the Communities' financial interests.

As  regards  the  preventive  aspects,  in  addition  to  the  general  effort  concerning  sound  financial
management,  the  new  Financial Regulation  adopted  by  the  Council  on  25  June  2002  contains  a
number of provisions designed to strengthen the protection of the Communities financial interests.

Articles 93 to 95 and 113 of the new Financial Regulation are designed to create a framework for a
set  of  financial  and  administrative  penalties  to  apply  to  procurement  and  grants  financed  by  the
Community  budget.  These  provisions  cover  not  only  cases  of  fraud,  corruption,  involvement  in  a
criminal  organisation  or  any  other  illegal  activity  (including  money  laundering),  but  also
misconduct, misrepresentation and failure to comply with legal or contractual obligations.

Articles 102 and 118 deal with the suspension of performance of contracts and agreements where
irregularities or fraud are detected.

Article  72  makes  recovery  decisions  taken  by  the  institutions  enforceable  within  the  meaning  of
Article 256  of  the  Treaty,  and  Article  73  states  that  as  a  principle  amounts  may  be  recovered  by
offsetting against any claim that a debtor has on the Communities that is certain, of a fixed amount
and due.

50

These general arrangements set out in the new Financial Regulation are spelt out in more detail in
the  draft  implementing  rules  which  the  Commission  adopted  on  24 July 2002  and  subsequently
consulted with Parliament.

55.

Notes that it is incumbent upon the Commission to make use of the same standards and rules
across all sectors of Community expenditure in combating fraud and other irregularities if it
is  to  fulfil  the  spirit  of  Article  280  of  the  EC  Treaty  and  guarantee  an  equivalent  level  of
protection of the financial interests of the Community,

Commission's reply :

Many of the legislative initiatives in the Commission’s Action Plan on the fight against fraud and
the protection of the Communities’ financial interests which the Commission is preparing are based
on Article 280 of the EC Treaty. It is intended that an equivalent and effective level of protection
for all areas of Community expenditure should be provided.

56.

Considers that some common policies are themselves conducive to fraud, particularly where
guide prices are fixed and export refunds are used to support the export of surpluses mainly
for dairy products, sugar, cereals and beef;

Commission's reply :

Community  legislation  provides  for  proportionate  control  procedures  and  measures,  and  adjust
them as necessary, account being taken of the importance of the funds at stake.

See  also  the  answer  to  paragraph  85  on  fraud-proofing  of  legislation.  In  addition  to  the  fraud-
proofing  of  new  legislative  proposals,  existing  legislation  may  also  be  examined  with  a  view  to
proposing amendments if necessary to ensure it is fraud-proof.

57.

Considers that one of the main objectives of the Common Agricultural Policy as established
by the Treaty is to insure "a fair standard of living for the agricultural community" and this
objective  makes  imperative  for  the  Commission  to  monitor  carefully  the  patterns  of  the
distribution of the Common agricultural budget by farmers and other beneficiaries;

Commission's reply :

Ensuring a fair standard of living for the agricultural community and contributing to the stability
of farm  incomes remain key  objectives  for the Common  Agricultural Policy (CAP).  Agenda  2000
therefore  foresaw  further  compensation  of  farmers  for  price  cuts,  in  order  to  avoid  a  significant
loss of farm income and a threat to the economic and social stability of the farming community.

At  the  level  of  EU-15  per  capita  agricultural  incomes  have  developed  quite  favourably  since  the
beginning  of  the  reform  process.  However,  this  favourable  development  hides  the  increased
importance of direct payments in farm income as well as considerable variations between countries,
regions and sectors.

58.

Considers  that  transparency  rules  that  make  it  imperative  for  Commission  to  disclose  the
names  of  final  recipients  of  its  subventions  in  domains  like  science  and  technology  or  the
Cohesion  Fund,  should  also  be  applied  to  other  budgetary  lines  and  in  particular  to  the
Common Agricultural Policy;

51

Commission's reply :

Within the framework of the Structural Funds, which are managed in a decentralised fashion, this
question  is  a matter  for  the  Member  States,  but  the  Commission  encourages  them  to  publish  the
names of beneficiaries, and most of them do so.

On 6 March 2002 the Commission adopted an amendment to Regulation (EC) No 2390/1999 (OJ L
64,  7.3.2002,  p.8).  The  new  Article  2  of  this  Regulation  allows  the  Commission  to  use  the
accounting  information  to  carry  out  its  functions  in  the  context  of  the  clearance  of  account
procedure  and  to  monitor  developments  as  well  as  to  provide  forecasts  in  the  agricultural  sector.
The accounting information transmitted to the Commission remains, however, confidential and is
communicated  only  for  the  purposes  given  in  Article  2  of  (EC)  Regulation  No  2390/1999.  In
carrying out the two new actions, the Commission is obliged to respect the provisions of Regulation
(EC)  No  45/2001  of  the  European  Parliament  and  of  the  Council  of  18  December  2000  on  the
protection  of  individuals  with  regard  to  the  processing  of  personal  data  by  the  Community
institutions and bodies and on the free movement of such data. It therefore renders the information
anonymous and processes it in aggregated form only.

On  the  1.10.2002,  the  Commission  published  indicative  figures  on  the  distribution  of  direct  farm
aids by size-class of aid to farmers and presented them to the Parliament.

EXPORT REFUNDS

– 

– 

notes that expenditure on export refunds rose from EUR 5 695 million in 1980 (50,3%
of  the  EAGGF  Guarantee  budget)15  to  EUR  10  159  million  in  1993  (29%  of  the
EAGGF Guarantee budget) and then fell to EUR 5 646 million (14 % of the EAGGF
Guarantee budget) in 200016; notes, however, the relativity of these  figures due to the
changes in the dollar rate;

notes that the export refunds system is still important in the common agricultural policy
and  that  it  has  a  considerable  -  although  not  clear  -  impact  on  agricultural  and  food
markets in the EU and third country markets;

Commission's reply :

The  export  refund  system  is  designed  to  bridge  the  gap  between  EC  domestic  and  world  market
prices.  Its  impact  on  EU  and  third  country  markets  has  been  drastically  declining  following  the
implementation  of  the  1992  and  Agenda  2000  CAP  reforms.  It  can  now  be  considered  as  rather
limited for most agricultural products. The Mid-Term Review proposals may be expected to reduce
further the effect of export refunds on the markets of the products concerned.

– 

notes that according to the Commission the phasing-out of the export refund system is
dependent  on  the  forthcoming  WTO  negotiations;  urges  the  Commission  in  the
meantime  to  make  a  radical  effort  to  simplify  legislation  and  procedures  for  more
transparency:

15

16

Information provided by the Commission by mail of 7 February 2002
Court of Auditors' Special Report 2/1990 and note from DG IV : "Restitutions à l'exportation" p. 6

52

                                                
Commission's reply :

As noted, export refunds are the subject of negotiations in the World Trade Organisation (WTO).
Regarding  legislation  and  procedures,  the  Commission  has  proposed  an  action  plan  for  a
modification of the system which contains several measures of simplification.

– 

notes  that  since  1990  the  Court  of  Auditors  has  drawn  up  no  less  than  eight  Special
Reports  dealing directly  or indirectly  with the  control  of  export  refunds  which  shows
that the Court regards this as a sector which needs to be watched very closely, also, that
the Court of Auditors, in Special Report 2/1990, stated that "Export refunds are a high
risk area" due to "the complexity of the governing legislation and the size of the sums
which can be involved in individual transactions" (point 3.5);

Commission's reply :

The  Commission  has  always  carefully  examined  the  Special  Reports  drawn  up  by  the  Court  of
Auditors  dealing  with  the  control  of  export  refunds  and  has  taken  practical  measures  wherever
possible  to  improve  the  effectiveness  of  controls  in  this  area.  In  this  respect,  however,  the
Commission  draws  attention  to  the  Court  opinion  in  its  Annual  Report  concerning  the  financial
year  1987  where  the  Court  concluded  that  “While  differentiated  rates  of  refund  apply,  the  Court
has  difficulty  in  envisaging  any  system  of  controls  over  proof  of  arrival  which  would  provide
sufficient  safeguard  against  a  determined  attempt  at  fraudulent  declaration”  (OJ  C  316,
12.12.1988).

– 

regrets that the Commission on several points has not followed the Court of Auditors'
previous  recommendations  as  regards  physical  checks  of  agricultural  products
attracting export refunds (Annual Report 2000, point 2.104),

Commission's reply :

The  Commission  has  explained  in  detail  in  its  replies  to  the  Court’s  observations  in  the  Annual
Report on the financial year 2000 how some of the Court’s recommendations have been followed
and implemented and why it has not been possible to follow other recommendations (See Annual
Report 2000, point 2.104, OJ C 359, 15.12.2001, pages 98 et 99).

– 

calls on the Commission - in the light of the findings in the Court of Auditors' special
report 7/2001 - to examine the eventual need for reinforcement of Council Regulations
(EEC) No 4045/8917 and (EEC) No 386/9018;

Commission's reply :

A Commission proposal to amend Regulation (EC) No 4045/89, which is intended to increase the
quality  of  ex-post  controls,  strengthen  mutual  assistance  between  Member  States  and  notify
requests for mutual assistance on a quarterly basis, has recently been discussed by Parliament.

17

18

OJ L 388, 30.12.1989, p. 18.
OJ L 42, 16.2.1990, p. 6.

53

                                                
As  regards  physical  checks,  Commission  Regulation  (EC)  No 2221/95  laying  down  detailed  rules
for the application of  Council Regulation (EEC)  No  386/90  is  currently  being  codified  and  takes
account of a number of requests from the Member States to improve their management.

– 

recalls  its  position  in  its  resolution  of  13  November  200119  on  protection  of  animals
during  transport  as  regards  the  repeated  infringement  of  the  directives  concerning
animal  welfare  during  transport  and  Member  States'  inadequate  monitoring  policies;
insists that the Commission carries out systematic control of the implementation of EU
animal welfare legislation in the Member States and requests the phasing-out of export
refunds on slaughter animals as soon as possible;

Commission's reply :

The  Commission  will  of  course  continue  to  steer  the  Community’s  approach  towards  subsidising
the export of cattle to the level that is strictly necessary, bearing in mind the request made by the
Parliament to end,  as  soon  as  possible, the payment  of  export refunds for  slaughter  cattle  and  to
seek the establishment of binding international guidelines governing the treatment of live animals
during long-distance transport.

Furthermore  the  Commission’s  Food  and  Veterinary  Office  regularly  carries  out  missions  to
control the implementation of EU animal welfare legislation in the Member States.

– 

urges  the  Commission  to  apply  to  export  refunds  the  same  policy  of  transparency
already  used  in  other  domains,  such  as  science  and  technology,  by  making  public  in
electronic  form  the  names  of  all  the  undertakings  and  the  amounts  paid  under  this
scheme;

Commission's reply :

The Commission adopted on 6 March 2002 an amendment to Regulation (EC) No 2390/1999 (OJ L
64,  7.3.2002,  p.8).  The  new  Article  2  of  this  Regulation  allows  the  Commission  to  use  the
accounting  information  to  carry  out  its  functions  in  the  context  of  the  clearance  of  accounts
procedure and to monitor developments as well as to provide forecasts in the agricultural sector. In
order to carry out the latter two actions, the Commission respects the provisions of Regulation (EC)
No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection
of  individuals  with  regard  to  the  processing  of  personal  data  by  the  Community  institutions  and
bodies  and  on  the  free  movement  of  such  data  and  it  renders  the  information  anonymous  and
processes it in aggregated form only.

The  accounting  information  transmitted  to  the  Commission  is  confidential  and  is  communicated
only  for  the  purposes  given  in  Article  2  of  the  said  Regulation.  It  is  for  these  reasons  that  the
Commission does not publish the information referred to in the above indent.

– 

in  line  with  the  above  considerations  as  well  as  with  paragraph  24  above,  asks  the
Commission to undertake a global appraisal of alternative instruments to export refunds
capable of achieving in a more efficient way the policy objectives set out in the Treaty
while meeting the European Union's commitments under WTO;

19

Texts Adopted, Item 11.

54

                                                
Commission's reply :

Over  the  past  years  the  EU  has  already  substantially  reduced  the  export  refunds  for  agricultural
products.  Through  the  process  initiated  in  the  1992  reform  and  carried  much  further  in  Agenda
2000, the CAP  has  been  subject to the most wide-ranging reform since  its  launch.  In  1989-1991,
EU farm expenditure for market intervention and export refunds – considered to be trade-distorting
by the WTO - accounted for 90.7% of the EU farm budget as against 9.3% for direct aids.

The Uruguay Round Agreement on Agriculture (URAA) made major advances in imposing greater
discipline  in  the  area  of  export  subsidies  on  agricultural  goods.  The  EU  has  honoured  the
commitments it entered into in the URAA, and even gone further. In the period 1995-1999, the EU
used  less  than  60%  of  the  financial  possibilities  allowed  by  the  URAA.  Export  subsidies  were
reduced by: – 21% by volume and – 36% ad valorem. These reductions were effected over six years
and will be calculated with regard to the 1986–90 reference period.

The  Agenda  2000  reforms  introduced  cuts  in  institutional  prices  for  beef,  cereals,  and  milk  and
dairy products. In the beef sector, prices are to be cut by 20%, starting in 2000. In the arable crops
sector, prices will be cut by 15%, also starting in 2000. Finally, in the milk and dairy sector, prices
will be cut by 15% from 2005. In its reform proposal in the framework of the Mid-Term review of
Agenda 2000 the Commission has proposed a further reduction of 5%  of the cereals  intervention
price  which  will,  according  to  the  Commission,  lead  to  a  further  recovery  of  the  cereals  exports
without refunds.

But the latest round of price cuts  does  not give  the  full  picture  of  the  long-term  downward  trend
towards lower institutional prices in the EU. If the 1992 and 1999 reforms are taken together, the
price cuts are in the order of 45% in the arable crops sector and of 35% in the beef and veal sector.
These substantial price cuts are bringing prices in the EU closer to those on the world market, thus
opening up the prospect of subsidy-free exports.

The  proposals  made  in  the  Mid  term  review  will  continue  to  reinforce  alternative  instruments  to
market support in general and export refunds in particular.

One of the options which the Commission discusses for the future of the milk market is to pre-empt
the reform of the sector foreseen for 2008 which would lead to better prospects for exports of dairy
products without refunds.

– 

welcomes  the  fact  that  the  Commission,  following  the  Court  of  Auditors'  Special
Report 7/2001 and discussions in the Budgetary Control Committee on the report in the
framework of the discharge 2000, has presented an action plan aimed at:

(1) modification of Commission Regulation (EC) No 800/199920 before the end of the first

semester 2002 along the following lines:

(a) when approval is withdrawn from a supervisory company, suspension of approval
will  apply  in  all  Member  States  to  the  other  companies  within  the  same  group,
until the necessary investigations of each company have been completed,

20

OJ L 180, 15.7.1999, p. 53.

55

                                                
(b)

(c)

(d)

(e)

effective penalties for irregular proofs of arrival issued by supervisory companies
to be provided for by Member States,

provisions  of  the  Commission's  working  document  VI/2705  of  26.10.1999
concerning  the  rules  on  approval  of  surveillance  agencies  to  be  incorporated  in
the horizontal regulation,

rules  to  be  observed  by  Member  States'  embassies  on  issuing  certificates  on
unloading,

doubling  of  the  de  minimis  limits  by  which  payment  claims  involving  small
amounts of refunds may be exempted from the production of proof of import;

Commission's reply :

A regulation amending Regulation (EC) No 800/1999 and containing the provisions set out in the
action plan has been adopted.

(2)

inclusion of audit visits to the most important supervisory companies in the inquiry on
differentiated refunds before the end of 2002,

Commission's reply :

As part of the audits on differentiated refunds, supervisory companies are indeed being visited.

(3)

creation  of  a  catalogue  of  customs  forms  and  stamps  used  in  a  number  of  third
countries within the next one and a half years,

Commission's reply :

The preparatory procedure concerning the call for tenders to produce a catalogue of customs forms
and stamps used in third countries has been started.

(4)

visits  to  transport  companies  in  order  to  evaluate  the  potential  use  of  the  container
movement databases for control purposes before the end of 2002;

– 

expresses the following comments on the action plan:

ad 1 b) takes the view that the Commission has to provide for the penalties and assure

through systematic controls that Member States apply them,

ad 1 e) agrees that the Commission under present circumstances only partially responds
to  the  Court  of  Auditors'  recommendation  that  proofs  of  arrival  should  only  be
required  in  cases  of  doubt  or  for  high  risk  destinations;  is  nevertheless  of  the
opinion  that  the  Commission  should  seriously  explore  ways  of  improving  the
actual system which clearly is not satisfactory;

ad  3)  would  welcome  more  information  on  this  measure,  including  a  cost/benefit
analysis in the light of the need for such a catalogue to be constantly updated;

Commission's reply :

56

Within the framework of a cost-benefit approach the catalogue will be restricted to 50 countries (as
a  rule,  these  are  the  third  countries  for  which  more  and  more  is  spent  in  terms  of  differentiated
refunds).  In  order  to  take  account  of  possible  changes,  regular  updating  of  the  catalogue  would
seem to be appropriate.

– 

regrets  that  the  action  plan  does  not  address  the  recommendations  of  the  Court  of
Auditors in the following respects:

transport documents and commercial invoices should be presented to paying agencies

for all claims exceeding the de minimis limit,

a posteriori checks on placing on the market should be intensified,

refunds  should  not  be  paid  on  products  which  are  subject  to  reduced  rates  of  import
duty in non-member countries where this creates the possibility of carousels.

Commission's reply :

As stated in the action plan, the Commission will propose doubling the threshold for the de minimis
rule. However, the Commission maintains its position that presenting those documents in all cases
as  requested  by  the  ECA  would  not  offer  adequate  assurance  that  the  goods  have  arrived  at  the
third country of destination. A proposal to amend Regulation (EC) No 4045/89, which is intended
to  increase  the  quality  of  ex-post  controls,  strengthen  mutual  assistance  between  Member  States
and  notify  requests  for  mutual  assistance  on  a  quarterly  basis,  is  currently  being  discussed  by
Parliament.

59.

Asks the Commission to ensure that the calculation of the refund rates to potato and cereal
starch  follows  predictable  and  transparent  criteria,  as  recommended  by  the  point  40a)  of
Special Report No 8/2001 of the European Court of Auditors;

Commission's reply :

In the light of the findings and conclusions of the evaluation report on the starch regime produced
for the Commission, the method for calculating refunds is currently being examined.

All  elements  which  have  an  effect  on  the  calculation,  and  hence  on  the  competitiveness,  of  the
Union's products, will be analysed, including the relative value of the refund in the cost price of the
product, substitutability between starches and the impact of transport costs.

The Commission will continue to seek a transparent method, the representative elements of which
are available to interested parties such that the amount of the resulting refund can be predicted.

60.

Welcomes all the steps announced by the Commission in its reply to the Budgetary Control
Committee's questionnaire in order to publish data on concentration of CAP funds per farmer
and  or  per  working  unit,  and  asks  the  Commission  to  start  presenting  this  data  as  soon  as
possible;

Commission's reply :

57

Regulation  419/2002  of  6  March  2002  was  adopted  by  the  Commission  in  order  to  enable
developments  to  be  monitored  and  forecasts  to  be  drawn  up  in  the  agricultural  sector,  while
maintaining the personal nature of these data.

On  the  1.10.2002,  the  Commission  published  indicative  figures  on  the  distribution  of  direct  farm
aids by size-class of aid to farmers and presented them to the Parliament

61.

Notes that, according to point 2.145 of the Annual Report of the Court of Auditors, the recent
reform  on  the  fresh  fruit  and  vegetables  sector  concentrated  Community  funds  in  more
developed countries and regions;

Commission's reply :

The  Commission  is  aware  of  the  differences  that  exist  between  Member  States  as  regards  the
situation  of  fruit  and  vegetable  producers.  This  situation  will  be  improved  primarily  by  a  better
match,  both  qualitative  and  quantitative,  between  production  and  demand.  The  Commission  is
convinced  that  the  concentration  of  supply  by  producers'  organisations  and  a  contractual  policy
with the processing sector are powerful instruments for facilitating this match. In the light of the
debates  in  the  Council,  Parliament  and  the  Economic  and  Social  Committee  and  with  the
professional circles concerned which followed its report on the application of the 1996 reform, the
Commission  plans  to  present  in  2003  proposals  to  simplify  the  CMO  currently  in  force.  These
proposals will make it possible to respond to the Council's general demand. They will be based on
the  principles  of  good  governance.  Their  objectives  will  be  to  improve  product  quality  and  better
protect the environment. They will also aim to simplify the way that producers' organisations work.
This should allow these organisations to achieve greater economic efficiency, to the benefit of not
only the producers but also the whole of the sector concerned.

62.

Notes  that  some  rules  introduce  neither  verification  mechanisms  nor  penalties,  which  may
encourage fraud or simply involve public health risks;

Commission's reply :

See the reply to point 14c)

63.

Calls,  for  instance  as  regards  the  sheepmeat  and  goatmeat  CMO,  for  the  introduction  of  a
mandatory  electronic  identification  system  for  animals  in  order  to  enable  information-
gathering on premiums and verification thereof;

Commission's reply :

In  the  aftermath  of  the  foot-and-mouth  disease  crisis,  the  Commission  is  currently  drafting  a
proposal establishing a system for the identification and registration of sheep and goats.

64.

Calls,  as  regards  the  milk  quotas  regime,  for  a  harmonised  application  of  the  rules  for
penalties for milk producers failing to comply with milk  quotas, which, 17  years  after they
were  introduced,  are  still  not  correctly  applied  in  all  Member  States  (cf.  paragraph  2.193  -
Court  of  Auditors'  annual  report);  regrets  that  Italy  has  been  paying  the  superlevy  for  the
breaching of the milk quotas, on behalf of its farmers, thereby distorting competition across
the Union;

58

Commission's reply :

The  fact  of  delivering  more  milk  than  the  individual  quotas,  set  by  Council  Regulation  (EEC)
No 3950/92 cannot be considered as “failing to comply with milk quotas” but is a calculated risk
permitted by the regulation and taken by the producer, who will be liable to pay a levy only if the
national quota is exceeded. In the event of fraud or irregularities regarding this levy being proved,
the  Member  States  apply  the  penalties  provided  for  in  Commission  Regulation  No 1392/2001,
which entered into force on 31 March 2002 and has considerably strengthened and harmonised the
penalties  which  were  previously  provided  for  in  Regulation  (EEC)  No 536/93,  so  meeting  the
recommendations made by the Court of Auditors.

However, in most cases, the producers who refuse to pay the levy bring legal proceedings before the
national courts and, in this case, neither the Member States nor the Commission can interfere in
the normal course of justice. Furthermore, the Court of Justice recently ruled (case C-277/99) that
the  Commission  may  not  impose  financial  corrections  against  the  Member  States  regarding  the
estimated  levy  where  judicial  proceedings  are  under  way,  unless  it  demonstrates,  on  the  basis  of
specific  examples,  how  the  protraction  of  the  proceedings  might  be  imputable  to  the  national
authorities. Moreover, the Commission may not impose financial corrections against the Member
States with regard to the interest for late payment, if it doesn’t prove, by showing that serious and
reasonable doubts exist, that the fact that certain sums due remain unpaid or have been paid late is
the result of a negligent failure attributable to the national authorities (case C-130/99).

In paragraph 2.193 of its annual report, the Court of Auditors contests the application of the rules
on  quotas  by  certain  national  administrations,  but  does  not  mention  individual  wrongdoing  by
certain  producers.  In  its  reply,  the  Commission  has  already  pointed  out  that  infringement
proceedings have already been initiated against these Member States.

65.

Calls, as regards application of BSE legislation by the Member States (cf. Court of Auditors’
Special Report 14/2001) and measures concerning the prevention of foot and mouth disease,
for  procedures  to  be  established  to  impose  financial  corrections  or  fines  and  penalties
concerning  veterinary  expenditure  or  market-related  measures  financed  by  the  European
Union where Member States fail to comply with veterinary legislation;

Commission's reply :

Under Regulation  (EC) N°  178/2002  the Commission has the  right  to  intervene  in  cases  where  a
serious risk to human health, animal health or the environment cannot be contained satisfactorily
by means of the measures taken by the Member State(s) concerned. The Commission is authorised
to  adopt  certain  provisional  measures  that  have  to  be  confirmed,  extended,  amended  or  revoked
later.

As  announced  in  the  Commission’s  White  Paper  on  Food  Safety  [COM  (1999)  719],  the
Commission  intends  to  submit  to  the  European  Parliament  and  the  Council  a  proposal  for  a
Regulation  on  feed  and  food  controls.  The  Commission  services  are  examining  intensively  how
procedures to fill the above gaps can be integrated into such a proposal. Possible measures to that
effect must be carefully screened against the rules laid down in the Treaty.

66.

Calls on the Commission to consider whether it ought to have additional powers for special
emergency situations where human and animal health are at risk;

59

Commission's reply :

Although  it  shares  the  concern  of  the  European  Parliament  in  respect  of  risks  to  human  and
animal health, the Commission would  say that an  appropriate legal basis for such an instrument
would have to be found in the Treaties.

It is expected that the proposal for a Regulation on feed and food controls can be submitted to the
European  Parliament  and  Council  before  end  of  2002.  The  Commission  services  are  examining
how and in what form the above intentions can be carried through in the final proposal (see replies
to paragraphs 65 & 70).

67.

Notes that some rules have produced  unwanted  effects and that  the  Commission  responded
late  to  the  Court  of  Auditors’  warnings,  and  cites  in  this  connection  aid  for  fibre  flax
growing, in respect of which the Court of Auditors recommended as long ago as 199221 that
the  Commission  avoid  any  further  encouragement  of  fibre  flax  production,  since  there  was
already  ‘a  production  surplus  for  which  no  buyer  could  be  found’22;  deplores  the  way  the
Commission and the Member States reacted to the situation and the length of time; notes that
Council  and  Parliament  have  in  some  cases  obstructed  proposals  by  the  Commission  to
improve CAP legislation;

Commission's reply :

The  Commission  totally  agrees  in  condemning  any misuse  of  the  Community  budget.  It  followed
the  recommendations  of  the  Court  of  Auditors  in  1992,  as  the  overall  level  of  support  for  the
production  of  fibre  flax  was  not  increased.  In  fact,  in  1992  the  problem  was  related  to  a  market
imbalance which does not exist at present. Instead, the problems that started in 1994 were basically
not related to any increase in the quantities of fibres produced.

68.

Condemns rules which give rise to ‘premium hunting’ with unintended, pernicious effects on
the  Community  budget;  again  presses,  as  it  did  in  its  resolution  of  19  January  200023  on
discharge  1997,  for  systematic  and  careful  follow-up 
the  Court  of  Auditors’
recommendations;

to 

Commission's reply :

The  Commission  totally  agrees  in  condemning  any misuse  of  the  Community  budget.  It  followed
the  recommendations  of  the  Court  of  Auditors  in  1992,  as  the  overall  level  of  support  for  the
production of fibre flax was not increased In order to prevent premium hunting in the case of flax
and  hemp,  the  Commission  presented  a  reform  proposal  in  1996.  Subsequently  supplementary
requirements such as the compulsory processing contracts, the obligation to transform the product
harvested and the minimum yield per hectare were introduced in the support regime."

69.

21

22

23

Asks the Court of Auditors to assess to what extent the system of trade preferences is also a
source  of  irregularities  adversely  impacting  on  Community  resources  (cf.  judgment  on  the
case  involving  television  sets  from  Turkey),  and  calls  on  the  Commission  to  develop
alternatives to the present system as soon as possible;

OJ C 309, 16.11.1993.
Annual report of the Court of Auditors – paragraph 2.77.
OJ L 45, 17.2.2000, p. 33.

60

                                                
70.

Deplores  the  situation  where  trafficking  in  adulterated  butter,  organised  by  professional
criminals could have led to health risks and represents a potential loss for the budget; calls for
appropriate penalties to be imposed on the adulterators and European firms involved and for
all information on this affair to be forwarded as soon as possible to the European Parliament;
regrets that the Commission has failed to warn the consumer against possible health hazards
after the case became public knowledge in July 2000; expects the Commission in the future
to  give  public  health  concerns  priority  over  all  other  investigations;  notes  that  nearly  two
years  after  the  scandal  was  made  public  by  OLAF,  no  Community  financial  corrections  of
any  sort  have  yet  been  passed  against  the  responsible  undertakings  involved  in  this  affair,
which is in sharp contrast with what happens with any violation of much lesser gravity (such
as to produce milk over the allocated milk quota);

– 

– 

considers that the present situation is contrary to the principles of equitable protection
of  Community  financial  interests,  and  asks  the  Commission  to  ensure  that  criminal
offences are not treated in more favourable conditions than administrative offences;

asks  the  Commission  to  monitor  this  affair  closely,  and  to  report  to  the  European
Parliament all major developments;

Commission's reply :

legislative  framework  established  by 

The  new 
the  “General  Food  Law”  adopted  on
21 January 2002  reinforces  the  Commission's  capability  to  act  on  microbiological  and  chemical
contamination on food products of any origin. Under these provisions, the Commission can adopt
emergency  measures  covering  the  whole  food  chain  “where  it  is  evident  that  food  or  feed
originating in the Community or imported from a third country is likely to constitute a serious risk
to human health and that such risk cannot be contained satisfactorily by means of measures taken
by the Member State(s) concerned” (Art. 53 of Regulation N°178/2002 of 28.1.2002).

In addition, this legislative framework insists on the importance of the traceability of food products
in order to target the appropriate part of the food chain.

OLAF  assisted  the  judicial  authorities  in  Italy  and  France  and  was  associated  with  the
administrative  inquiry  in  Germany.  At  this  stage  the  enquiries  (criminal)  are  continuing  in  Italy
and France. The Belgian, French and  German  administrative authorities  are  waiting for specific
information  collected  within  this  framework  to  be  legally  accessible  to  them  in  order  to  evaluate
whether,  and,  if  so,  to  what  extent,  recovery  measures  as  well  as,  if  appropriate,  the  Community
penalties provided for in the regulations in accordance with the provisions of horizontal regulation
2988/95  can  be  applied.  Any  criminal  penalties  which  might  be  imposed  in  the  butter  case  are  a
matter for the national judicial authorities concerned.

Parliament will be informed of the outcome of the case.

71.

Notes  that  detecting  irregularities  or  fraud  comes  under  the  responsibility  of  the  Member
States  (which  are  obliged  to  report  them  to  the  Commission),  Commission  departments,
OLAF and the Court of Auditors, but that the Member States, as is pointed out in Court of
Auditors’  Special  Report  10/2001,  by  no  means  meet  their  obligation  in  full  to  report
irregularities relating to the Structural Funds and that the figures established are likely to be
much higher in reality;

Commission's reply :

61

It is certainly true that there were difficulties in the area of the Structural Funds for some Member
States in the interpretation of what constituted an irregularity, which led to a low level of reported
frauds and irregularities. The Commission was aware of this problem and sought to find a solution
to  it.  This  consisted  of  organising  targeted  training  courses  for  officials  dealing  with  the
management of the Structural Funds in the Member States as well as continuing bilateral contacts
between  the  Commission  and  the  Member  States  in  the  meetings  of  the  Structural  Fund  control
coordination committee and the COCOLAF, the Advisory committee on fraud prevention. Dialogue
with  the  Member  States  on  this  question  for  all  areas  of  the  Community  budget  is  an  ongoing
matter and meetings of the COCOLAF in 2002 have focused specifically on it. There has been an
improvement  in  the  reporting  and  the  number  of  cases  since  1998.  This  development  should  be
viewed in a positive light.

Article  3  of  Regulation  (EC)  No  1681/94  clearly  sets  out  what  has  to  be  communicated  to  the
Commission  by  Member  States  while  there  is  a  definition  of  what  constitutes  an  irregularity  in
regulation  (EC)  No  2988/95.  The  latter  is  a  horizontal  framework  regulation  concerned  with
protection of the whole of the Community budget and is applicable for all irregularities occurring
in all sectors of the Community budget.

In the autumn of 2002 the Commission Structural Fund directorates general and OLAF will audit
the  observance  by  Member  States  of  the  procedures  for  reporting  irregularities  in  the  Structural
Funds.

The  Commission  places  strong  emphasis  on  irregularity  reporting  and  follow-up  in  every
coordination  meeting  with  the  national  control  authorities.  The  national  auditors  are  now  more
aware of the need not to neglect this aspect during audit missions.

72.

Calls  upon  the  Commission  to  evaluate  and  revise  the  existing  arrangements  for  import  of
agriculture produce below EU-prices from third countries to be processed in the EU and re-
exported to third countries;

Commission's reply :

It would not be appropriate to discontinue the preferential arrangements which make it possible to
import  products  into  the  Community  at  the  world  price  and  to  re-export  them  with  or  without
processing. Preferential agreements of this type mainly benefit the developing countries.

The inward processing arrangement, which allows products to be  processed in the  Community at
the  world  price  and  the  processed  products  then  to  be  re-exported,  is  permitted  only  when  the
economic conditions which justify it are met. Restricting access to inward processing could penalise
the Community processing industry.

73.

Calls  for  Member  States,  including  regional  administrations,  to  be  made  more  aware  of
action  to  combat  irregularities,  given  that,  in  particular  in  the  field  of  structural  measures,
negligent  or  irregular  use  of  Community  budget  appropriations  is  mirrored  by  equally
negligent use of funds provided by cofinancing from national budgets;

Commission's reply :

The Commission welcomes Parliament’s endorsement of its continued efforts to increase Member
States’ awareness of the need for action to combat irregularities.

62

See also reply to point 14 a.

74.

Urges  the  Commission  to  apply  financial  corrections  in  accordance  with  Commission
Regulation  (EC)  No  448/200124  in  connection  with  structural  measures  where  there  are
irregularities;

Commission's reply :

The Commission has every intention of enforcing Regulation 448/2001 vigorously.

75.

Takes  note  of  the  figures  transmitted,  at  its  request,  by  the  Commission,  concerning  the
amount  of  irregularities  per  Member  State  and  the  amount  of  recovery  for  the  Structural
Funds since the implementation of Commission Regulation (EEC) No 1681/9425; takes note
of the significant amounts owing from some Member States (Italy, Spain, United Kingdom,
Germany)  and  wishes  to  be  informed  about  the  reasons  for  the  low  recovery  from  those
countries;

Commission's reply :

In  the  case  of  irregularities  notified  to  OLAF,  the  Member  States  are  required  to  make  the
necessary corrections and inform OLAF. Currently, it is when the programmes are closed that the
Directorates-General  responsible  for  the  Structural  Funds  check  with  OLAF  whether  the
irregularities notified have been corrected. If not, they ensure that these cases are dealt with before
proposing the closure of the programme concerned.

The  OLAF  database  of  irregularity  cases  in  the  Structural  Funds  reported  by  Member  States
indicates on a case-by-case basis for each Member State the Fund, the amount concerned and the
recovery position at national level. The closure period for the 1994-99 programme has now begun
and will continue until its completion in 2003, at which point the complete picture on the recovery
situation can be established. Before closure all cases reported will have to be closed except for those
where  action  has  been  suspended  due  to  pending  legal  proceedings.  If  a  Member  State  has  not
taken account of all the amounts remaining to be recovered during the closure of the programme,
the  Commission  will  take  the  appropriate  action,  including  the  application  of  Article  24  of
Regulation No 4253/88 as amended by Regulation No 2082/93.

In the period 2000-06, on the basis of the implementing regulations Nos 438 and 448/2001(for the
Structural  Funds)  and  1386/2002  (for  the  Cohesion  Fund),  the  Directorates-General  responsible
for these Funds will be informed each year of recovery proceedings pending in the Member States.
This,  together  with  a  more  complete  database  with  more  uniform  contents,  will  allow  better
monitoring, including of less serious irregularities.

Systems to reduce the number of irregularities have been put in place. They strengthen:

– 

24

25

the requirements in terms of sound financial management and control (Articles 38, 32 and
34  of  Regulation  No 1260/1999,  Article  12  of  Regulation  No  1164/94  and  Article  H  of
Annex II thereto, and the implementing regulations 438/2001 and 1386/2002);

OJ L 64, 6.3.2001, p. 13.
OJ L 178, 12.7.1994, p. 43.

63

                                                
– 

the  penalties  applicable  for  irregularities  both  in  the  Member  States  (which  have  the
primary  responsibility  for  detecting,  correcting  and  notifying  the  Commission  of
irregularities  on  the  ground)  and  in  the  Commission  (Article  39  of  Regulation
No 1260/1999,  Article  H  of  annex  II  to  Regulation  No  1164/94  and  implementing
regulations 48/2001 and 1386/2002, and the Commission’s internal guidelines on financial
corrections).  The  Commission's  range  of 
includes  corrections  by
extrapolation26 or at a flat rate27.

instruments 

The sums, which, it is true, are still relatively low, for which the Commission issued recovery orders
on the basis of the old rules (Article 24 of Regulation No 4253/88) over the years 1997 to 2000 were
communicated  to  Parliament  in  the  replies  sent  by  the  Director-General  of  DG  REGIO  to
COCOBU's questions on 8 February 2002.

CORRECTIONS

76.

Recommends  again  (cf.  Parliament's  resolution  of  4  April  2001  on  discharge  1999)
concerning  the  clearance  of  accounts  (EAGGF),  that  the  procedure  be  improved  especially
through  increased  financial  corrections  for  Member  States  where  there  are  repeated
weaknesses in the control system, including delay in the setting-up of the IACS, and through
extending the deadline for conformity decisions from the current 24 months to 36 months, as
already proposed in its abovementioned resolution on discharge 1999; asks the Commission
to come forward with the necessary proposals;

Commission's reply :

The  Commission  services  are  studying,  on  the  basis  of  current  regulations,  the  possibilities  of
increasing  flat-rate  corrections  in  the  event  of  repeated  weakness  of  the  control  systems  already
having  been  the  subject  of  a  correction  at  the  time  of  a  previous  clearance  of  accounts  decision.
This would apply in particular to delays or weaknesses in the implementation of the IACS. Indeed,
the  persistence  of  a  non-corrected  control  weakness  may  increase  the  risk  and  gravity  of
irregularity and therefore the financial loss for EAGGF. These modalities should be defined during
the second half of 2002.

77.

Asks the Commission to make proposals before the next discharge, so that non-respect of the
criteria  by  the  paying  agencies  in  the  Member  States  can  be  properly  sanctioned  (such  as
reduction of advances or financial corrections);

Commission's reply :

It  is  not  possible,  with  the  current  state  of  the  legislation,  to  make  corrections  on  the  basis  of  a
potential failure on the part of the paying agencies to respect the  approval criteria.  Approval is a
matter for the Member States. The Commission's services do intervene in this area, with corrections

26

27

Applied in the case of systemic irregularities the financial impact of which could, theoretically, be calculated but
for cost or other reasons is not calculated precisely and must be estimated.
Applied to systemic irregularities (resulting from shortcomings in the national control systems,  for example the
lack of checks on adherence to the Community rules) or one-off infringements of the rules the financial impact of
which is not calculable.

64

                                                
in matters of conformity and reduction of advances, but this is for quite specific budget headings
corresponding to measures financed.

78.

Questions  again  if  the  current  system  of  financial  correction  is  sufficient  to  encourage
Member States to combat fraud and irregularities; invites the Commission again to propose a
simplification of the infringement procedure, which allows a lump sum or penalty payment to
be  paid  by  the  Member  State,  following  a  judgment  by  the  Court  of  Justice,  if  the
Commission  considers  that  the  Member  State  concerned  has  failed  to  fulfil  its  obligations
under the Treaty (Article 228);

Commission's reply :

Article  39  of  Regulation  No 1260/1999  and  Regulation  No 448/2001  (financial  corrections)  give
Member  States  an  incentive  to  detect  and  correct  irregularities  in  the  spending  of  the  structural
Funds  by  allowing  them  to  reallocate  cancelled  and  recovered  expenditure  to  other  projects,
whereas  expenditure  cancelled  and  recovered  by  the  Commission  will  be  lost  to  the  programme
concerned.

The  Commission,  which  is  constantly  endeavouring  to  improve  the  correct  application  of
Community law, including in the case of repeated infringements, has no reason not to be satisfied,
at  this  stage,  with  the  instrument  of  periodic  penalty  payments  which  it  systematically  uses  to
encourage the Member States to implement the rulings by the Court of Justice.

79.

Calls on the Commission to inform Parliament more fully on progress towards more effective
recovery of unduly paid funds (action 96 of the internal reform of the Commission); repeats
its regret (cf. its abovementioned resolution of 28 February 2002)  that the Commission has
not followed Parliament's recommendation and introduced a requirement to launch recovery
proceedings  within  three  month  of  receipt  of  details  of  irregularities  from  the  Court  of
Auditors;

Commission's reply :

The Commission would once again point out that finding that an irregularity has occurred does not
necessarily mean that money was wrongly paid out. Moreover, where irregular expenditure has to
be recovered, it should be noted that a three-month time limit is unrealistic since over 80% of the
amounts concerned are Community expenditure managed indirectly, with Member States the first
line  managers.  As  regards  the  rules  for  recovery  of  amounts  wrongly  paid,  this  expenditure  is
subject  to  special  legislation  (EAGGF  Guarantee  and  SAPARD  legislation  for  clearance  under
these  funds;  Structural  Funds,  Cohesion  Fund  and  ISPA  legislation  for  financial  corrections
under these funds).

As stated above (point 4), the Commission will be sending a communication to the other institutions
before  the  end  of  2002  on  progress  made  under  the  present  legislation  on  implementation  of
action 96 "More effective management of the recovery of unduly paid funds" on the basis of the
action  plan  adopted  in  December  2000  (SEC(2000)2204/3  of  13  December  2000)  and  what  is
expected to be achieved under the recasting of the Financial Regulation adopted by the Council on
25 June 2002 and its implementing rules (the draft of which was submitted to the other institutions
for  their  opinion  at  the  end  of  July  2002),  including  as  regards  the  systematic  establishment  of
amounts that can be established. The IAS is finalising an audit on this question (see also the last
paragraph of the reply to point 4).

65

Actions  carried  out  without  any  change  in  legislation  include  those  designed  to  prevent  amounts
becoming irrecoverable because they are too old, in particular the automatic reminders and letters
of formal notice to debtors (dunning), improvements in reporting and generalised access for DGs to
databases for checking the financial position of debtors. In order to reduce the old debts which can
still  be  recovered,  the  resources  and  structures  allocated  to  recovery  have  been  strengthened.  As
regards the writing-off of certain amounts judged to be irrecoverable, the rules have been clarified
with  the  adoption  of  the  internal  rules  on  the  implementation  of  the  2002  budget  adopted  on
8 April 2002  including,  to  the  satisfaction  of  Parliament  (see  point  80  below),  the  waiving  of
recovery of established amounts by application of the proportionality principle.

Actions being taken in preparation for the new regulatory framework which is to enter into force
on 1 January 2003 (new Financial Regulation, implementing rules for that Regulation and revision
of  the  internal  procedural  provisions  on  debt  recovery)  include  strengthening  the  role  of  the
authorising officer (who will be responsible for drafting and sending the debit note to the debtor)
and strengthening the enforced recovery instruments (recovery by offsetting, by enforcement of any
guarantee  lodged  in  advance  and  by  enforcement  of  an  enforceable  order  obtained  either  under
Article 256  of  the  EC  Treaty  or  after  Court  proceedings).  Finally  the  new  regulatory  framework
continues  the  abovementioned  rationalisation  of  the  provisions  on  writing-off  established
entitlements (waiver, cancellation and technical and accounting adjustments).

Commission departments are already receiving training in the new regulatory framework and the
changes in computer applications that this entails.

80.

81.

Congratulates  the  Commission  on  its  guidelines  on  the  application  of  the  principle  of
proportionality to the waiving of debt recovery; is pleased that the guidelines introduce clear
and  transparent  procedures  for  the  writing-off  of  debt  in  accordance  with  Parliament’s
wishes;

Demands that, once the Commission  decision  has  been  taken,  the  Commission  informs  the
European Parliament of the basis for calculating the financial correction applied on the one
hand  to  the  Netherlands,  in  the  framework  of  the  ESF,  on  the  other  hand  to  Spain,  in  the
framework of the flax case;

Commission's reply :

With regard to the monitoring of the irregularities detected in the Netherlands, the Commission has
regularly (on several occasions in 2001) informed the European Parliament via COCOBU, whether
in the form of a letter addressed to the rapporteur on the 1999 discharge or in response to specific
written questions sent by some of its members. The method for calculating the applicable financial
corrections  is  given  in  the  decision  which  was  taken  by  the  Commission  under  Article  24  of
Regulation 4253/88 (reduction in Community assistance – Decision C(2002) 970  final), a copy of
which was sent by Ms Diamantopoulou to Ms Theato on 19 April 2002 (courrier Cabinet No 0596).

In  order  to  implement  this  Decision,  the  Commission  issued  several  debit  notes  which  were
transmitted to the Dutch Authorities for a total recoverable amount of € 157.188.991. This amount
was fully recovered by the Commission on 9 July 2002.

As  regards  the  flax  case,  the  Commission  regularly  informs  the  Cocobu  on  the  clearance  of
accounts decisions.

66

82.

Expects  Commission  decision-making  procedures  for  financial  corrections  to  be  open  and
transparent; recalls Article 213 of the Treaty, which states that Members of the Commission
"shall be completely independent in the performance of their duties" and "shall refrain from
any action incompatible with their duties"; recalls the Code of Conduct for Commissioners,
which states that "ruling out all risks of a conflict of interests" helps Members "to guarantee
their  independence";  notes  that  according  to  the  Code  of  Conduct,  the  role  of  Members'
private  offices  is  "to  act  where  necessary  as  the  interface  between  Commissioners  and  the
departments they are responsible for, but without interfering in  departmental management";
expects the Members of the Commission and their private offices to continue to observe this
set  of  rules;  reminds  the  Commission  of  its  undertaking  to  report  in  detail  on  any  specific
financial correction, and on the procedures followed, at the request of Parliament;

Commission's reply :

The Commission and its members cannot but reiterate their strict respect of their obligations under
the Treaties and of the code of conduct that was put in place by the Prodi Commission as one of its
first acts.

AS REGARDS THE ANTI-FRAUD OFFICE

83.

Notes the limits on action by OLAF, as set out in the annual report (Chapter III, point 3.2) of
the OLAF Supervisory Committee since it was unable to provide precise information on the
action  taken  by  the  competent  national  authorities  on  the  various  cases  concerned,  on  the
imposition of any administrative or criminal law penalties or on the recovery of funds; notes
also the limits on its scope for action, (for example the VAT sectors stated by the Court of
Auditors - point 1.90 of the annual report "another element likely to increase the risk of fraud
is  the  absence  of  a  clear  basis  for  international  coordination  of  VAT  investigations  by
OLAF/Commission");

Commission's reply :

In  the  framework  of  the  Advisory  Committee  for  the  Coordination  of  Fraud  Prevention
(COCOLAF),  the  Commission  has  launched  a  dialogue  with  the  Member  States  and  taken
initiatives  within  the  means  at  its  disposal  to  have  more  precise  information  on  the  follow-up  of
cases transmitted by OLAF to the national judicial authorities. Moreover, all aspects of follow-up
action  for  cases  investigated  by  OLAF,  be  they  administrative,  judicial,  disciplinary  or  financial,
are carried out by the units responsible for follow-up work.

The Commission did include a proposal in its 2001 work programme to improve Community-wide
cooperation and information exchange in the field of VAT and to fight more effectively VAT cross-
border fraud cases. This consisted of a proposal for a regulation of the European Parliament and
of the Council establishing a cooperation mechanism between the competent national authorities of
the  Member  States  and  the  Commission.  Its  objective  would  be  to  ensure  the  protection  of  the
Communities'  financial  interests  against  illegal  activities,  including  in  matters  such  as  VAT  and
money laundering.

The Commission repeated its determination to present such an initiative in its Action Plan for 2001-
2003 on the fight against fraud.

67

Acknowledging  that  the  primary  responsibility  for  the  measures  necessary  to  ensure  the  efficient
operation  of  the  common  system  of  VAT  lies  with  the  Member  States,  this  Regulation  should
especially  enable  the  Commission  to  play  a  coordinating  and  motivating  role  in  countering  VAT
irregularities which are of particular relevance at Community level. As regards VAT, this initiative
will establish a complementary legal instrument to the Commission proposal for a Regulation of the
European Parliament and the Council on administrative cooperation in the field of value added tax
(COM (2001) 294 final)".

84.

Notes with concern the finding in the Supervisory Committee report (Chapter IV, point 3.1.1)
that  although  a  large  proportion  of  OLAF  cases  involve  criminal  elements,  the  Office
forwarded  reports  or  information  to  the  competent  national  judicial  authorities  in  a  tiny
number of instances only;

Commission's reply :

The  functions  of  the  recently  established  unit  of  magistrates  and  judicial  advice  include
establishing close links with the national judicial authorities and ensuring the transmission to these
authorities of OLAF investigation reports at the appropriate time.

85.

Asks  to  be  informed  about  the  exact  role  of  OLAF  in  the  context  of  fraud-proofing  of
legislation;

Commission's reply :

Action  94  of  the  White  Paper  on  reform  outlines  the  Commission’s  intention  to  strengthen  the
fraud-proofing  of  legislation  and  the  management  of  contracts.  The  Commission  adopted  a
communication  on  7  November  2001  on  the  issue  which  was  transmitted  to  the  European
Parliament  for  information.  OLAF  is  specifically  consulted  upstream  of  the  inter-service
consultation. In other words, OLAF may be associated in the drawing up of a legislative project by
contributing particular anti-fraud provisions.  This consultation is carried  out  by  way  of  a  formal
procedure based on a selection of risk areas and sensitive projects. The legislative aspect of fraud-
proofing will be implemented by a clearly identified cell within OLAF, which will coordinate and
deal  with  this  type  of  consultation.  The  cell  is  currently  being  set  up  and  will  make  its  first
proposals to a specific inter-service working group, which will meet at the initiative of OLAF.

The main tasks of this group will, according to the above-mentioned communication, be to validate
the criteria and initial findings of the Office that will lead to the identification of risk sectors. Then
legislative drafts covering high-risk sectors that need a fraud-proofing opinion will be clearly listed,
under  OLAF  responsibility,  with  the  involvement  of  the  specific  working  group,  and  the  lead
Directorates-General.

To  this  end,  the  Directors-General  of  the  Commission  have  been  invited  to  nominate  a
correspondent  or  contact  person  for  OLAF  and  its  specific  cell  who  will  be  responsible  for  the
upstream consultation of  the Office  (coordination as well as internal work in  OLAF  and  specific
working  group  work  and  decisions).  This  correspondent  will  have  the  opportunity  to  be  a
permanent  member  of  the  specific  working  group  to  be  set  up  or  to  recommend  the  appropriate
representative.  This  group  will  be  chaired  by  OLAF  and  will  include  representatives  of  the
Secretariat-General, the Legal Service, DG Budget, DG Financial Control and the Internal Audit
Service,  as  well  as  a  limited  number  of  operational  Directorates-General.  Those  Directorates-
General, which are not part of the group, will be fully involved in the exercise and will contribute to

68

it in the same way as the group members as to the final choice of high-risk areas to be agreed by
common accord.  OLAF also has an  important  role  to  play  regarding  the  second  aspect  of  fraud-
proofing  work,  i.e.  the  management  of  contracts.  It  will  assist  DG  Budget  in  the  review  of  the
Commission’s  systems  for  contract  management  (e.g.  standard  contracts,  central  contracts
database,  management  tools).  OLAF,  via  its  internal  fraud-proofing  cell,  and  the  Legal  Service,
will  be  involved  very  early  in  the  process  of  defining  and  drafting  clear  clauses  for  both  the
protection  of  the  Community's  financial  interests  and  also  for  the  protection  of  beneficiaries’
interests.  OLAF  will  also  disseminate  the  information  in  its  possession  (whatever  its  form  and
within the limits envisaged by Community law) relating to fraud and irregularities connected with
the  use  of  contracts  for  goods  or  services  and  grant  decisions  (information  connected  with
investigations, analyses etc.). This information will be used as input for the database of  contracts
and contractors and will thus be available to all Commission departments.

86.

Is  seriously  concerned  at  the  current  application  of  Article  7  of  European  parliament  and
Council  Regulation  (EC)  No  1073/199928  on  OLAF's  investigations  as  regards  the
communication of information between Union bodies and institutions;

Commission's reply :

Article  7  of  Regulation  No 1073/1999  concerns  the  duty  of  the  institutions,  bodies,  offices  and
agencies to forward to OLAF information relating to possible cases of fraud or corruption or any
other illegal activity or any document relating to a current internal investigation.

The  most  recent  OLAF  activity  report  covering  the  period  from  1  June  2000  to  31  May  2001
referred  to  the  fact  that  OLAF  had  opened  36  internal  cases,  of  which  28  concerned  the
Commission. However, those figures do not permit any conclusions to be drawn about the extent to
which the obligation to communicate information set out in Article 7 is being fulfilled.

Article 15 of the same regulation provides for a progress report to be produced by the Commission
during the third year of the entry into force of the regulation on the Office’s activities together with,
where appropriate, proposals to modify or extend the Office’s tasks. Work on that report  is being
finalised and, once completed, it will be transmitted to the Council and the Parliament.

OLAF transmitted to the Parliament  in  June  2002  a  communication  setting  out  guidelines  on  its
own communication action towards the institutions.

87.

Regards  it  as  imperative  that  the  revision  of  the  regulation  referred  to  above  settle  the
question of national authority ‘recognition’ of OLAF investigations and of how they should
be followed up;

Commission's reply :

As stated in the response to point 86, the Commission is currently finalising its progress report on
the Office’s activities in accordance with Article 15 of Regulation 1073/1999.

Article  9(1)  of  Regulation  1073/1999  provides  for  the  recommendations  of  the  Director  of  the
Office on the action to be taken to accompany the investigation report.

28

OJ L 136, 31.5.1999, p.1.

69

                                                
Article  9(2)  states  that  OLAF  ‘reports  shall  constitute  admissible  evidence  in  administrative  or
judicial proceedings of the Member State in which their own use proves necessary, in the same way
and  under  the  same  conditions  as  administrative  reports  drawn  up  by  national  administrative
inspectors. They shall be subject to the same evaluation rules as those applicable to administrative
reports  drawn  up  by  national  administrative  inspectors  and  shall  be  of  identical  value  to  such
reports.’  Article  8(3)  of  Regulation  No  2185/96  also  specifies  the  admissibility  of  OLAF
investigations.

Current  Community  legislation  already  clarifies  the  admissibility  of  the  administrative  reports
drawn up by OLAF and their assimilation to national reports.

As for the judicial follow-up to administrative investigations, OLAF has a unit of magistrates and
judicial  advice  directly  under  the  responsibility  of  the  Director-General  of  the  Office,  whose
objectives include improving cooperation with the national judicial authorities and monitoring the
judicial follow-up of OLAF investigations.

In addition, the ratification by the Member States of the second protocol to the Convention on the
protection  of  the  Communities’  financial  interests  would  give  OLAF  a  more  specific  role  of
assistance to the national judicial authorities.

Furthermore, paragraph 2.1.3 of the Commission’s Green Paper on criminal-law protection of the
financial  interests  of  the  Community  and  the  establishment  of  the  European  Public  Prosecutor
((COM) 2001 715 final of 11.12.01) deals with this issue. It sets out the current difficulties such as
the  fact  that  the  Community  does  not  have  a  criminal  prosecution  function  to  supplement
administrative investigation and the diversity of national rules on evidence and goes on to propose
that the establishment of a common investigation and prosecution area could help to overcome the
present difficulties.

88.

Deplores  the  fact  that  the  establishment  of  a  European  Public  Prosecutor  (cf.  COM(2000)
608),  was  not  taken  up  at  the  Nice  European  Council  in  December  2000;  welcomes  very
much  the  Green  Paper  submitted  in  December  2001  (COM(2001)  715)  as  requested  on
several  occasions  by  the  European  Parliament  and  considers  that  the  establishment  of  the
European Public Prosecutor is essential for effective combating of Community budget fraud;
calls  for  the  establishment  of  the  European  Public  Prosecutor  to  be  included  within  the
Convention so that it can be enshrined in the Treaty in good time ahead of enlargement;

Commission's reply :

- The Commission proposed the establishment of a European Public Prosecutor for the protection
of  the  Community’s  financial  interests  on  26  January  2000  (COM  (2000)  34,  §  5),  nearly  a  year
before the Nice Intergovernmental Conference. Its complementary contribution of 29.9.2000 (COM
(2000) 608) clarified its earlier main contribution.

- There was no consensus  on  having  a  discussion on  the question between  the  Member  States  in
Nice.  The  Commission  therefore  decided  to  launch  a  public  debate  on  the  theme  with  its  Green
Paper (COM (2001) 715), which was adopted on 11.12.2001.

- The Commission welcomes in this regard the conclusions of the European Council of Laeken of
14  and  15  December  2001  (point  43),  which  called  on  the  Council  to  examine  the  Green  Paper
rapidly.

70

The public debate involving seminars and conferences organised with the direct participation of the
Commission  began  in  December  2001  and,  once  completed  in  July  2002,  will  have  specifically
covered 13 Member States and several candidate countries through more than  20 events.  Around
11 000 copies of the Green Paper have been distributed among interested circles. Responses to the
Green Paper can be read on the web site (http://europa.eu.int/olaf/livre_vert). A public hearing has
taken place in Brussels  on16  and  17  September  2002  on  this  subject.  The  Commission welcomes
the public hearing organised by the CoCoBU is on the aforementioned Green Paper on 5 November
2002.

- The Commission will present conclusions, and possibly a fresh contribution, early in 2003, on the
basis of all the answers it receives, in connection with its preparations for revision of the Treaties.

In  its  recent  Communication  to  the  European  Convention,  "A  Project  for  the  European  Union"
(COM  (2002)  247  final  of  22  May 2002),  the  Commission  stressed  the  need  to  supplement  the
current Treaty provisions on the protection of the Community's financial interests with a legal basis
establishing  a  European  Public  Prosecutor  and  allowing  the  adoption  of  rules  on  criminal
prosecution of transnational fraud.

89.

Asks to be kept fully and adequately informed of developments as regards the "illicit traffic
in butter-based products". "European Migrants Forum". "ESF", "Berlaymont", "ACEAL" and
"IRELA";  regrets  that  the  results  of  OLAF's  internal  investigation  on  possible  disciplinary
action in relation to IRELA has not yet been finalised;

Commission's reply :

OLAF  will  inform  Parliament  in  line  with  past  practice  and  the  guidelines  on  its  own
communication  activity  towards  the  institutions,  on  which  a  communication  was  submitted  to
Parliament in June 2002. See also answer to point 23.

As regards the butter-based products, the EP will be informed by the Commission.

As regards ESF, the Commission has always responded promptly to any request for information by
the EP – please see in particular paragraph 81 on the NL-ESF irregularities case. As regards the
Berlaymont, Vice-President Kinnock informed the COCOBU on 26 February 2001 of the evolution
of the costs for the renovation work of the Berlaymont. Since then the following developments have
taken place:

The Memorandum of Understanding signed between the Commission and the Belgian State on 17
July 2001 provided for the signature of a contract fixing the price, the technical specifications and
the delivery date of the building before 31 December 2001. In the event, the contract was not signed
by that date because the Belgian Minister with responsibility for the matter, Rik Daems, wished first
to have an audit of SA/NV Berlaymont 2000 and a valuation of the building. The payment regime
for the rental of the replacement buildings has not been modified, payment still being made by the
Belgian State.

The discussions on the possible purchase of the building continue. In determining the price that the
Commission  would  consider  paying,  the  Commission  will  take  as  a  basis  its  own  analysis  of  the
source of delays in the execution of the renovation works and of subsequent price increases.

Currently, the budget of the Union is not adversely affected either by the fact that the Berlaymont is
not available or by the significant delays in its delivery. The Belgian government is continuing to

71

pay  €33  million  for  the  rent  of  replacement  buildings  while  the  European  Commission  is
continuing to pay €14.2 million rent for the Berlaymont building.

The Commission kept informed the chairpersons of Cobu and Cocobu most recently on 21 October
2002 shortly before the Agreement with the Belgian authorities signed on 23 October 2002.

OLAF will inform Parliament of the outcome of all the cases concerned.

ENLARGEMENT

90.

Considers  that  combating  fraud  and  the  effective  protection  of  the  Community’s  financial
interests must be top priorities in the candidate countries and invites the Commission to make
special  efforts  to  ensure  that,  prior  to  accession,  all  candidate  countries  have  introduced
genuine accounting, auditing and control systems in accordance with the EU standards, in the
areas  benefiting  from  EU  financial  assistance  and  in  particular  where  there  is  shared
management  of  Community  appropriations;  insists  that  the  annual  country  progress  reports
include clear  and detailed  information on the implementation of the financial  pre-accession
aid, on the measures taken to monitor it and on the out-come of auditing and checks on the
spot and on chapter 28 (financial control); notes in this respect the importance of stronger EU
financial  and  technical  assistance  with  a  view  to  improving  the  candidate  countries
administrative capacity;

Commission's reply :

As indicated in its various replies to Parliament the Commission is fully cognisant of the difficulties
in  this  area  and  shares  Parliament’s  concern  about  the  continuing  weakness  of  public
administration  in  the  candidate  countries.  Furthermore,  these  problems  and  difficulties  were
recognised  in  the  2001  Progress  Reports,  Accession  Partnerships  and  Strategy  Paper.  Therefore,
the  Commission  has  identified  the  challenges  ahead  for  the  candidate  countries  and  has
undertaken  and  continues  to  undertake  extensive  measures  to  ensure  that,  upon  accession,  the
candidate countries will have in place effective control systems for the management of EU funds.
These measures currently include a threefold approach:

-  Firstly,  in  the  context  of  Chapter  28  of  the  negotiations,  the  Commission  closely  monitors  the
candidate countries’ commitments to build up a fully functioning public internal financial control
system  (PIFC)  and  to  further  develop  the  external  audit  systems  for  which  the  Supreme  Audit
Institutions are responsible. The PHARE programme has been and continues to be used to support
both the legislative alignment process and the requisite institution building for implementation of
PIFC and external audit systems at both national and, where required, regional levels. Through the
twinning instrument EU Member States have been actively engaged as partners in this effort and
over  30  twinning  projects  are  being  carried  out  in  this  and  closely  related  areas.  Furthermore
extensive  work  has  been  and  continues  to  be  undertaken  by  SIGMA  including  peer  reviews  and
other measures to carry the process forward.

- Secondly, the Commission has since 1999 stepped up its efforts to reinforce candidate countries'
institutional capacity to prevent and fight against fraud, particularly in relation to the management
of EU funds. In the framework  of  negotiations  under  Chapter  28,  it has  consistently  encouraged
candidate  countries  to  set  up  operationally  independent  anti-fraud  co-ordination  services  or
structures  (AFCOS),  responsible  for  the  co-ordination  of  all  legislative,  administrative  and
operational  aspects  of  the  protection  of  the  Communities'  financial  interests.  The  designation  of

72

such co-ordination structures or services has been completed in nine candidate countries and has
reached an advanced stage in most of the remaining countries.

A multi-country PHARE "Anti-fraud programme for the protection of the Communities' financial
interests" will be implemented as of early 2003 in order to assist the Commission's efforts in this
respect.

OLAF has already established effective  co-operation with several of the designated anti-fraud co-
ordination services at an operational level.

-  Thirdly,  through  the  process  of  the  gradual  introduction  of  an  extended  decentralised
implementation  system  (EDIS)  for  pre-accession  funds,  the  Commission  will  help  the  candidate
countries to build up “systems-based” rather than “transactions-based” financial management and
control  systems.  This  process  has  started  and  an  initial  analysis  in  the  areas  of  systems,  staff,
internal controls, financial responsibility, audits and procurement is being carried out.

The action plan for building institutional capacity as indicated in the 2001 Strategy Paper is also
being  engaged  in  this  effort.  However,  ultimate  responsibility  for  this  issue  resides  with  the
candidate  countries  themselves.  The  Commission,  in  partnership  with  the  Member  States,  can
provide the methodology and the means but only the candidate countries can guarantee the results.

91.

Is  deeply  concerned  to  note  how  little  progress  has  been  made  towards  computerising  the
Community transit system since Parliament's committee of inquiry; expects the Commission
to come forward with concrete proposals for improvement in the context of the follow-up to
the  2000  discharge;  demands  that  all  possible  necessary  measures  are  taken  before  any
candidate country joins the European Union and calls its Committee on Budgetary Control to
review the  situation as  a matter of urgency  and points to the recommendation of  13  March
1997 of the European Parliament Committee of Inquiry into the Community Transit System;

Commission's reply :

The  Commission  regularly  reviews  the  planning  of  the  National  Administrations  as  regards  the
setting  up  and  roll-out  of  the  New  Computerised  Transit  System.  The  attached  table  gives  an
overview of the situation. Dates have been  confirmed  in  Spring  2002  by  national  administrations
following a letter from Mr Bolkestein. It results from this that all Community Member States and
10 countries that are candidates to accession will have become connected to NCTS by the end of the
first half of 2003.

Since the candidate countries are supposed to become operational already before their accession to
the Community, the Commission  is  now  preparing  procedures  ensuring their  earlier  accession  to
the Common Transit Convention (with the exception of the Visegrad countries which are already
contracting Parties to that Convention).

See annex.

INVOLVEMENT OF PARLIAMENT

92.

Instructs its President, at this early stage, to champion its rights before the Court of Justice of
the  European  Communities  if  the  Council  includes  provisions  in  the  new  Financial

73

Regulation which in any way at all attach provisos to the right of Parliament, under Article
276 of the EC Treaty, to have access to information and thus constrain its control powers;

SPENDING SECTORS

III. SECTORAL ISSUES

JUSTICE AND HOME AFFAIRS SECTOR (JHA)

93.

(a) Calls  on  the  Court  of  Auditors  to  give  explicit  recognition  to  Title  B5-8,  Area  of
freedom,  security  and  justice,  in  its  list  of  internal  policy  actions  and  to  devote  the
necessary attention to it;

(b) Notes  that  the  2000  budget  implementation  rate  in  respect  of  Title  B5-8,  Area  of
freedom,  security  and  justice,  analysed  in  the  light  of  the  objective  factors  which
delayed  the  implementation  of  certain  measures  and  the  fact  that  there  were  no
emergencies, is acceptable, but no more than that;

Commission's reply :

With  regard  to  paragraph  93  (b,)  2000  was  the  first  "full  execution"  year  of  the  Directorate-
General Justice and Home Affairs, which was created in October 1999.

As  regards  the  European  Refugee  Fund  (B5-810  and  811)  and  the  EURODAC  programme  (B5-
812), the appropriations were carried over to 2001 because of the late adoption of the legal bases
(amount €37.279 million).

As regards the appropriations concerning the Measures combating and preventing discrimination
(B5-803) and the European Monitoring Centre on racism and Xenophobia in Vienna (B5-809)), no
particular delay was encountered and almost 100% of the appropriations allocated to these lines in
2000 were spent.

(c) Notes  with  satisfaction  the  large  increase  in  the  number  of  Commission-conducted

audits of contracts managed by DG JHA;

(d) Notes that, in the JHA sector, amounts recoverable or reduced payments as a result of
audits  exceed  10%  of  the  total  value  of  the  contracts  audited,  whereas  the  overall
average rate for Commission-conducted audits is in the region of 2%;

Commission's reply :

As regards paragraph 93 (c and d), in the budget year 2000, the Commission’s departments carried
out in-depth document checks on the files submitted for final payment; these were dossiers relating
to  the  "KOSOVO"  operation  which  were  put  together  as  a  matter  of  urgency.  The  proposed
requests for financing presented by the Member States were absolutely not presented in due form.
This led to recoveries being made at the settlement stage on the sums paid as advances.

(e) Calls  on  the  Commission  to  step  up  its  efforts,  if  necessary  through  contractual
penalties, to combat the improper use of subsidies and/or overstatement of actual costs;

74

Commission's reply :

As set out in item 1.2.2. of its Action Plan for 2001-2003 on protecting the Communities’ financial
interests and the fight against fraud, the Commission intends to propose an initiative in the area of
direct expenditure to integrate administrative measures and penalties. This work is ongoing and a
process of revision of contracts is under way in order to include clear clauses for the protection of
financial interests (standard clauses concerning checks and penalties to make them more effective).

The Commission also uses more suitable funding agreements.

(f) Notes with satisfaction that, at the  end of  its  report  on  the  financial  statements of the
European  Monitoring  Centre  for  Drugs  and  Drug  Addiction  (EMCDDA)  for  the
financial year 2000, the conclusion of the Court of Auditors is that the annual accounts
are reliable and that the underlying transactions, taken as a whole, are legal and regular;

Commission's reply :

The Commission welcomes the Court of Auditors conclusions on the European Monitoring Centre
for Drugs and Drug Addiction (EMCDDA).

(g) Calls  on  the  EMCDDA's  management  bodies  to  act  on  the  Court's  specific

observations, in particular as regards:

– 

– 

fixed asset accounting management and inventory-keeping;

the  keeping  of  personnel  records:  job  descriptions,  career  records,  staff
assessments and information for staff;

Commission's reply :

The EMCDDA  has  taken  note  of  the  Court's  comments.  Since  2001  the  ELS  system  has  become
operational for the inventory of assets and has been used for the 2001 closure of accounts exercise.
Regarding  aspects  relating  to  staff,  the  EMCDDA  has  put  in  place  a  procedure  to  draw  up  a
periodic evaluation report which, in 2000, was applied to all the EMCDDA staff. Furthermore, the
necessary measures  were taken to supplement staff  files,  notably  by  including  the  job  description
for the member of staff concerned.

(h) Notes with satisfaction that, at the  end  of  its  report  on  the financial statements of the
European  Monitoring  Centre  on  Racism  and  Xenophobia  for  the  financial  year  2000,
the conclusion of the Court of Auditors is that the annual accounts are reliable and that
the underlying transactions, taken as a whole, are legal and regular, bearing witness to
the  genuine  efforts  made  by  the  Monitoring  Centre  in  2000  to  improve  its  internal
control system;

(i)

Calls  on  the  management  bodies  of  the  European  Monitoring  Centre  on  Racism  and
Xenophobia to act on the Court's specific observations, in particular as regards:

– 

fixed asset accounting  management, inventory-keeping and  controlling  recovery
operations;

75

– 

systematic data matching between the budget accounts and the  general accounts
in order to ensure better monitoring of financial management during the year;

Commission's reply :

The  Commission  reaffirmed,  at  the  February  2002  meeting  of  the  Management  Board  of  the
European Monitoring Centre on Racism and Xenophobia, that it shares the concern expressed by
the Court on the  scale of carry-overs  from  one  budget year  to  the  next  and  that  it  also  considers
regrettable  the  underutilisation  of  the  2000  budget.  The  Commission,  incidentally,  notes  an
improvement on these points in 2001.

94.

Takes  the  view  that  the  low  implementation  rate  for  budget  heading  B5-503  was
predominantly due to the strict conditions in the invitation for the submission  of  proposals;
takes the view that the condition of transnationality as a prime requirement for entitlement to
support  must generally not exceed the  requirement  that  there  is  a  transnational  partnership,
with partners from three Member States;

Commission's reply :

The Commission agrees with remark that the time allowed for presentation of applications was too
short in 2000. The deadline was extended to 15 weeks in 2001.

By the deadline of 26 June 2000, 129  proposals  had been received, of which 93 were  eligible; 33
projects (i.e. 35% of eligible projects) were selected for funding. To select any more projects would
have compromised the quality of the actions co-financed by the Commission by admitting proposals
which had scored less than 60% in the external evaluation.

Another  factor  which  contributed  to  the  underspending  in  2000  was  the  small  number  (5)  of
proposals that were presented  under Measure 2  of  the  call. The focus of  that particular Measure
was on regional support to social economy, and potential promoters found it difficult to implement
given the time constraints. Also, few of the 2000 proposals requested the maximum amount of co-
financing available.

As regards transnationality, the Commission considers that this requirement strongly increases the
Community added value of projects.

AGENCIES

95.

(a)

Takes the view that efficient assessment of  the  agencies’ financial requirement in  the
budget procedure and scrutiny of their funding under the discharge procedure requires
close cooperation between the committees involved;

(b) Welcomes in this connection the appointment of a standing rapporteur for the agencies
on the committee responsible for budget matters and proposes a revision of the present
guidelines  for  cooperation  between  the  committees  responsible  for  the  specialist
agencies;

(c)

Takes  the  view  that  revision  of  the  guidelines  should  concentrate  on  the  following
aspects:

76

– 

– 

– 

– 

ensuring there are adequate control mechanisms in the specialist committees,

ensuring there is transparency in the budget procedure,

strengthening the mutual duty to inform,

clear division of powers between the relevant committees;

DAPHNE PROGRAMME

96.

Asks  the  Commission  to  draw-up  an  evaluation  report  on  the  Daphne  programme,  as  laid
down  in  European  parliament  and  Council  Decision  (EC)  No  293/200029,  without  delay;
expects the Commission to incorporate into the report the results of the evaluations, as well
as, information on Community financing in the different fields of action implemented under
the  programme;  invites  the  Commission  to  report,  in  particular,  on  the  low  utilisation  of
payment appropriations in the financial year 2000;

Commission's reply :

The 2000 budget year was the first year of the DAPHNE programme; hence only the first payments
could be made. An amount representing 25% of the allocation was consequently carried over to the
budget  year  2001  (€1.259  million).  The  Commission  already,  in  April  2002,  transmitted  the  mid-
term report to Parliament in line with the requirements of Article 9 concerning the monitoring and
evaluation of the DAPHNE programme.

TRANS EUROPEAN TRANSPORT

97.

Notes  that  the  2000  budget  implementation  rate  for  the  Trans-European  transport  network
budget  line  is  satisfactory;  recommends  a  further  reduction  in  the  number  of  projects  by
concentrating  on  those  projects  where  important  bottlenecks  in  the  TEN-transport  network
are removed and thus a European added value is immediately ascertainable;

Commission's reply :

The Commission agrees with the Parliament's remark : in order to further reduce  the number of
projects/studies  each  year,  as  from  2000,  the  minimum  amount  of  Community  financial  support
was set at 1M€.

According  to  the  Commission's  proposal  COM(2001)545  of  2.10.2001,  amending  Council
Regulation (EC) N° 2236/93, the total amount of Community aid may reach 20% (from 10%) for
projects  which  concern  cross-border  rail  bottlenecks  at  borders  with  candidate  countries.  If  the
proposal is  adopted, this will lead to "concentration" of the  Community  financial  support  on  the
most important trans-European network projects.

Further  to  that,  the  Multi-Annual  Indicative  Programme  2001-2006  adopted  by  the  Commission
C(2001)2654  of  19/9/2001  aims  at  the  financing  of  projects  representing  the  highest  Community

29

OJ L 34, 9.2.2000, p. 1.

77

                                                
Priorities; Several of the Essen Priority Projects and Groups 1-2 of the MIP concern projects for
the removal of bottlenecks on the railway network.

COOPERATION

98.

(a) Notes that poverty reduction is the fundamental objective of Community development
policy  and  in  order  to  achieve  that  objective  it  must  be  adapted  to  the  terms  and
calendar adopted at the Millennium Summit;

Commission's reply :

The  November  2000  Statement  defines  the  main  objective  of  the  European  Community’s
development policy as reducing and, eventually, eradicating poverty. This objective entails support
for  sustainable  economic  and  social  and  environmental  development,  promotion  of  the  gradual
integration  of  the  developing  countries  into  the  world  economy  and  a  determination  to  combat
inequality.

A  Commission  Staff  Working  Paper  produced  in  July  200130  establishes  the  main  elements  to
address  the  poverty  reduction  objective  in  EC  Development  Policy.  This  work  programme  is
progressively being implemented.

In terms of financial allocations, the Commission considers that particular attention must be paid
to the situation of the least developed and other low-income countries. Allocations must also take
into account the efforts by the governments of partner countries themselves to reduce poverty, their
performance  and  their  absorption  capacity.  Among  middle  income  countries,  the  Commission
believes that encouragement and attention should be concentrated on those in which the proportion
of  poor  people  continues  to  be  high  and  which  are  fully  committed  to  implementing  coherent
poverty-reduction strategies.

In  that  regard,  a  further  strengthening  of  the  poverty  impact  of  the  European  Community’s
programmes depends to a great extent on EU Member States, along with the European Parliament.

(b) Notes  that  the  Commission  has  lifted  its  reservation  concerning  sectoral  targets  as
introduced in the 2002 budget and that it has begun to fulfil its commitments in relation
to the DAC (Development Assistance Committee) classification system;

Commission's reply :

As  indicated  during  the  budgetary  procedure  for  2002,  the  Commission  is  setting  up  the
management information system which will make it possible to produce information in conformity
with the standards fixed by the Development  Assistance Committee (DAC)  of the OECD. All new
actions undertaken in the year 2002 are now being entered according to DAC standards. This will
enable detailed  reporting on 2002 activities as per  DAC classifications to  be  produced  from  early
2003 onwards. In addition, resources have been allocated, and the process is currently under way,
to code the activities of the year 2001. The Commission will prepare a statistical summary for the
Parliament, by November of this year, on its external assistance in 2001 as per DAC standards.

30 SEC(2001)1317 dated 26.07.2001

78

                                                
A  seminar  organised  jointly  by  the  EP  and  the  Commission  on  'European  Development  Policy
Targets  and  Indicators',  where  the  Commission  explained  its  move  towards  a  result-oriented
approach to development, took place on 26 February 2002. The documents provided to the EP for
the seminar give details on how DAC standards are applied by the Commission, and on the use of
indicators.

(c) Notes,  nevertheless,  that  the  information  is  still  imprecise;  trusts  that,  in  future
budgetary  procedures,  the  figures  provided  will  be  totally  reliable  and  asks,  in
particular, for the terms and results of the application of social conditionality in relation
to structural adjustment aid to be clarified;

Commission's reply :

EC Structural adjustment support, as is the case with other donors, used to be given primarily in
response  to  satisfactory  progress  in  sustaining  macroeconomic  stability  and  implementation  of
economic  reforms.  This  progress  was  measured  through  a  series  of  policy-based  conditionalities,
generally  defined  by  the  IMF  and  the  World  Bank.  In  addition  to  general  policy-based
conditionalities,  the  Commission  added  specific  conditionalities  often  related  to  reforms  in  the
social  sectors,  including  the  establishment  of  essential  drugs  policies  using  generic  drugs,  the
adoption  of  decentralisation  policies,  the  devolution  of  expenditure,  the  establishment  of  road
funds,  and  the  refocusing  of  budgets  in  favour  of  basic  services.  Where  counterpart  funds  were
held  in  a  separate  account,  the  Commission  also  sought,  by  monitoring  their  use,  to  ensure  that
social  expenditures  were  protected,  releasing  its  funds  only  in  line  with  the  implementation  of
certain elements of the budget – usually targeted on the social sectors.

(d)

Points  out  that  information  on  the  results  of  Community  participation  in  the  HIPC
strategy  for  debt  reduction  is  poor;  calls  on  the  Commission  to  urge  the  African
Development  Bank  to  speed  up  negotiations  on  agreements  with  the  beneficiary
countries;  asks  the  Commission  to  provide  clarification  by  country  and  outcome
concerning the implementation of its contribution to the HIPC strategy;

Commission's reply :

A report on the participation of the Community to the enhanced HIPC initiative was prepared in
November  2001.  The  report  was  one  of  the  requirements  to  be  fulfilled  to  release  the  second
tranche of the EC contributions to the HIPC Trust Fund and to the EIB Fund, amounting to € 250
million  and  €  100  million  respectively.  To  date,  €  754  million,  or  70  per  cent  of  the  original
allocation  of  €  1.08  billion,  have  been  disbursed.  The  report  indicated  the  mechanism  in  use  to
provide  debt  relief  to  HIPC/ACP  Countries.  Support  amounting  to  €  54  million  was  provided  to
HIPC countries in Latin America and Asia from the general budget. The Commission participates
actively in the bi-annual meeting organised by the World Bank to assess the progress of the HIPC
Trust Fund. The Commission is about to launch a study on how HIPC funds are managed in ACP
HIPC countries and has instructed EC delegation staff in HIPC countries to be actively associated
to the discussion concerning HIPC assessment (HIPC trigger assessment) particularly with regard
HIPC  tracking.  The  Commission  is  currently  preparing  a  proposal  for  adding  €  60  million  to  its
contribution as creditor with a view to providing a full relief (cancellation) of all special loans due
to  the  Community  by  Least  Developed  ACP  countries.  This  follows  a  decision  of  the  ACP/EC
Council  of  Ministers  taken  in  December  2001,  which  was  previously  submitted  to  the  competent
parliamentary commission. A report on debt (the Mantovani report) discussed and approved during
the EP plenary session in April 2002 mentioned the proposal too.

79

(e) Regrets that, according to the Commission's preliminary estimates for 2000, the funds
set aside for infrastructure and social services are unacceptably low; recalls the results
of the budgetary procedure for 2002, through which the Commission has undertaken to
amend this situation in line with the objectives set;

Commission's reply :

The  Commission  considers  that  the  criteria  of  the  2002  budget  are  not  applicable  to  the  2000
discharge procedure. The Commission has recently provided the EP with extensive information on
implementation of the results of the budgetary procedure for 2002.

(f)

Stresses that a transparent information system which complies with DAC standards is a
first  step  towards  an  approach  more  closely  geared  to  results,  and  stresses  that
indicators showing development results in relation to the objectives must be a priority
for  the  Commission;  calls  for  Parliament  to  be  comprehensively  informed  and
consulted on this process;

Commission's reply :

See the answer under point b).

(g) Takes  the  view  that  complementarity  with  Member  State  development  policies  and
coordination  with  other  donors  are  a  key  element  in  achieving  the  above  objectives;
calls,  in  this  context,  for  the  Commission  to  provide  Parliament,  in  future  discharge
procedures, with specific information on actions carried out jointly with other donors,
and on their results;

Commission's reply :

Coordination  within  the  Commission  between  the  various  actors  of  Development  has  been  a  key
concern since the beginning of the reform. Inter-service meetings, inter-service consultations and
Thematic  Networks  have  helped  achieve  cross-fertilisations  and  positive  feedback  from
implementation experience into programming.

The improvement of coordination between the Member States and the Commission is beginning to
show  clear  results.  In  this  context,  the  Commission  regularly  organises,  in  conjunction  with  the
Member States, meetings of the Directors-General for Development where they can exchange best
practices  on  common  concerns,  current  difficulties  and  new  approaches.  In  preparation  for  the
major international Conferences  on  Financing  for  Development  (Monterrey)  and  on  Sustainable
Development  (Johannesburg)  a  specific  focus  was  placed  on  coordination  within  international
bodies. A similar effort has been made in favour of a stronger involvement of the Commission in
the OECD/DAC.

80

The mission given to the Commission by the Member States to prepare a report in preparation for
the  Monterrey  conference  is  a  very  positive  sign  of  this  confidence-building  process.  On  8
November 2001, the Development Council asked the Commission to clarify a number of issues and
explore,  through  a  dialogue  with  Member  States,  potential  initiatives  to  be  implemented  by  the
Member States in order for the EU to make a positive contribution to the conference. The Council
singled  out  the  issue  of  increasing  the  volume  of  aid  with  a  view  to  reaching  the  0.7%  target,
including  the  establishment  of  specific  timetables;  particular  mention  was  also  made  of  the
effectiveness  of  aid,  including  the  untying  of  aid,  global  public  goods  and  innovative  sources  of
financing.  The  report  was  presented  by  the  Commission  at  the  General  Affairs  Council  of  18
February.  It  summarises  the  possible  positive  initiatives  which  emerged  as  a  result  of  the
discussions and addresses the issue of how the financial gap between the current level of ODA and
the volume necessary to meet the Millennium Declaration Goals can be closed.

The Commission has launched several coordination initiatives with other donors in the framework
of  the  joint  summits  with  the  US,  Canada,  and  Japan,  paying  particular  attention  to  the  Great
Lakes Regions and Afghanistan. Several high-level meetings were conducted  in  order  to  improve
cooperation  with  Norway.  Furthermore,  the  Commission  is  exploring  pilot  models  for  further
strengthening  cooperation  with  other  donors.  A  first  initiative  has  taken  place  whereby  officials
from Japan are hosted within the Commission.

Harmonisation  of  donor  procedures  is  also  a  key  element  for  the  improvement  of  coordination,
efficiency  and  recipient  country  ownership.  In  this  regard,  the  Commission  has  launched  review
exercises  with  the  Member  States  and  the  DAC.  A  similar  effort  is  being  conducted  at  UN  level
through the renegotiations of the general Framework Agreement and the recasting of the financial
regulation.

At field level, the new programming instrument called "Country Strategy Paper" (CSP), creates a
compulsory  coordination  and  consultation  mechanism  with  the  recipient  countries,  the  Member
States and the UN bodies present there.

In order to strengthen its coordination with the United Nations, the Commission has conducted an
extensive policy dialogue and negotiations on the improvement of the EC/UN general Framework
Agreement,  through  joint  high-level  meetings  with,  amongst  others,  UNHCR,  ILO,  UNDP,
UNICEF, FAO, and UNESCO. In 2001 the Commission adopted a Communication "Building an
Effective  Partnership  with  the  United  Nations  in  the  Fields  of  Development  and  Humanitarian
Affairs. Its overall thrust (improvement of EC-UN cooperation) was endorsed by the Development
Council  of  31  May  2001.  Its  proposed  new  approach  should  lead  to  a  strengthening  of  the  EC's
involvement in upstream policy dialogues and to the establishment of a more effective, transparent,
financially predictable and easier to monitor operational partnership with UN agencies, funds and
programmes.  The  Commission has  started  conducting  a  broad  analysis  of  the  core  mandate  and
capacities of the UN agencies, funds and programmes. On this basis, the Commission will propose,
in dialogue with the  Member  States, and where  there is an added  value  within  commonly  agreed
political  objectives,  to  strengthen  cooperation  with  UN  bodies  through  the  establishment  of  a
Strategic Partnership.

Complementarity in the policy-making area expresses itself through the complete integration of the
Millennium  Development  Goals,  the  Poverty  Reduction  Strategy  Paper  process  and  the  DAC
recommendations in the work of the Commission.

81

Concerning  complementarity  with  Member  States'  activities,  the  Commission  has  focused  its
activities  according  to  the  six  priorities  for  fighting  poverty  defined  in  the  communication  of  26
April  2000  and  by  concentrating  on  its  expertise  in  specific  fields  and  on  its  comparative
advantages. The experience of sector guidelines shared by the Member States and the Commission
has  proved  to  be  a  very  effective  instrument  for  operational  coordination.  The  Commission  is
preparing guidelines in relation to its 6 priorities. Guidelines on the transport priority sector have
already been adopted.

(h) Notes  the  delays  in  the  implementation  of  projects  co-financed  with  NGOs;  asks  the
Commission  to  provide  information  on  the  simplification  and  harmonisation  of
procedures.

Commission's reply :

The introduction of the call for proposals (started for the first time in June 2000) made it possible
to ensure greater  transparency in the  allocation  of  funds. Indeed,  all the  requests were  presented
according  to  the  logical  framework,  for  the  first  time,  and  the  overall  and  annual  budget  were
presented according to a standardised model, namely by accounting chapter and by activities.

All  the  requests  were  analysed  using  an  identical  evaluation  grid  by  independent  experts.  In
addition,  the  NGOs  received  a  letter  giving  reasons  for  the  refusal  of  unsuccessful  applications.
The  decisions  for  18%  of  the  received  requests  (=  163)  were  taken  within  less  than  6  months
(compared  with  2.5%  in  1999)  and  72%  within  13 months  (compared  with  97.5%  in  1999).  With
regard to the payment periods (2000-2001), 95% of the payment requests received during the same
period were honoured within less than 60 days.

(i) Notes the continuing tendency for traditional cooperation in the form of projects to be
replaced  by  a  system  whereby  a  growing  proportion  of  funds  known  as  rapid
disbursement instruments – chiefly aid for structural adjustment – is allocated to direct
support  for  budgets;  believes  that  the  Commission  and  Parliament  must  undertake  a
detailed  analysis  of  the  advantages  and  disadvantages  of  this  approach  and  urges  the
Commission to submit a communication on this subject;

Commission's reply :

Structural  adjustment  support  programmes  tackled  essential  problems  that  project  aid  could  not
address: (i) to help countries to restore macro-economic stability: balance of payments equilibrium
to  allow  countries  to  import  products  needed  by  their  people  and  their  economies;  budgetary
equilibrium  to  allow  spending  plans  to  be  implemented;  and  (ii)  to  encourage  implementation  of
important  economic  reforms  –  enhanced  effectiveness  of  public  services,  reduced  fiscal  costs  of
parastatals, removal of stultifying controls on enterprise, etc. There is a broad consensus that the
results  have,  on  balance,  been  positive.  The  Commission  strongly  believes  that  without  macro-
economic stability any hope of development is an illusion; that, without progressive integration into
the world economy, growth prospects have no future.

More  recently,  in  support  of  the  national  development  and  poverty-reduction  strategies  in  low
income countries, the Commission has been moving towards budget support for poverty reduction:
this aims at (1) allowing countries to maintain macro-economic stability through financing balance
of  payment  gaps  and  improving  country  macro-economic  and  public  expenditure  policies;  (2)
allowing  countries  to  finance  their  growth  and  poverty  reduction  strategies  through  additional
budget resources and participation in policy discussions on budget structure. The aim is to enhance
country  ownership  of  poverty  reduction  policies  and  improve  their  effectiveness.  It  is  associated
with  a  shift  to  results-based  conditions  (see  reply  to  item  (c)  above)  and  away  from  externally

82

imposed policy prescriptions. It is, however, too soon to measure the impact of this new approach.
The Commission is collaborating with Member States in exploring the scope for evaluation of the
approach over the coming few years.

IV.

99.

ACCESS TO DOCUMENTS

(a) Asserts  that  Parliament,  as  the  discharge  authority,  must  have  the  same  access  to

Commission documents as the Court of Auditors;

(b) Reiterates  that  the  rules  in  the  existing  Framework  Agreement  concerning  access  to
confidential  documents  have  proven  unsatisfactory  for  Parliament  as  discharge
authority and instructs its President to open negotiations without delay on the revision
of  the  Framework  Agreement  and  to  ensure  that  the  new  agreement  is  in  accordance
with  the  principles  adopted  by  Parliament  in  its  resolution  of  4  April  2001  on  the
discharge 1999;

(c) Warns  the  Council  not  to  adopt  new  financial  regulations  limiting  Parliament’s
untrammelled right of access to the information necessary for the exercise of its tasks
related to discharge;

(d)

Instructs  its  President  to  bring  an  action  before  the  Court  of  Justice  if  the  Council
should adopt financial regulations limiting Parliament’s budgetary control powers.

Commission's reply :

The  Commission  considers  that  the  Framework  Agreement  has  enabled  all  the  necessary
confidential  information  to  be  transmitted  to  Parliament  for  the  purposes  of  the  discharge  in
satisfactory conditions.

Parliament’s control powers are fully recognised and protected by the EC Treaty. The Commission
considers  that  the  new  Financial  Regulation  adopted  unanimously  by  the  Council  after  detailed
discussions with all institutions concerned, fully complies with the EC Treaty and the legislation in
force and do not affect their control powers.

83

Annex to point 11

Commission

All institutions not taking 
account of enlargement

Posts to be filled 
in the year

Turn-over
Appropriations converted into 
posts
Termination of service
New posts
Total

2001

2002

2003

736

100

0
400
1.236

798 1.025

25

0

0
317

90
0
1.140 1.115

Total costs

Personnel
Infrastructure
Specific
Total

Equivalent number 
of successful 
candidates to 
finance per year

42% of the cost of a successful 
candidate of the year

58% of the cost of a successful 
candidate of the next year

Cost per 
successful 
candidate

Total
Personnel
Infrastructure
Specific
Total

6.024.976 6.024.976
1.387.500 1.387.500
6.961.526 5.600.000
14.374.002 13.012.476

519

479

661

647

1.180
5.106
1.176
5.900
12.181

1.126
5.351
1.232
4.973
11.556

2004

1.415

0

135
50
1.600

2003

1.337

0

135
50
1.522
EPSO
7.127.832
3.203.329
4.215.600
14.546.761 *

639

928

1.567
4.549
2.044
2.690
9.283

All  institutions taking account of 
enlargement
2003

2004

1.415

0

135
2.817
4.367

1.337

0

135
1.001
2.473
EPSO
8.639.000
3.608.500
8.771.000
21.018.500

1.039

2.533

3.572
2.419
1.010
2.455
5.884

* the necessary appropriations in 2002 for all institutions not taking enlargement into account come to 16.537.488. This represents a change, disregarding 

enlargement, compared with 2002, of -€1.990.727, i.e. an economy of scale of 10.93%. Without taking enlargement into account, the setting up of EPSO will lead to 

savings.

84

Annex to point 21

2. Geographical breakdown of the programme beneficiaries in 2000.

Herewith  there  is  a  table  summarising  the  geographical  breakdown  of  projects  selected  and
amounts of grants allocated to beneficiaries by country.

The first section  of  the  table  (“overall  results”)  contains  the  number  of  projects  supported  from
each country, as well as the total amount of financial support awarded to beneficiaries from that
country.

The  second  section  of  the  table  (“Distribution”)  gives  the  geographical  breakdown  of  financial
support  granted  in  the  area  of  distribution  (support  to  cinema  distribution,  support  to  video
distribution, support to cinemas, support to festivals) by country of the beneficiary, as well as the
country  share  (in  %)  of  the  support  granted.  This  data  can  then  be  compared  to  an  indicator
reflecting the reality of the size of the market of each country (total number of cinema admissions
in the country in 2000, source : Eurostat).

The  third  section  of  the  table  (“production”)  gives  the  geographical  breakdown  of  financial
support  granted  from  the  point  of  view  of  the  production  country.  It  includes  support  granted
directly  to  producers  (development  support,  distribution  support  for  television),  as  well  as  the
cinema support schemes (Automatic & Selective Distribution) allocated by nationality of the films
supported.  The  geographical  breakdown  can  then  be  compared  with  an  indicator  reflecting  the
reality  of  the  size  of  the  market  of  each  country  (total  investment  in  Film  Production  in  1999,
source : Screen Digest).

Example :

Netherlands

The  Netherlands  received  3.07%  of  the  support  awarded  to  distribution,  whereas  it  represents
2.49% of the European market in terms of total number of admissions in cinemas.

Likewise, 2.56% of the investment of the MEDIA Programme  was  in  favour  of  Dutch films and
audiovisual  programmes,  whereas  this  country  represents  1.60%  of  the  total  investment  (private
and public) in European film production.

85

SUMMARY AND ANALYSIS OF GEOGRAPHICAL BREAKDOWN – MEDIA II - 2000

Overall results

Distribution

Production

Country Number of

projects
selected 2000

Amount of
grants awarded
(€) to final
beneficiaries

MEDIA
Support to
distribution

country
share of
MEDIA
support to
distribution

Market Data :
country share of
total admissions
in cinemas in
2000 *

MEDIA Support to
Production (including
cinema distribution
support reallocated
by country of origin
of supported film)

country share of
MEDIA support
to production

Market Data :
country share of
total Film
production
investment 1999
**

AT

BE

DA

DE

ES

FI

FR

GR

IE

IS

IT

LI

65

124

89

164

101

41

260

54

34

33

131

1

978 270

589 270

1.57%

6 431 131

2 886 889

7.70%

3 921 527

1 055 664

2.82%

1.89%

2.72%

1.24%

12 487 564

6 686 875

17.84%

17.67%

8 062 084

5 113 713

13.64%

15.69%

439 894

1 575 534

4 085 322

5 387 660

2 611 294

1 009 732

493 732

1.32%

0.82%

475 000

0.79%

2.83%

7.33%

9.67%

4.69%

0.85%

1.09%

1.46%

1.28%

14.55%

6.44%

0.82%

17 869 337

7 242 401

19.32%

19.24%

14 752 861

26.49%

28.02%

2 122 884

722 934

1.93%

1 452 221

172 784

0.46%

451 476

191 476

0.51%

1.56%

1.73%

0.19%

612 600

1 821 103

463 894

9 103 388

6 165 085

16.45%

12.58%

3 432 388

1 000

1 000

0.00%

0.00%

0

1.10%

3.27%

0.83%

6.16%

0.00%

0.31%

3.78%

0.16%

6.54%

0.00%

86

LU

NL

NO

PT

SU

UK

8

63

80

47

60

832 139

177 139

0.47%

2 696 432

1 149 649

3.07%

2 627 100

1 359 178

3.63%

1 128 475

1 006 799

2.69%

1 716 806

1 018 606

2.72%

0.16%

2.49%

1.34%

2.19%

1.97%

430 234

1 437 608

1 538 087

320 845

2 458 507

106

5 996 657

1 450 233

3.87%

16.51%

13 854 176

TOTAL

1 461

78 888 223

37 483 427

100%

100%

55 697 007

0.77%

2.58%

2.76%

0.58%

4.41%

24.87%

100%

0.06%

1.60%

1.10%

0.17%

1.33%

31.28%

100.00%

* source : Eurostat. Statistics in Focus 4/2002

** source : Screen Digest. December 2001

87

Annex

Provisions regarding Technical Assistance and Technical Assistance Offices contained in the
Decision establishing the MEDIA II (1966-2000) and MEDIA Plus (2001-2005) programmes.
(we underline the provisions relating to Technical Assistance Offices).

MEDIA II (1996-2000) :

95/563/EC: Council Decision of 10 July 1995 on the implementation of a programme encouraging
the  development  and  distribution  of  European  audiovisual  works  (Media  II  -  Development  and
distribution) (1996-2000) Official Journal L 321 , 30/12/1995 P. 0025 - 0032

Annex, paragraph 2.3. Implementation :

The  Commission  shall  implement  the  programme  in  accordance  with  the  procedure  set  out  in
Article 5 of the decision.

2.3.1. In implementing the programme, in particular the technical selection of projects, monitoring
and evaluation of projects benefiting from the programme's funding and actions for networking, the
Commission will ensure that it obtains the expertise of acknowledged specialists in the field of the
development and distribution of cinema and television works.

To  this  end,  it  can,  if  necessary,  involve  intermediary  organisations  which,  on  the  basis  of  their
professional expertise, will provide technical assistance and will formulate proposals for the choice
of  the  beneficiaries,  without  prejudice  to  other  selection  methods.  These  organisations  will  be
chosen after calls for proposals and following the procedure described in Article 5(2).

The Commission shall make the final selection of projects benefiting from the Programme's funding,
in the context of the dispositions of Article 5 (2)

95/564/EC: Council Decision of 22 December 1995 on the implementation of a training programme
for professionals in the European audiovisual programme industry (Media II - Training)

Official Journal L 321 , 30/12/1995 P. 0033 - 0038

Annex, paragraph 2.3. Implementation :

The Commission shall implement the programme in conformity with Article 4.

2.3.1. In implementing the programme, in particular the technical selection of projects, monitoring
and  evaluation  of  projects  benefiting  from  the  programme's  funding,  the  Commission  will  ensure
that it obtains the expertise of acknowledged specialists from the audiovisual sector in the field of
professional training.

To  this  end,  it  can  if  necessary  involve  intermediary  organisations  which,  on  the  basis  of  their
professional expertise, will provide technical assistance and will formulate proposals for the choice
of  the  beneficiaries,  without  prejudice  to  other  selection  methods.  These  organisations  will  be
chosen after calls for proposals and following the procedure described in Article 4 (2).

The Commission shall  make the  final  selection  of  beneficiaries  from  the  programme's  funding,  in
the context of the dispositions of Article 4 (2).

88

MEDIA Plus (2001-2005) :

Corrigendum to Council Decision 2000/821/EC of 20 December 2000 on the implementation of a
programme  to  encourage  the  development,  distribution  and  promotion  of  European  audiovisual
works  (MEDIA  Plus  Development,  Distribution  and  Promotion)  (2001-2005)  (OJ  L  336  of
30.12.2000)

Official Journal L 013 , 17/01/2001 P. 0034 - 0043

Annex 2.3 Implementation.

2.3.1. The Commission will implement the Programme. It may, to this end, call upon independent
consultants and technical assistance offices to be selected, after a call for tenders, on the basis of
their expertise in the sector, experience acquired in the MEDIA II programme, or other experience
acquired  in  this  area.  The  technical  assistance  will  be  financed  by  the  Programme's  budget.  The
Commission  may  also  conclude,  in  accordance  with  the  procedure  referred  to  in  Article  8(2),
partnerships  for  operations  with  specialist  bodies,  including  those  which  have  been  set  up  under
other  European  initiatives  such  as  Audiovisual  Eureka,  EURIMAGES  and  the  European
Audiovisual Observatory in order to implement joint measures that meet the Programme objectives
in the field of promotion.

The Commission will make the final selection of the beneficiaries of the Programme and decide on
the financial support to be granted, in accordance with Article 8, on the basis of preparatory work
conducted by the technical assistance offices. It will give grounds for its decisions to applicants for
Community support and ensure the transparency of implementation of the programme.

In  order  to  execute  the  Programme  and,  in  particular,  evaluate  the  projects  benefiting  from
Programme  funding  and  networking  activities,  the  Commission  will  draw  on  recognised,
independent  audiovisual  experts  in  the  fields  of  development,  production,  distribution  and
promotion, who are, where necessary, proficient in the area of the management of rights, especially
in the new digital environment.

Decision No 163/2001/EC of the European Parliament and of the Council of 19 January 2001 on the
implementation of a training programme for professionals in the European audiovisual programme
industry (MEDIA-Training) (2001-2005)

Official Journal L 026 , 27/01/2001 P. 0001 - 0009

Annex 2.3 Implementation.

2.3.1. The Commission, in accordance with the procedure laid down in Article 6, will implement the
programme. It will call upon consultants and technical assistance offices to be selected, after a call
for  proposals,  on  the  basis  of  their  expertise  in  the  sector,  experience  acquired  in  the  MEDIA  II
programme, or other experience acquired in this area. The technical assistance will be financed by
the  programme's  budget.  In  accordance  with  the  procedure  referred  to  in  Article  6(2),  the
Commission may also conclude partnerships for operations with specialised bodies, including those
which have been set up under other European initiatives, such as Audiovisual Eureka, Eurimages
and the European Audiovisual Observatory, in order to implement joint measures which meet the
objectives of the programme in the field of training. The Commission will make the final selection of
the  beneficiaries  of  the  programme  and  will  decide  on  the  financial  support  to  be  granted,  in
accordance with Article 5.

89

It  will  give  grounds  for  its  decisions  to  applicants  for  Community  support  and  ensure  the
transparency of implementation of the programme.

The beneficiaries will take steps to publicise the Community's support.

In selecting supported activities, the Commission will, in addition to the priorities set out in Article
2(2), take particular account of the following criteria:

- partnership between training establishments, the professional sector and undertakings;

- the innovatory nature of the measure;

- the multiplier effect of the measure (including utilisable results, e.g. manuals);

- the cost-effectiveness of the measure;

- availability of other national or Community support measures.

For  the  implementation  of  the  programme,  and  in  particular  the  assessment  of  the  projects
receiving  funding  under  the  programme,  and  for  the  networking  measures,  the  Commission  will
ensure that it makes use of the skills of recognised experts in the audiovisual sector in the fields of
training,  development,  production,  distribution,  promotion  and  also  management  of  rights,
especially in the new digital environment.

In  order  to  ensure  the  independence  of  the  consultants  and  experts  whose  services  it  uses,  the
Commission will lay down incompatibility provisions in respect of the participation of these groups
of persons in the invitations to submit proposals under the programme.

90

Annex to point 91

30.01.2002

COUNTRY

GERMANY
AUSTRIA
BELGIUM
DENMARK
SPAIN
FRANCE
FINLAND
GREECE
IRELAND
ITALY
LUXEMBOURG
NETHERLANDS
PORTUGAL
UNITED KINGDOM
SWEDEN

EU
ICELAND
NORWAY
SWITZERLAND
HUNGARY
POLAND
CZECH REPUBLIC
SLOVAKIA

EFTA/V4
EU/EFTA/V4
BULGARIA
ESTONIA
LATVIA
LITHUANIA
ROMANIA
SLOVENIA
TURKEY

CANDIDATE COUNTRIES
GRAND TOTAL

CONNECTION TO NSTI

CONNECTION OF OPERATORS

PERCENTAGE OF CUSTOMS OFFICES CONNECTED TO NSTI AT

SINCE

FROM

SINCE

FROM

01.07.2001

01.01.02

01.07.02

01.01.03

01.07.03

06.02
01.05.02
01.12.02

mid 2002
01.04.03
31.05.03
end 2002

09.02

04.03
01.01.03
01.01.03

04.03
07.03

01.01.03

04.03
beginning 2003
01.01.03
01.01.03
07.03
01.01.03

10.05.00

10.05.00

10.05.00

01.10.00

4

28.02.01
10.05.00

15.06.01

3
7

0
7

15.10.01

06.01

01.01.01

3

01.10.01

01.10.01

2
5

5

beginning 2003
beginning 2003
01.05.02
01.12.02

01.04.03
31.05.03
fin 2002

09.02

04.03
01.01.03
01.01.03

02.02
04.03

01.04.03

mid 2003

01.07.03
from 2005
01.01.03

91

2,9 %
0 %
0 %
0 %
5,4 %

0 %
0 %

2 %
0 %
1,6 %
0 %
0 %
0 %

0,8 %

100 %
30 %
0 %
0 %
1 %
0 %

18,7 %
6,5 %
0 %
0 %
0 %
0 %
0 %

0 %
4,9 %

4,7 %
0 %
0 %
0 %
100 %

0 %
0 %

6 %
0 %
3,2 %
0 %
0 %
0 %

7,6 %

100 %
30 %
0 %
0 %
1 %
0 %

18,7 %
11,1 %
0 %
0 %
0 %
0 %
0 %

0 %
8,4 %

4,7 %
1 %
36 %
0 %
100 %

0 %
0 %

75 %
0 %
100 %
0 %
0 %
0 %

21,1 %

100 %
50 %
0 %
0 %
30 %
0 %

25,7 %
22,6 %
0 %
0 %
0 %
0 %
0 %

0 %
17,1 %

62,9 %
50 %
77 %
100 %
100 %

0 %
0 %
100 %
100 %
100 %
100 %
0 %
1 %
100 %

59,4 %

100 %
90 %
0 %
0 %
100 %
20 %

44,3%
54,5 %

3 %
5 %
0 %
10%

3%
43.6%

100 %
100 %
100 %
100 %
100 %

100 %
100 %
100 %
100 %
100 %
100 %
100 %
60 %
100 %

90,7 %

100 %
100 %
100 %
100 %
100 %
100 %

85,7%
89,1%

50 %
14 %
0 %
100%

27.3 %
79.4 %