“Plus ça change, plus c’est la même chose”

In the last Fraud Intelligence, Keith Nuthall reviewed OLAF, the European Union’s anti-fraud office’s own report on its operations. This month we are able to provide perhaps a more independent perspective following the release of the European Court of Auditors annual report for the financial year 2000 (available at www.eca.eu.int). It reveals gaping accounting black holes in the Euros 92.8 billion EU budget and serious problems at OLAF. Timon Molloy reports.

Timon Molloy • Editor

The Court of Auditors 2000 report starts off on a positive note, highlighting restriction of milk quota production to target levels, and commenting that work on the reconstruction of Kosovo was “both efficient and economical”. However, the tone swiftly changes as it goes on to say that objectives are often not realized, blaming the inadequate or total absence of evaluation by the Commission. Around five per cent of the EU budget was unaccounted for last year, which is in line with the losses in previous years. Although the reform programme, under Neil Kinnock, which was initiated after the resignation of the previous Commission headed by Jacques Santer in March 1999, aims to focus attention more on performance and results, the Court’s recent research in this area shows that there are still “major challenges” to be faced. It says that there are persistent weaknesses in the checking procedures carried out by member states on Community programmes for which management responsibility is shared with the Commission - shared and decentralised management covers more than 80 per cent of the general budget - and observes that its Opinion has not been followed on a number of matters of principle. Interalia , the practice of making budgetary and legal commitments in “artificial annual instalments” means, it says, that not all expenditures during a financial year are recorded in the same period, which only increases complexity. The Commission has also not followed its recommendation to define the professional and legal duties of the officials who oversee budget transactions and controls. The Court is similarly displeased by the failure of several institutions (which it tactfully does not name) to take up its recommendation to consider funding their property purchases by direct financing rather than use of special purpose vehicles, which it says are less transparent and cost more.